Why the Fed should target underemployment, not unemployment, as it sets interest rates
Why the Fed should target underemployment, not unemployment, as it sets interest rates
Members of the Fed Up Coalition protest during the Jackson Hole economic symposium in 2015.
...
Members of the Fed Up Coalition protest during the Jackson Hole economic symposium in 2015.
See the photo here.
Yellen Meets With Activists Seeking Fed Reforms
ABC News - November 14, 2014, by Martin Crutsinger - A coalition of community groups and labor unions are "fed up" with the Federal Reserve.
More than two dozen activists demonstrated...
ABC News - November 14, 2014, by Martin Crutsinger - A coalition of community groups and labor unions are "fed up" with the Federal Reserve.
More than two dozen activists demonstrated outside the Fed and then met with Chair Janet Yellen on Friday as part of a new campaign seeking policy reforms and a commitment to keep interest rates low until good jobs are plentiful for all workers. Although the labor market has steadily strengthened this year, wages have remained stagnant.
During the hour-long discussion with Yellen and three other Fed board members, coalition representatives discussed problems their communities were facing with high unemployment and weak wage growth.
Ady Barkan, one of the organizers of "Fed Up: The National Campaign for a Strong Economy," said Yellen and the other Fed officials listened but made no commitments about future Fed policy.
"It was a very good conversation," said Barkan, an attorney with the Center for Popular Democracy in Brooklyn. "They listened very intently, and they asked meaningful follow-up questions."
Fed officials confirmed that the meeting took place but declined to comment on the issues raised at the meeting.
The Fed's outreach to community activists was the latest move by Yellen to focus attention on lingering problems from the Great Recession. Wearing green tee-shirts with the phrase "What Recovery?" the group had protested outside of the Fed's headquarters on Constitution Avenue under the watchful eye of nine Fed security officers.
Members of the group, some of whom had demonstrated at a central bank gathering in August in Jackson Hole, Wyoming said it was important that Fed officials not be swayed by arguments that it needs to move quickly to raise interest rates to make sure inflation does not become a threat.
"The banks are the ones that crashed the economy ... but they're the ones who got the bonuses and the bailouts while workers and homeowners like me were left to drown," said Jean Andre, 48, of New York, who said he was having a tough time finding full-time work.
In addition to Yellen, the Fed officials who took part in the meeting were Fed Vice Chairman Stanley Fischer and Fed board members Jerome Powell and Lael Brainard.
Members of the coalition said about half of the meeting was taken up by their members telling stories about the difficulty in finding jobs, particularly in disadvantaged groups and communities dealing with unemployment much higher than the 5.8 percent national average.
The Fed officials also were presented a petition signed by 5,000 people around the country urging the central bank to keep interest rates low until the country reaches full employment.
The group also pushed for a more open process in the selection of presidents of the Fed's 12 regional banks. They say the current process is too secretive and dominated by officials from banks and other businesses with little input from the public. The regional presidents, along with Fed board members in Washington, participate in the deliberations to set interest rates.
Source
NY coalition pushes for reliable work schedules nationally
NY coalition pushes for reliable work schedules nationally
ALBANY, N.Y. (AP) — A coalition of New York-based advocates on Tuesday launched a national campaign to press large retailers, restaurant chains and other companies to end on-call and last-minute...
ALBANY, N.Y. (AP) — A coalition of New York-based advocates on Tuesday launched a national campaign to press large retailers, restaurant chains and other companies to end on-call and last-minute scheduling, which allows companies to assign shifts to workers with only a few hours’ notice.
The campaign follows recent agreements by several large retailers with New York’s attorney general to end the practice in that state.
The Center for Popular Democracy, the Rockefeller Foundation and the online organization Purpose are calling for scheduling at least two weeks in advance, eliminating on-call assignments that leave employees scrambling for child care, unable to hold second jobs and with uncertain paychecks.
