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National unemployment is, at best, 7.8 percent, and by some measures as high as 14 percent, when those who are marginally attached to workforce and those who have given up searching for work entirely are factored in.
Plosser points out that 8.8 million jobs were lost between January 2008 and February 2010. Since 2011, the U.S. economy has employed just 153,000 people per month on average, a pace that by any definition is painfully slow. Unemployment has fallen 1.7 percent over the last two years, and Plosser optimistically projects that it will fall towards 7 percent by the end of 2013.
One of the major problems, as Plosser points out, is that “the labor force needs to be at least partially retooled to match the skills employers demand. Even within sectors such as manufacturing, the skills of workers now being hired are different from those who were let go.”
But Plosser argues that education and re-training will not only take time, but that alone it’s not enough. “Establishing training programs, investing in education, and adopting immigration reforms can increase the quality of our work force and enhance future productivity growth,” he said. Beyond that, the policies coming out of Washington set the stage for the unemployed and employers both.
The health of the labor market is the backbone of long-term economic growth and should be the focus of economic policy making. Unfortunately, the current stimulus strategy employed by the Federal Reserve misses the core problem (the labor market) and may backfire in the long run…
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