Minnesota pension board looks at private equity strategy
Minnesota pension board looks at private equity strategy
Toys R Us has not fared well in recent years. And critics, led by New York’s populist-leaning Center for Popular...
Toys R Us has not fared well in recent years. And critics, led by New York’s populist-leaning Center for Popular Democracy, accused the huge equity-investment firms of making hundreds of millions in fees and dividends on the failed retailer over the years.
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Warren leads crusade for diversity at Fed
Warren leads crusade for diversity at Fed
“I’m judging John Williams based on the last several years of him being wrong about the levels of maximum employment...
“I’m judging John Williams based on the last several years of him being wrong about the levels of maximum employment and pushing for additional [interest rate hikes] prematurely because that mistake puts millions of jobs at risk,” said Shawn Sebastian, who co-leads the Fed Up coalition comprising advocacy groups and unions.
Read the full article here.
One Word Could Be Worth a Million Jobs
One Word Could Be Worth a Million Jobs
Supporting a strong job market is a big part of the U.S. Federal Reserve's mandate. Fed officials, though, interpret...
Supporting a strong job market is a big part of the U.S. Federal Reserve's mandate. Fed officials, though, interpret that goal differently than most observers do. For the economy's sake, Congress should step in to resolve the discrepancy.
Specifically, the Federal Reserve Act instructs the central bank to promote "maximum employment" and "stable prices." Most people understand these instructions as meaning the Fed should seek to generate as much demand for workers as possible without causing an unduly large increase in prices.
The website of the Fed's Board of Governors, however, makes a slight modification to the jobs mandate: "maximum sustainable employment." Innocuous as it may seem, that one word can make a big difference.
How? Well, suppose inflation is running below the Fed's 2 percent target and the unemployment rate is at 5 percent, which officials consider to be its long-run level (pretty much the current situation). They can choose between two monetary policies, which are expected to result in the following paths for the unemployment rate:
Most observers would opt for the second policy. It's more aggressive, so it will get inflation back to target sooner. Even better, the unemployment rate is the same or lower every year, and by a significant amount: One percentage point is worth more than a million jobs.
The word "sustainable," however, means that the Fed views any deviation from the long-run unemployment rate -- up or down -- as undesirable. When officials speak of the economy “overheating” or “running hot” in the absence of inflationary pressures, this is what I think they have in mind. So they would see unemployment as running too low under policy 2.
Some Fed officials worry that “overheating” could trigger a recession. (I don’t understand the precise economic mechanism, but let’s leave that aside.) They think policy 2 might generate the following path for the unemployment rate:
Policy 2: Possible Recession Outcome
In 2019 and 2020, the economy falls into recession. From the Fed’s perspective, this unemployment path is terrible, because the rate is either too low or too high for the next four years.
It's easy to imagine, though, that many people would be willing to trade the risk of recessionary pain in 2019 and 2020 for the near-term gain of 2017 and 2018. They might even believe there's some chance that policy 2 will generate an outstanding outcome -- if, for example, the long-run unemployment rate is actually lower than the Fed thinks it is. Here's how that would look:
This interpretational divide was on full display last month, when Fed officials met with representatives of the pro-employment activist group Fed Up. The activists largely assumed that the central bank was contemplating near-term interest-rate increases to keep inflation in check. But most of the officials downplayed inflation, invoking instead the need to keep the economy from running too hot (which some said could lead to a recession).
I find it hard to believe that the Fed's approach is consistent with Congress's intent as expressed in the Federal Reserve Act. That said, it's really up to legislators to provide an unequivocal answer, which could matter a lot for the economy over the next few years.
By Narayana Kocherlakota
Source
Why You Should Care About the Federal Reserve’s Secrecy and Elitism
New Republic - Last weekend, Cee Cee Butler, a 34-year-old McDonald’s worker from Washington D.C., became sick with the...