“Already major employers are responding to mounting public pressure to deliver more stable work schedules to their front-line employees,” said Carrie Gleason, director of the center’s Fair Workweek Initiative. “This movement is about a greater voice in how much and when we work — predictable and stable hours, more input and the opportunity to work enough hours to make ends meet.”
They say three in five American workers — about 75 million people — are paid hourly, with recent job growth mainly in low-wage jobs, often part-time and subject to last-minute scheduling practices.
The Workshift campaign, formed by Purpose and the Rockefeller Foundation last year, says employer software aimed at savings and efficiency is behind the growth in last-minute worker scheduling with broad consequences. Those include lower pay, higher job turnover and unhealthy series of changing or extended shifts with little rest.
“For too long, hourly workers at retail chains, fast food companies and other businesses have been squeezed by companies who employ unfair scheduling practices to maximize their profits at the expense of their workers,” said Jose Martinez Diaz, Workshift campaign director. The organization is asking people to sign its online petition for predictable scheduling.
In December, New York Attorney General Eric Schneiderman said Pier 1 Imports had agreed to end on-call shifts at stores nationally, posting schedules at least 10 to 14 days in advance.
His office had sent letters to 14 retailers questioning the practice and citing possible violations of New York’s requirement to pay hourly staff for at least four hours when they report for work.
Retailers that have agreed to stop included Abercrombie & Fitch, Gap, Banana Republic, Old Navy, J. Crew, Urban Outfitters, Bath & Body Works and Victoria’s Secret. Other companies contacted say they weren’t using on-call scheduling.
In April, attorneys general from eight states and the District of Columbia sent letters to retailers with outlets in their states expressing concerns about on-call scheduling. Companies included American Eagle, Aeropostale, Payless, Disney, Coach, PacSun, Forever 21, Vans, Justice Just for Girls, BCBG Maxazria, Tilly’s Inc., David’s Tea, Zumiez, Uniqlo and Carter’s.
The states were California, Connecticut, Illinois, Maryland, Massachusetts, Minnesota, New York, and Rhode Island.
By MICHAEL VIRTANEN
Source
Toys 'R' Us and the Death of Retail
When Debbie Beard found out the company she'd worked at for 29 years, Toys R Us, was closing down, she was shocked--she knew the company had been having financial difficulties for a while, but...
When Debbie Beard found out the company she'd worked at for 29 years, Toys R Us, was closing down, she was shocked--she knew the company had been having financial difficulties for a while, but didn't realize it was that bad. The more she learned, though, about the way the company had been looted by private equity firms Bain Capital and KKR, the more she determined that no one else should have to go through this. Debbie and other Toys R Us workers are organizing to demand severance pay from the company, and beyond that, organizing to stop the kind of leveraged buyouts that saddle viable companies with unsustainable debt. She joins me along with Carrie Gleason of the Fair Workweek Initiative at the Center for Popular Democracy to explain what can be done.
Read the full article here.
Progressives must find the road back to Factville
Donald Trump’s upset election, I’ve had a unique and odd experience, one peculiar to D.C. I’ve participated in a number of events — conferences, dinners, panels — that were planned before the...
Donald Trump’s upset election, I’ve had a unique and odd experience, one peculiar to D.C. I’ve participated in a number of events — conferences, dinners, panels — that were planned before the election and predicated on a different outcome. To say the mood is somber at these events is an understatement.
What has been particularly discordant is to hear policy types, myself included, discuss what we need to do going forward. These include ideas to prolong the economic recovery and help ensure that it reaches more people. Also, there’s a recession out there somewhere, and we’re not ready for it, so good ideas abound regarding preparations that Congress should undertake now while the sun’s still shining. Other ideas include some of the best parts of Hillary Clinton’s agenda, including ways to help people balance work and family, pay for college, improve the Affordable Care Act, and to push back on economic discrimination by race and gender.
When I hear myself and my colleagues make these arguments, I feel as if we’re leading a parade but have neglected to turn around and see the thin crowd that’s following us.
