By Rick Manning
Federal Reserve Chair Janet Yellen will be speaking on August 22 on the nation’s employment situation at a meeting of the Fed in Jackson Hole, Wyoming.
Yellen’s speech is expected to explain some of the factors that she uses to look beyond the headline unemployment rate that has been dropping steadily over the past two years.
Factors that she is likely to highlight will be the underemployment rate (also known as U-6), which adds the number of people who are unemployed, employed at a temporary or part-time job but want full time employment, and marginally attached workers. This indicator which does a better job of incorporating those who have been left behind by the economic recovery currently sits at 12.2 percent down from 14.3 percent a year ago. By comparison, the U-6 rate in July 2004, ten years ago, sat at 9.5 percent.
Yellen is also likely to look at the falling labor participation rate and more importantly at who is falling out of the workforce. While many demographers seek to make the case that the decline is due to our aging population, a in-depth review of Bureau of Labor Statistics data by Americans for Limited Government’s Robert Romano showed that a significant portion of those dropping from the workforce are younger people.
A result that has disastrous long-term consequences to the economy over the decades ahead, as a smaller and smaller percentage of workers in their prime years are engaged in the above board, taxpaying system.
If Yellen glosses over this challenge, or fails to mention it at all, it can be hoped that she will be asked why by those in attendance.
Other employment factors that are at the top of analysts minds are likely the persistently high unemployment rate among African American youths, and how the President’s push to provide legal avenues for illegal aliens to enter the workforce are expected to impact them.
U.S. Civil Rights Commissioner Peter Kirsanow expressed his concerns about this problem and the impact that granting amnesty to millions of illegal aliens would have in an August 4, 2014 letter to the President writing, “Granting legal status to millions of people who are in the United States illegally will continue to depress wages and employment opportunities of African-American men and teenagers. It also will depress the wages and employment opportunities of African-Americas going forward.”
It is also likely that Yellen will cover issues related to stagnant wages, and the impact on the slowly growing American economy to produce an abundance of good paying jobs unlike previous recoveries.
While a speech by a Federal Reserve Chairman is only normally anxiously awaited by executives of major bond companies like Goldman Sachs, and Chase Manhattan, it does promise a rare glimpse into the thinking of the Chair and will reveal what parts of the overall employment situation she views as important.
For a change, this one might be worth catching on YouTube.
The author is the vice president of public policy and communications for Americans for Limited Government.