New Republic - Last weekend, Cee Cee Butler, a 34-year-old McDonald’s worker from Washington D.C., became sick with the flu, or at least something that resembled the flu. Her phone had been cut off and she missed work Friday, Saturday and Sunday. “I did a ‘no-call, no-show’ for three days and I’ve never done that in over the year and a half I’ve been working here at McDonald's,” she said. “They terminated me Tuesday morning. So I lost my job, my rent is going up in December, I have two kids—19 and 5, a girl and boy—and I can’t afford to take care of them.”
On Friday, Butler gathered outside the Federal Reserve building with around two dozen activists from labor unions and progressive groups before an afternoon meeting with Fed Chair Janet Yellen. The groups are part of a new campaign called “Fed Up” that is pressuring Yellen and her colleagues to keep interest rates at zero until the recovery strengthens and wages rise. “The economy is not working for the vast majority of people,” said Ady Barkan, a lawyer from The Center for Popular Democracy, which is the lead organizer of the campaign. Fed Up wants to rectify that problem by putting direct pressure on the Federal Reserve itself—a quest that may not captivate the public’s attention but could have a very real effect on the lives of working Americans.
In August, for instance, members of Fed Up staged protests outside of the Federal Reserve’s annual monetary policy conference in Jackson Hole, Wyoming. Many reporters there said it was the first time they could remember protestors at the conference—but their tactics must have worked, because Yellen agreed to meet with the protesters Friday afternoon in the boardroom where the Federal Open Markets Committee (FOMC) meets eight times a year to set monetary policy. Three other Federal Reserve governors—Vice Chair Stanley Fischer, Jerome Powell and Lael Brainard—joined the meeting and the activists said that Yellen was engaged throughout and was moved by the stories she heard. They hope that this meeting was just the first of many in the future.
The message the Fed Up campaign delivered is the same one voters sent loud and clear last week: The recovery is not being felt by millions of Americans. Exit polls indicated that 45 percent of voters considered the economy the most important issue of the midterms. Wage growth for low-income workers, like janitors and fast food workers, are barely keeping up with inflation. “That’s not an economic recovery,” said Jean Andre, who does location support for film production and is a member of New York Communities for Change. “That’s not the way thing should be.”
But the slow recovery isn’t always noticeable in leading economic indicators. The unemployment rate, for instance, has fallen 2.1 percentage points since the start of 2013 and is now at 5.8 percent, its lowest point in more than six years. As a result, some economists inside and outside the Fed, including inflation hawk Charles Plosser, have called for a hike in interest rates in the near future. “Beginning to raise rates sooner rather than later reduces the chance that inflation will accelerate and, in so doing, require policy to become fairly aggressive with perhaps unsettling consequences,” Plosser, the president of the Federal Reserve Bank of Philadelphia, said Wednesday.
Plosser’s worry about rising inflation, even though it is nowhere to be found, could prove dangerous. If the FOMC listens to the hawks, it will prematurely raise rates and choke off the recovery before workers see wage growth. So far, Yellen has done a good job ignoring Plosser and Co. And, luckily, Plosser and Richard Fisher, the president of the Dallas Federal Reserve Bank and another hawk at the FOMC, announced that they would retire in the spring of 2015, opening up two positions that have a significant impact on monetary policy. Fed Up sees their retirements as a boon—and is keen to have a say in the selection process.
Under the current rules, Plosser and Fisher’s replacements will be chosen by the board of the Philadelphia and Dallas reserve banks, respectively. Each board has nine members, three from banks and six from nonbanks—companies and organizations that are not financial institutions. Because of Dodd-Frank restrictions, only the six non-bank members are involved in selecting the replacements. But of those six members, three are chosen by banks and three are chosen by the Fed board in Washington. Workers and consumers are supposed to be represented on the board, but of the 108 members, 91 are from financial institutions and corporations. Just two are leaders of labor groups and another 15 represent non-profit organizations.