That is, of course, an exaggeration. Clinton won the popular vote by more than 1 percent and counting. But those of us in the facts business must at least consider how little our work seemed to penetrate in the months leading up to the election.
Already, many of us progressives have dusted ourselves off and gone right back to work, promulgating more facts and policy arguments. That’s necessary and increasingly important, as the Trump team is generating policies that sound good but are wasteful and inefficient. We’re used to playing such defense, and we’re good at it.
But if that’s all we do, we’ll be failing the people whom we’re here to help. The problem isn’t that the facts aren’t out there; it’s that they don’t seem to be gaining much traction. Moreover, there is no way an $18.7 trillion economy can be successfully managed if facts are on the run. We either solve this problem or watch our country deteriorate.
So how do we find and successfully navigate the road back to Factville?
We can gain an important hint by looking at what hasn’t worked. Many in the real media (as opposed to the “alt-right”) responded, often admirably, with fact checking, even in real time, as during the presidential debates. But listen to what Major Garrett, from CBS news, said about this on the Diane Rehm radio show the other day, incisively summarizing his experiences on the campaign trail:
“Any fact-checking I did … was prima facie evidence that I was biased and that I was wrong. Fact checking Trump was proof not that he was wrong but that he was right and that anyone who would raise a question about the underlying relationship about what he said and the facts was biased and therefore legitimately disregarded … It wasn’t as if there was a conversation about this; it wasn’t as if facts were litigated back and forth. The very raising of a question about the factual basis of a Trump assertion was proof that you were wrong and biased and that was the atmosphere that I found myself existing in as a reporter and to call it challenging would be an understatement.”
The institution of the establishment media is, in other words, not trusted by partisans who can point and click to countless other places to find “facts” that meet their priors. It’s a brilliant opposition strategy: when the act of fact-checking itself signals to partisans that you’re biased, that’s checkmate against evidence.
Next, ask yourself who benefits from the absence of evidence-based analysis? Examples are useful here. I can show, using the work of the think-tankers I’ve mentioned thus far that the social insurance programs of Medicare and Social Security are highly efficient and effective in boosting the welfare of retirees, and that there are no such private systems that would be nearly as effective. I can show the same societal-wide net benefits for the Affordable Care Act and the anti-poverty safety net. Same for countercyclical policy to offset recessions. Same for public education, from quality preschool to affordable college.
Every one of these programs is a “public good” and thus adds to the role of the government and requires ample funding provided through tax revenue. So, if you’re someone who wants to keep more of your pretax income, you must discredit such programs and the government that provides them.
I see this play unfolding as we speak: One, discredit the facts so nobody knows what works and what doesn’t. Two, pass a massive tax cut that delivers the goods to the top few percent. Three, argue, based on #1 above, that the tax cuts will generate enough growth to pay for themselves. Four, when they fail to do so and the debt starts going through the roof, throw up your hands and say you’ve got to cut the “entitlements.”
I don’t profess to know how to break this chain, but I do know this: Bringing the best ideas to fruition, where “best” means those that promote the greatest social welfare, does not depend solely on logic, numbers and the best arguments.
First, both the media and allegedly centrist policy organizations need to retire the idea that pairing fact-based analysis with unfounded bias is balanced reporting. Why should there be a debate on whether trickle-down tax cuts can double the growth rate and pay for themselves? And, yet, I’m called upon to have that debate weekly. If they can get you arguing over the wrong questions, they’ve already won.
At the very least, the media should mitigate the damage by making debates more representative of the state of knowledge on an issue — meaning, as John Oliver has pointed out, that climate change debates should generally feature 97 scientists explaining that it’s real and a problem for every three people who deny that reality.
Second, we in the think tank world need to reach beyond the choir both in our policy and our communications. I can name many think tanks that work with great energy and notable successes on the problem of poverty. I cannot say the same for the problem of helping displaced manufacturing workers.
Third, we must call it like we see it with much more intensity. I wonder if one reason the progressive base wasn’t out in force was in part because we failed to explain the stakes in clear, powerful language, naming names and directly confronting falsehoods and racism.
