I should say, however, that while 100,000 [net entrants to the labor force] per month appears to be the right benchmark for the next year or two, there is a lot of uncertainty about this benchmark, particularly in the longer run. Some of this uncertainty revolves around the participation of the baby boomers. People are living longer, healthier lives, which may allow baby boomers to work until they are older. Moreover, wages for all workers may change in response to these trends, convincing some to work more, and others to work less, than they would otherwise.

....Putting together our best estimates of the trends of labor force growth and productivity growth, we at the Chicago Fed think potential GDP growth is lower than it was five years ago, and currently is somewhat below 3 percent.

Recent research conducted at our Bank suggests the trend growth rate for employment over the next 10 years may be around 120,000 jobs per month.  Thus, it should not be too surprising that last year’s employment growth has kept labor market conditions fairly tight.

A paper published earlier this year in the Brookings Papers on Economic Activity (Aaronson et al., 2006) contains a summary table reporting four different projections of labor force growth out to 2014 based on the authors’ model and estimates from the Congressional Budget Office, the Bureau of Labor Statistics and the Social Security Administration. For 2007, the projections range from a low of 0.6 percent growth to a high of 1.1 percent growth. For 2014, the projections range from a low of 0.2 percent to a high of 0.8 percent.

The magnitude of these differences is stunning. Based on these projections, if the unemployment rate remains about steady next year we can expect average monthly growth of employment ranging from a low of about 70,000 to a high of about 120,000. These are rough, rounded off estimates—to provide the estimates any other way would imply a false sense of precision. On the same basis, in 2014, the range is from about 30,000 to about 100,000 new jobs each month. These are very large differences. Moreover, given that each of the models used to produce these estimates is subject to error, in fact the range of uncertainty is even greater than the numbers just quoted.

However, research at the Chicago Fed and elsewhere suggests that, given the slower growth in the labor force, monthly increases of roughly 100,000 are most likely consistent with potential. This transition has not yet been fully appreciated by many market observers.  1

The changes in labor force growth also imply that, in the absence of changes in productivity trends, our estimates of potential GDP growth should be revised down somewhat to around 3 percent.

The changing age distribution--primarily the aging of the baby boomers--is expected to lower the participation rate by about 0.2 percentage point next year and continue to lower it over the next several years...

Similarly, changes in the expected growth rate of the labor force affect our interpretation of the monthly employment data. If the labor force participation rate remains at its current level, then what might be thought of as the “equilibrium” growth rate of payroll employment--that is, the increase consistent with a stable unemployment rate--would be about 140,000 per month. However, if the labor force participation rate instead declines 0.2 percentage point over the next year, as suggested by the Fed’s staff research, then the comparable equilibrium payroll employment growth would be closer to 110,000 per month.

Lacker said payroll growth around 100,000 going forward would be sufficient to keep labor market conditions "pretty firm."

"They'd have to ease by a lot more than that to throw a monkey wrench into consumer spending and that doesn't seem likely to me," he added.

As reported by Dow Jones

Over the past six months, employment has been increasing at about 120,000 per month, a bit above its long-run sustainable pace.

[O]ver the last six months job creation has averaged 118,000 jobs per month. While that sounds low, it’s actually pretty close to what we would need to keep employment growth in line with population growth.

{Monthly payroll gains of 100,000 would be enough to} maintain a steady unemployment rate, taking into account labor-force growth.

From Q&A session as reported by Bloomberg News

So the trends in both the growth of the population and labor force participation point to slower growth in the labor force. This has important implications for our benchmarks for the monthly employment statistics. Earlier in the decade, most economists estimated that job growth of about 150,000 per month was consistent with an economy expanding near potential. However, research at the Chicago Fed and elsewhere suggests that, given the slower growth in the labor force, monthly increases of roughly 100,000 are most likely consistent with potential. This transition has not yet been fully appreciated by market observers. In each of the past three months, financial markets have expected job growth of about 160,000 on average. When actual job growth averaged just above 100,000, many analysts interpreted this as a sign that the economy is growing slower than its potential. In contrast, we at the Chicago Fed see these numbers as actually consistent with an economy moving ahead at about its potential.

I think [the number of jobs that must be created monthly to maintain constant employment] is dropping. I would say now it's more like 130,000. And within the next few years, it might be down to 100,000...This is all based on research at the Federal Reserve on labor participation rates, which suggest that  we'll be seeing, over the next 10 years, some significant decline from the current about 66 percent of the adult population is in the labor force.  We expect to see that coming down and, therefore, the number of jobs a month we need to keep the unemployment rate is constant is likely to fall as well.

With overall population growth continuing to slow and labor force participation not expected to rise, we probably need to adjust our benchmarks for what level of employment growth is consistent with economic growth near potential and a steady unemployment rate. It used to be that increases in payroll employment that averaged 150,000 per month were consistent with flat unemployment. Now that number may be closer to 100,000. These developments also imply that, in the absence of changes in productivity growth, our estimates of potential GDP growth should be revised down 2 or 3 tenths of a percentage point to a range of 3 to 3-1/4 percent.

The solid growth forecast for the economy also should translate into steady growth in employment.  The increases will be somewhat less than employment gains seen in the past two years due to two factors.  First, as growth slows and converges toward the economy's trend growth rate, fewer additional workers will be needed.  And second, strong productivity growth over the past few years is expected to continue, sggesting that the existing workforce will be able to produce a sozeable portion of the projected increase in output.  Based on these factors, I would expect that employment will grow by between 1.5 and 2 million jobs in 2006.  That translates into an increase of 125,000 to 167,000 jobs per month.

I would expect that employment will grow between 1.5 and 2 million in 2006.

I expect employment growth to continue in the range of 150,000 to 200,000 jobs per month this year, and obviously, this would be a welcome pattern in an economy that had struggled to add jobs in this cycle.