Fed Up has a list of demands to make the replacement process more transparent and to ensure the public has adequate representation within the central bank. They want a public schedule of the process, a list of criteria for how the replacements will be chosen, a chance for members to question the candidates, and public forums where citizens can discuss monetary policy with candidates and the search committee. These reforms, they hope, will keep presidents like Plosser and Fisher—who activists say are disconnected from the daily struggles of their constituents—out of office. “We need a president in Philadelphia who will listen to working people,” said Kati Slipp, the director of Pennsylvania Working Families. “Charles Plosser hasn’t been or he would not believe that our economy has really recovered.” In fact, Fed Up is already getting results. On Friday morning, the Philadelphia Fed announced that it was setting up an email to receive inquiries about the search process. “That would never have happened if this campaign hadn’t happened,” Slipp said. The campaign said it expected the same things from the Dallas Fed.
After Republicans destroyed Democrats in the midterms, many liberal commentators argued that a fresh agenda for raising wages could help the Democratic Party win back voters, particularly those in the white working class. But the problem isn’t that Democrats’ ideas—raising the minimum wage, investing in infrastructure and strengthening the safety net—won’t help middle- and lower-class Americans. It’s that the weak recovery has destroyed those ideas’ political salience. It’s a political problem much more than a policy one.
Such arguments almost always ignore monetary policy. After all, no one but Ron Paul fanatics care about the Federal Reserve. And the Fed is independent from the federal government. If a Democratic candidate’s economic message was to fill the FOMC with economists committed to keeping interest rates low or even adopting a different monetary policy regime altogether, voters would likely roll their eyes. It would be a political disaster. But given congressional gridlock, it might also be far more effective at boosting the recovery.
The Fed Up campaign isn’t going to change that. Millions of Americans will not suddenly realize that the most important economic actor in the United States is not the president or Congress but the Federal Reserve. They will not understand that some inflation is needed, especially right now, to convince businesses to invest and consumers to spend money to get the economy back going again. But the campaign may convince some Americans of the Fed’s importance. That’s why Cee Cee Butler, the former McDonald's worker who was fired Tuesday, and Jean Andre, the man who scouts out locations for films, spent a cold Friday morning outside the Fed.
“I just got out of the shelter two years ago and here I am about to be back in one. I’m not trying to go back there,” Butler said. “My daughter will never walk in my shoes. She doesn’t need to. That’s why my voice needs to be heard.”
Source
Five Long Island nonprofits to share $70,000 in grants
Five Long Island nonprofits to share $70,000 in grants
Five Long Island nonprofits concerned with progressive social change were awarded funding by the Long Island Unitarian...
Five Long Island nonprofits concerned with progressive social change were awarded funding by the Long Island Unitarian Universalist Fund, which doled out $70,000 in its first round of grants for 2017. Three organizations received $15,000 apiece. These are the Center for Popular Democracy, which will use its award to organize elected officials on Long Island around progressive public policy solutions. The Child Care Council of Suffolk’s award has been earmarked for a graduate coalition for parents who have completed parent leadership initiative training, while the Pulse Center for Patient Safety and Advocacy will use its $15,000 award to train and empower African-Americans to advocate for better medical care.
Read full story here.
EXCLUSIVE: Latino, immigrant construction workers more likely to die on job in NYC: study
New York Daily News – Thursday, October 24, 2013 - Just 41% of all construction workers in New York City identify...
New York Daily News – Thursday, October 24, 2013 -
Just 41% of all construction workers in New York City identify themselves as Latino — but they account for 74% of the fatalities from accidents.
One worker was pouring concrete in a construction site on Brooklyn’s Brighton 5th St. when the building’s fourth floor collapsed, smashing down to the second floor and crushing him to death.
Another was removing pipe from a warehouse when it suddenly shifted, causing him to fatally fall 10 feet to the ground.
A third was up on a ladder installing safety gear for a construction site when he accidentally touched a live electrical wire and fell through the building’s ceiling. He dropped 92 feet to his death.
All of these incidents happened in New York City in 2011, and when inspectors looked into the deaths, they found multiple workplace violations and, on a form, checked the same box — identifying the workers as “Latino and/or immigrant.”
Latino and immigrant construction workers are dying on the job in New York City in disproportionate numbers, according to a new study set to be released Thursday.
A review of all of the fatal falls on the job investigated by the federal Occupational Safety and Health Administration from 2003 to 2011 found that 74% of construction workers who died were either U.S. born Latinos or immigrants.