Fourth, and relatedly, we need to be more proactive in working with and supporting advocates and social movements. The Fight For $15, the Fed Up Campaign and Black Lives Matter are examples in recent years of people coming together to pressure politicians to act. They’ve been successful because they haven’t stopped at the facts; instead, they take the facts and integrate them with people-power and a compelling moral message.
I’m sure there are more and better ideas to reestablish facts and evidence-based policy to their necessary perch. Like I said, I’m no expert in this space: When my colleagues and I were in graduate school, we studied facts, not how to reinject them into the debate. But unless we do so and couple them with progressive political movements, I fear we may make no progress.
By Jared Bernstein
Source
Zara stores in NYC accused of discriminating against black employees and customers
According to a new report published by the Center for Popular Democracy, ZARA’s New York City...
According to a new report published by the Center for Popular Democracy, ZARA’s New York City locations have a serious problem with discrimination.
Study author Chaya Crowder writes that Zara has a “documented history of racial insensitivity in its designs, discriminatory treatment of its employees, and prejudice agains its customers.” Zara, as you may remember, is the company that caught flack for items like a bag with a swastika on it, a striped shirt with a gold star that looks very much like what Jews were forced to wear in concentration camps during the Holocaust, and a T-shirt bearing the phrase “white is the new black.” Charming stuff!
So it’s hard to be completely shocked by the report’s conclusions—after surveying employees at six of Zara’s NYC stores (for context, eight of the Spanish retailer’s 53 U.S. locations are in the city), Crowder found that most employees feel workers with lighter skin are treated better. From the report:
Employees of color agreed most strongly that ‘managers show favoritism.’ Many of the employees interviewed felt that favoritism is based on race. One employee stated ‘Managers definitely show favoritism to the Europeans.’ Another employee asserted, ‘The favoritism goes to those that are not African American or Latino’… In general, employees with a longer tenure at Zara identified favoritism, especially race-based favoritism, as an issue.
And, employees say that customers are treated with bias, as well. According to Crowder, Zara workers say that that the code “special order” is used as a way to trail suspected shoplifters in the stores. The people trailed, say employees, are disproportionately black:
A preponderance of employees surveyed mentioned a practice of labeling customers as ‘special orders,’ a security code for suspected shoplifters. Employees overwhelmingly felt that the Zara practice led to Black customers being disproportionately labeled as special orders upon entry to Zara stores.
A Zara spokesperson told the Guardian that “Zara USA vehemently refutes the findings,” adding that Crowder did not try to reach the company.
Zara’s parent company, Inditex, reiterated to Fusion in an email that Zara USA refutes the accusations, adding that the report “was prepared with ulterior motives,” and that “it fails to follow an acceptable methodology for the conduct of a credible objective survey on workplace practices, and instead appears to have taken an approach to achieve a pre-determined result which was to discredit Zara.”
But Zara is currently being sued by a former employee who says he was harassed and later fired because he’s gay, Jewish, and American.
This, of course, is not the first time a major retailer has been accused of discrimination. Back in 2013, sources at Barneys said racism against black customers was part of the culture at the luxury department store.
Zara’s parent company, Inditex, reiterated to Fusion in an email that Zara USA “vehemently refutes the claims,” adding that the report “was prepared with ulterior motives,” and that “it fails to follow an acceptable methodology for the conduct of a credible objective survey on workplace practices, and instead appears to have taken an approach to achieve a pre-determined result which was to discredit Zara.”
Source: Fusion
Black Community Seeks the Power of the Ballot
Source: Vox
For black communities in the United States, presidential election participation rates are strong and momentum is building.
In 2012, black voters showed up at the polls in the largest numbers (66.2 percent) and voted at a higher rate than non-Hispanic whites (64.1 percent) for the first time since rates were published by the U.S. Census Bureau in 1996.
Black Americans tend to vote Democratic in presidential elections. This was true by historic margins in President Barack Obama's 2008 and 2012 victories— 95 and 93 percent, respectively. And their turnout rate in 2016 could be an important factor in deciding the next president of the United States, especially in a tight race.
That's good news for black community leaders who want to ensure their voices are heard and hold future leaders accountable.
Civil rights leadership
The 2014 and 2015 cases of deadly police force against unarmed African-Americans have galvanized a tech-savvy generation of activists to inject new life in an age-old push for racial, economic and social equality.
More and more, movements such as Black Lives Matter are becoming international household names and are holding candidates accountable to specifically address and push for legislation on these issues.
One such organization, Black Alliance for Just Immigration (BAJI), engages and advocates on behalf of African-American and black immigrant communities on issues of racial justice and immigrant rights.
BAJI's policy and legal manager, Carl Lipscombe, says part of the greater push nationwide to organize and bring to light instances of police brutality results from what he describes as a community-wide fear of "being killed when walking to the corner." He says these police cases are enhanced by the advent of social media and by the ability to capture events on camera that wasn't possible in the 1980s.
Lipscombe says candidates must do more than "throw a bone" if they expect communities of color to go to the polls in droves.
"It's not enough to just say we want free education for everyone," Lipscombe said. "We want to know how this is going to impact black people."
According to the U.S. Bureau of Labor Statistics, the unemployment rate among blacks in the United States, at 9.4 percent, remains significantly higher — nearly double — than the overall rate of 5 percent nationwide.
Black wealth also has declined. The non-partisan Economic Policy Institute, in coordination with the liberal research institution Center for Popular Democracy, reports that black workers' wages have fallen by 44 cents on the hour in the past 15 years, while wages of both Hispanic and white workers have increased by approximately the same amount.
African immigrant concerns
The Migration Policy Institute reports that black immigrants from Africa are better educated than the overall U.S. population, age 25 and older.
In 2007, 38 percent held a four-year degree or more, compared to 27 percent of the U.S. population. Yet, black immigrants earn lower wages and hold the highest unemployment rate in comparison to other immigrant groups, according to the Center for American Progress.
Bakary Tandia, case manager and policy advocate at African Services Committee, a Harlem-based agency dedicated to assisting African immigrants, refugees and asylees, says progress is necessary across all levels of government.
"Even if you take the case of [New York City Mayor Bill] de Blasio,” Tandia said, “he is a progressive mayor, but in his administration, I have not seen any African immigrant appointed or in a meaningful position, and the same thing goes at the state level, at the federal level."
New leadership
Grass-roots coordinators say anti-immigration rhetoric among some presidential candidates has fueled electoral participation, as well as greater community leadership.
Steve McFarland, whose organizing efforts include get-out-the-vote campaigns among disenfranchised communities in New York, says the immigration reform movement, combined with the work of Black Lives Matter, has produced a new generation of civil rights leaders.
"It doesn't look the way that it used to look," McFarland said. "It's not big organizations, but they can mobilize people, they have a clear voice, and they are winning changes across the country."
Ahead of the 2016 presidential primaries, there is good news for Democratic frontrunner and former secretary of state Hillary Clinton. She currently enjoys an 80 percent favorability rating among adult blacks, the highest positive net rating of all candidates, according to a recent Gallup poll.
Clinton, who has met privately with Black Lives Matters activists, specifically addressed racial profiling in an October speech at Clark Atlanta University.
"Race still plays a significant role in determining who gets ahead in America and who gets left behind," Clinton said. "Racial profiling is wrong, demanding, doesn't keep us safe or help solve crimes. It's time to put that practice behind us."
Jackson Hole Summit To Provide Forum For Policymakers Amid Market Turmoil
Also getting under way at the lodge is a protest conference organized by the Center for Popular Democracy, a liberal group that has been cajoling the Fed to hold off on raising...
Also getting under way at the lodge is a protest conference organized by the Center for Popular Democracy, a liberal group that has been cajoling the Fed to hold off on raising interest rates. Some researchers, for example, argue that “core inflation” – which strips out food and energy prices and is often used by bankers as their preferred gauge – may be less relevant in a world where futures contracts, global shipping and worldwide trade help even out retail level price swings for some of those goods.