According to census figures, just 41% of all construction workers in New York City identify themselves as Latino.
“The data we have demonstrates that Latinos and immigrants are more likely to die in these types of accidents,” said Connie Razza from the Center for Popular Democracy, which compiled the report.
Safety violations are more common at job sites run by smaller, non-union contractors — which in turn are more likely to hire immigrant day laborers, the report’s researchers said, citing a New York State Trial Lawyers Association study.
“Contractors aren’t taking simple steps to protect their workers,” said Razza. “They are not providing the training and the safety equipment that are required by law.”
Immigrant workers — especially day laborers — may be reluctant to report safety hazards because they are afraid of being told to leave for the day or losing their job altogether, advocates say.
Razza’s group is fighting potential changes to New York state’s scaffold law, which holds owners and contractors who did not follow safety rules fully liable for workplace injuries and deaths. They say the law gives businesses a strong incentive to keep workplaces safe.
“We really see that law as a necessary stopgap for the workers who work at elevations,” she said.
But contractors who are seeking to modify the law — so that jurors can consider evidence from contractors when making monetary decisions instead of holding them strictly liable — say it goes too far and has caused their insurance costs to skyrocket.
State Assembly leaders have historically blocked proposed changes.
“All we’re looking for is the ability to have the same right as anybody else would in the American jurisprudence system,” said Louis J. Coletti, president and CEO of the Building Trades Employers’ Association.
“Over the last 3 years, insurance costs for general liability on the private sector have increased over 300%.”
Source
Puerto Rico Activists Crash Federal Reserve Panel With Creative Protest
Puerto Rico Activists Crash Federal Reserve Panel With Creative Protest
NEW YORK — Over a dozen activists descended on a building where Federal Reserve chair Janet Yellen and her three living...
NEW YORK — Over a dozen activists descended on a building where Federal Reserve chair Janet Yellen and her three living predecessors were speaking on Thursday to demand that the Fed bail out Puerto Rico’s cash-strapped government.
The demonstrators, who are affiliated with the progressive Fed Up coalition, distributed Puerto Rican flags and empanadas as Puerto Rican music played outside Manhattan’s International House, a student residence. Yellen was there for an unprecedented panel discussion alongside past Fed chairs Ben Bernanke, Paul Volcker and Alan Greenspan, who participated via videostream.
The activists were joined by Puerto Rican lawmaker Manuel Natal, who was in town to participate in a panel discussion hosted by City Council Speaker Melissa Mark-Viverito on Friday.
“They have two mechanisms under their authority to help Puerto Rico: one is to provide a bailout to Puerto Rico similar to the one they did to banks, the same banks that are now in Puerto Rico making a fortune out of our fiscal situation,” Natal said. “And the second would be to buy our debt” and charge Puerto Rico interest rates that are lower than the market would offer.
The activists claim that since the Fed had the authority to buy trillions of dollars of bad debt from Wall Street banks after the 2008 financial crisis, it can do the same for the debt of Puerto Rico.
Economic observers with knowledge of the Fed’s functions consider that argument dubious. Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who was an economist at the Fed Board of Governors for many years, said that the Fed is not allowed to buy municipal debt — of the kind Puerto Rico owes — that comes due over a period longer than six months. He also said such a purchase would be inconsistent with the Fed’s dual mandate of maintaining price stability and full employment.
The Fed has “never bailed out any insolvent entity as far as I know. They always demand collateral sufficient to cover any loan,” Gagnon said, as the Fed did when it provided aid to major U.S. banks.
Natal, the lawmaker, also believes some of Puerto Rico’s debt has been issued unconstitutionally and can therefore be nullified.
Greg Williams, a spokesman for Jubilee USA, a coalition of faith-based groups that advocates for global debt relief policies, declined to endorse a Fed bailout, but suggested the Fed could broker a deal instead.
“We support a proposal where the Fed facilitates a restructuring process,” Williams said.