Some analysts have also said that globalization has been a factor in holding down U.S. wages and prices even at times of solid growth.
When the Fed met in June, US oil prices had recovered to over $60 a barrel, and there had been a belief that we’d seen the lows.
Inflation has been a concern for the Fed, as it has been running well below its 2 percent goal and some signs have indicated that it may fall further. London Business School professor Lucrezia Reichlin is the discussant. Yet the theory is still a useful framework to think about monetary policy. This year central bankers, finance ministers, academics and financial market participants will chewing over why inflation is so low, whether this is unsafe and what they can do about it. Investors have cut the probability of a move at that gathering to 28 percent Tuesday from 48 percent on August 18 based on trading in fed funds futures.
They confront a big disparity between the world’s two largest economies, the U.S. and China.
China’s stock market is swooning and its economy slowing.
Goldman Sachs economists wrote Wednesday that they “expect liftoff in December, and see the recent market sell-off as another argument against a hike in September“.
U.S. counterparts will experience both advantages and disadvantages if their currencies behave according to textbooks and their currencies weaken against the dollar if the Fed raises rates.
Dudley said a final decision would reflect how the market acts over the next few weeks, as well as the end-of-montheconomic data.
The absence of Yellen and Draghi has lowered expectations for a major policy announcements at Jackson Hole.
The official roster of attendees at the invitation-only event included Fed Vice Chairman Stanley Fischer and Fed governors Lael Brainard and Jerome Powell, and presidents from eight of the 12 regional Fed banks. “So you look around the world and ask who can take up the slack, and really the answer is nobody”, said Kevin Logan, chief U.S. economist at HSBC Securities, in New York.
The opening session at 10 a.m. Eastern will examine a paper on “Inflation dynamics though firms’ pricing behavior” by Simon Gilchrist, a professor at Boston University and Egon Zakrajsek, an associate director for monetary affairs at the Fed Board of governors.
The vice chairman is considered extra inclined than Yellen to boost charges prior to later, so his statements might make clear how the talk contained in the central financial institution might transpire when officers meet September 16 and 17.
Source: Rapid News Network
A Call to Action From NMAC & Housing Works
People in the movement might be surprised by a joint letter from Charles King of Housing Works and me, but these are not ordinary times. NMAC is writing this letter to invite constituents at this...
People in the movement might be surprised by a joint letter from Charles King of Housing Works and me, but these are not ordinary times. NMAC is writing this letter to invite constituents at this year’s United States Conference on AIDS to join Housing Works efforts on Wednesday, September 6, to greet Congress on its return from summer recess with a rally for the care we need to survive—sign up here!
These are confusing times with no clear roadmap. Since NMAC is hosting the HIV/STD Action Dayon the same day, we want everyone to be aware of our mutual support and collective goal to not just save the Affordable Care Act, but to also strengthen our vision of ending AIDS as an epidemic. This can only happen when affordable health care becomes a human right for everyone.
Read the full article here.
Fed Splits Evident Amid Wait for Yellen: Jackson Hole Journal
Bloomberg News - August 22, 2014, by Jeff Kearns, Simon Kennedy and Michael McKee - Divisions within the Federal Reserve over how long to...
Bloomberg News - August 22, 2014, by Jeff Kearns, Simon Kennedy and Michael McKee - Divisions within the Federal Reserve over how long to keep easy monetary policy are already in evidence in Wyoming as investors prepare for Chair Janet Yellen’s keynote speech.
Fed Bank of St. Louis President James Bullard told Bloomberg Radio that the U.S. central bank may begin tightening monetary policy earlier than officials previously expected.
“The evidence is leading toward an earlier increase than would have been in the works earlier this year,” said Bullard. “Labor markets have improved quite a bit relative to what the committee was thinking.”