More important than the details of the demonstrators’ demands, however, is the protest’s political symbolism in the midst of a heated battle over Puerto Rico’s future. The demonstration was perhaps the most colorful in a series of political moves and counter-moves by the Puerto Rican government and its sympathizers on one hand and the commonwealth’s bondholders and their allies on the other. Both seek to influence a congressional rescue plan that could enable Puerto Rico to restructure its debts.
Members of Congress from both parties are negotiating changes to the draft of a relief bill released last week by the House Committee on Natural Resources, which has jurisdiction over U.S. territories.
But many in Puerto Rico, and some progressives in the mainland United States, object to the Washington-based federal oversight board the bill would introduce to audit Puerto Rico’s finances and recommend reforms. Under the terms of the bill, Puerto Rico would pursue voluntary compromises with its creditors; failing that, the board could greenlight court-supervised debt restructuring that would force bondholders to accept the losses.
Those critics of the draft bill — including lawmaker Natal — view the board as having the trappings of American colonial rule over Puerto Rico.
Critics of the draft House bill say it has the trappings of American colonial rule over Puerto Rico.
They also argue that Puerto Rico should not have to meet any conditions to gain access to court-supervised debt restructuring. Puerto Rico, unlike the fifty mainland states, lacks the power to grant its municipalities and public corporations federal bankruptcy protections.
Puerto Rico is taking a multi-pronged approach to secure debt relief that appears designed to increase its leverage with creditors and win terms that are as favorable as possible.
The island’s governor, Alejandro Garcia Padilla, signed a bill on Wednesday that would empower him to declare a state of emergency and enact a moratorium on the island’s $70 billion debt. Puerto Rico’s next major debt payment — a $422 million tranche — comes due on May 1.
Daniel Hanson, a Puerto Rico specialist for the financial analysis firm The Height, wrote in an email newsletter that Puerto Rico’s creditors will likely challenge the moratorium in court, where Puerto Rico’s “playbook is not likely to be persuasive to American courts adjudicating the contracted rights of creditors.”
Garcia Padilla has said the island is incapable of paying its debts in full. Puerto Rico has enacted spending cuts and tax hikes in recent years that have stifled its economy and depleted its social services, creating a situation that many people already characterize as a humanitarian crisis.
Puerto Rico also argued for the right to enforce a local bankruptcy law that went before the Supreme Court last month after lower courts had blocked the island from putting it into effect. The high court is expected to rule in the case by late June.
In Congress, Democrats sensitive to Puerto Rico’s plight — and solicitous of the votes of former island residents living on the mainland — hope to dilute some of the proposed oversight board’s sweeping powers.
The Height’s Hanson, however, expects subsequent iterations of the House bill to be “more creditor-friendly,” he wrote.
Meanwhile, organizations representing Puerto Rico’s powerful creditors have stepped up their efforts to amend the legislation to limit the restructuring authority that the island would get. The commonwealth’s bondholders include a significant number of so-called vulture funds, which are hedge funds that have bought its debt from other creditors at discounted rates on the promise of recovering the obligations’ original full-dollar value.
A group called Main Street Bondholders, which claims to represent ordinary retirees, has created a web site attacking the draft House bill for granting Puerto Rico “super Chapter 9” bankruptcy protections.
Main Street Bondholders is associated with the conservative seniors group 60 Plus, which played an active role in the fight against the Affordable Care Act. The New York Times reported in December that 60 Plus is funded by a handful of large, anonymous donors and was recruited into the effort by a Republican public relations firm that also represents BlueMountain Capital, a creditor that has been outspoken against federal government help for the island.
The fight over whether to help Puerto Rico has reached the bottom rung of American discourse — cable news ads paid for by undisclosed donors. The ad, which ran on CNN and was paid for by the Center for Individual Freedom, urges Congress to “stop the Washington bailout of Puerto Rico.” The Virginia-based conservative group does not disclose its donors. It was founded in 1998 to combat government restrictions on smoking.
The CFIF did not respond to a Huffington Post question about whether any of its funders have a financial stake in the outcome of the Puerto Rico bailout.
By Daniel Marans & Ben Walsh
Source
Spreading a Minimum Wage Increase From Los Angeles to the Whole Country
Our economy has long been out of balance. Workers' efforts across the country create wealth, but the profits don't get...