Bullard spoke after Kansas City Fed President Esther George told Bloomberg Television that broad-based employment gains suggest the U.S. economy is strong enough to withstand higher interest rates. Philadelphia Fed President Charles Plosser, who voted against the Fed’s policy statement last month, told CNBC he’s concerned about the Fed not adjusting policy appropriately.
By contrast, Atlanta Fed President Dennis Lockhart urged more patience, warning in a separate interview with Bloomberg Radio against “moving prematurely and snuffing out some progress.”
* * *
Robots don’t steal jobs, the U.S. labor market is less flexible than it was and workers haven’t suffered unprecedented periods out of work.
Photographer: Bradly Boner/Bloomberg
Fed Chair Janet Yellen arrived at the dinner to be greeted by about 10 people wearing bright green T-shirts emblazoned with “What Recovery?” and carrying placards with labor market data. Close
Those are among the conclusions of papers being presented at the symposium. Here is a review of their contents, which can be read in full on the Kansas City Fed’s website.
Robots and computers don’t steal as many jobs as some believe, and automation actually benefits many workers, Massachusetts Institute of Technology Professor David Autor said in his paper.
A key reason humans aren’t obsolete yet is that simple tasks such as visually identifying a chair, which any child can do, aren’t so easy for engineers to teach to computers, Autor said.
“Journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities that increase productivity, raise earnings, and augment demand for skilled labor,” he wrote. “Challenges to substituting machines for workers in tasks requiring flexibility, judgment, and common sense remain immense.”
* * *
The U.S. labor market became less fluid in recent decades partly because of an aging workforce, a shift to older businesses, and the spread of occupational licensing and certification, economists Steven J. Davis and John Haltiwanger wrote in their paper.
The economists define labor market fluidity as “flows of jobs and workers across employers.” The paper found the U.S. “underwent a large, broad-based decline in the pace of labor market flows in recent decades.”
“An aging workforce is a factor behind the slowdown of worker reallocation,” the paper said.
* * *
U.S. workers in the aftermath of the 2007-2009 recession haven’t experienced unprecedentedly long bouts of non-employment, according to a paper by economists Jae Song and Till von Wachter.
Their findings “suggest that the potential for hysteresis in the aftermath of the Great Recession is moderate,” the paper said. Hysteresis posits that people out of work for too long have a harder time finding work, leading to a persistent decline in the employment-to-population rate
* * *
Policy makers would benefit from a better understanding of labor markets, economist Giuseppe Bertola argued in a paper that weighed the impact of rules making those markets rigid or flexible.
Rules that protect workers from job losses and provide more generous unemployment benefits can soften and smooth shocks to the economy, said Bertola.
* * *
George opened the symposium late yesterday by putting the presenters on the spot.
The last conference devoted to labor markets was 20 years ago, George told the group of almost 200 as they ate steak and salmon dinners beneath elk antler chandeliers.
The presenters and discussants back then included five future Nobel Prize winners and two academics who would go on to be central bankers: Bank of England Deputy Governor Charles Bean and Stanley Fischer, the Bank of Israel governor who became Fed vice chairman in June. Fischer sat at one of the front tables last night.
“So for those of you that will be on the program,” George said to laughter, “We’re either setting you up for a blessing or a curse.”
This year’s topic is “Re-Inventing Labor Market Dynamics.” In 1994 it was “Reducing Unemployment: Current Issues and Policy Options.”
George said she went through the 1994 proceedings only to find central bankers and economists are still grappling with some of the same basic issues today.
“I saw that the discussion included things like the decline in demand for low-skilled workers due to technology and the challenge of the long-term unemployment,” George said. “And questions were raised by that symposium, as they are today, about the usefulness of the unemployment rate as a measure of economic slack.”
It reads like a list of the most vexing issues the Fed faces now and will be attempting to tackle today and tomorrow.
* * *
Fed Chair Janet Yellen arrived at the dinner to be greeted by about 10 people wearing bright green T-shirts emblazoned with “What Recovery?” and carrying placards with labor market data.
The protesters had traveled to Wyoming to highlight the plight of “struggling workers from around the country” who want the Fed to pursue “full employment that reduces poverty and expands the middle class,” according to the Center for Popular Democracy, a Brooklyn-based organization. The backs of their T-shirts had a graph comparing the performance of wage growth among the top 1 percent and the rest.
Ady Barkan, a staff attorney with the group, spoke briefly with Yellen at the door of the lodge’s Explorers Room. “She said she understands the issues we’re talking about and is doing everything they can,” he said, after she had entered the room.
Yellen has regularly cited weak labor markets as a scourge of the economy she’s trying to boost with easy monetary policy.
Shemethia Butler, who works part time at a McDonald’s Corp. restaurant in Washington, was one of those to make the trip. The 34-year-old said that while she isn’t up on monetary policy, she wants policy makers to know she fears higher interest rates for her and her community. She said she works 25 to 35 hours a week for $9.50 an hour at a job she’s had for just over a year. Before that she was unemployed for two years.
“There’s no recovery,” Butler said. “The economy is broken because there aren’t enough jobs for people like me.”
* * *
Yellen’s speech will be the main event of the first full day of the conference. She will speak at 8 a.m. Mountain Time today.
Her address will be followed by the presentation of the paper by Davis and Haltiwanger.
Autor will then discuss job polarization before a panel on demographics featuring Karen Eggleston of Stanford University, David Lam of the University of Michigan and Ronald Lee of the University of California, Berkeley.
European Central Bank President Mario Draghi will deliver the keynote luncheon speech.
Tomorrow, Von Wachter and then Bertola will present their papers.
The final panel will provide an overview of labor markets and monetary policy. It will include Bank of England Deputy Governor Ben Broadbent, Bank of Japan Governor Haruhiko Kuroda and Brazilian central bank chief Alexandre Tombini.
* * *
The conference is lacking Wall Street participants for the first time.
An exception is Jacob Frenkel, chairman of JPMorgan Chase International, who is attending in his capacity of chairman of the board of trustees of the Group of 30, a private-sector group of mainly former policy makers which advises central banks and governments. Tim Adams, president of the Institute of International Finance, is also present.
Draghi, Kuroda and Bank of Canada Governor Stephen Poloz provide international central banking firepower.
Among academics in attendance are Alan Blinder of Princeton University, Harvard University’s Kenneth Rogoff and Martin Feldstein, and John Taylor of Stanford University. President Barack Obama’s administration is represented by Jason Furman, chairman of the Council of Economic Advisers and Jeffrey Zients, director of the National Economic Council.
* * *
The backdrop for the symposium and Yellen’s speech was set by the release of the minutes from the Federal Open Market Committee’s July discussions.
Fed officials in July raised the possibility they might raise rates sooner than anticipated, as they neared agreement on an exit strategy. Some participants were “increasingly uncomfortable” with the pledge to keep interest rates low for a “considerable period,” the minutes said.
At the same time, “many participants” still saw “a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization.”
* * *
* * *
Some recent stories on the U.S. labor market:
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The opening day of Jackson Hole has been associated with stock-market gains in each of the past seven years. The Standard & Poor’s 500 Index rose an average 1.3 percent on each of them from 2007 to 2012, following speeches by then-Chairman Ben S. Bernanke, who skipped last year’s conference.
The biggest climb was the 1.9 percent of 2009, when Bernanke said the economy appeared to be “leveling out.” Gains also followed his signals of 2010 and 2012 that fresh asset-purchases were imminent.
The bar is therefore set high for Yellen who identifies slack labor markets as a reason for easy monetary policy. Economist Ed Yardeni says the “Fairy Godmother of the Bull Market” won’t let us down.
Still, Steven Englander of Citigroup Inc. says that because “dovishness is increasingly anticipated,” Yellen may have to intensify her support for low interest rates if risk-assets such as stocks are to rally anew.
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2 months ago
2 months ago