Our economy has long been out of balance. Workers' efforts across the country create wealth, but the profits don't get to the working people who produce them. Correcting that so that workers are paid enough to sustain their families and make ends meet, is not easy. It requires changing rules that unfairly favor the rich and are written by politicians beholden to the wealthy. That's why the recent move by Los Angeles to raise the minimum wage to $15 is so meaningful.
Conceived and fought for by workers and grassroots organizations, the $15 minimum wage is a people-powered victory that will improve the lives of Angelenos for generations. More importantly, this victory signals an irreversible change in the broader fight for a decent wage in cities around the country. It inspires hope that we can finally make work pay enough to live on.
The brave families that fought for change include people like Sandra Arzu, a single mother who works for Health Care Agency at $9 per hour - barely enough to survive in Los Angeles. It is people like Sandra and their families who power the country's second-largest city.
Just like Sandra, other mothers, brothers, sales representatives and servers around the country deserve the opportunity to sustain their families. Everyone who works hard should be able to make ends meet.
We came together in Los Angeles for our families, but also to join something bigger than us. We saw what was done in other cities - San Francisco, Chicago and Seattle have all raised their minimum wage recently - and we picked up on that momentum.
Through organizing and hard work, our communities stood together and demanded change. Organizations like Alliance of Californians for Community Empowerment, the Center for Popular Democracy, and our partners and allies brought workers to the forefront and helped make history.
The result speaks for itself: an increase in the minimum wage in yearly increments, reaching $15 by 2020 for large employers. Businesses with 25 or fewer employees will have more time, until 2021. A recent study with comparable figures shows that almost 800,000 people stand to benefit. That's more than 40 percent of LA's workforce. And there will be further increases to the minimum wage with rising consumer prices, meaning that minimum wage workers won't fall further behind. It's not hyperbole; this is a victory for generations of Angelenos to come.
In New York, there is a vibrant Fight for $15 movement that has already led to Gov. Andrew Cuomo taking initial steps in favor of an increase in wages for tipped workers. Organizers in Oregon and Washington, DC are gearing up to make minimum wage fights a big part of their agendas next year. Other cities looking at increases include Portland, Maine, Olympia; Tacoma, Washington; and Sacramento and Davis, California.
Here is some of what this could mean across the country. No one will get rich off a $15 minimum wage; it adds up to just over $31,000 per year for a full-time worker. But there will be enormous benefit for local economies and household budgets. Poverty will be reduced.
According to the National Employment Law Project, a full 42 percent of U.S. workers make less than $15 per hour. People of color are overrepresented in jobs paying less than $15 an hour, and female workers make up 54.7 percent of those making less than $15 per hour, even though they make up less than half of the overall U.S. workforce. African-American workers make up about are about 12 percent of the total workforce, but they account for 15 percent of the sub-$15-wage workforce. Latinos constitute 16.5 percent of the workforce, but account for almost 23 percent of workers making less than $15 per hour. Inequality is never acceptable, and a $15 minimum wage would mean enormous progress in fighting it.
Ultimately, the fight in LA and around the country is about determining what kind of country we want to live in. In LA, we did it, and we continue the fight across the country until everyone who works can make ends meet and have a say in their future. The future for the fight for $15, our households and children looks a little brighter thanks to the victory here. We can't wait to see what our friends in other cities will do to take this fight further.
Source: Truthout
Activists Protest Universities Over Investments In Puerto Rico Bondholders
Activists Protest Universities Over Investments In Puerto Rico Bondholders
A coalition of social and economic justice groups has launched a one-week campaign to end what they view as problematic...
A coalition of social and economic justice groups has launched a one-week campaign to end what they view as problematic university investments. The New York-based Center for Popular Democracy (CPD) and partner organizations including three Make the Road branches will hold six protests along the East Coast, calling on Columbia, Harvard and Yale to pull their investments out of hedge funds that hold Puerto Rican debt and have advocated austerity measures in the U.S. territory, leading to mass school closings and higher tuition costs.
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...
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.
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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.”
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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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20 hours ago
20 hours ago