18 Comments
Feb 15, 2023Liked by Claudia Sahm

I agree. The Fed is an “independent” department that should be more transparent and communicate clearly so that the public can understand its rationale. Instead, we get plain-spoken comments from the Minneapolis Fed Governor such as how he’s “going to teach Wall Street a hard lesson.” That strikes me as in productive, as well as an expression of ego.

We have a solution to the coming long-term shortage of labor:

https://www.prisonpolicy.org/reports/pie2022.html

The U.S., far and away, imprisons a higher percentage of its people when compared to other advanced economies. Instead of complaining about a lack of workers or qualified workers, prisoners who pose no threat to society should be treated for behavioral problems and trained for employment that best fits their aptitude. The amount of money spent to imprison people is far greater than releasing them into a system of counseling and skills training. I’ve hired and worked with former felons. Many are smart and hard-working. People on a variety of spectrums (e.g., ADD, Asperger’s, Autism) have been hired and trained to work in all levels of employment. The shortage of legitimate labor required to keep growing the economy exists in the prison system -- and we’re paying through the teeth to keep it there?

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Feb 15, 2023Liked by Claudia Sahm

I had just shared this article on Twitter and yes I agree that the fed could be more transparent regarding rate hikes, but you also have to give the jobs market some credit for solid job growth despite the aggressive rate hikes from the federal reserve. I also agree with one of your previous articles from before in which if you want to solve this so-called shortage of workers then you solve it with labor, not rate hikes. Better pay, more benefits, and hours would go a long way towards bringing those workers back, especially since so many have left due to covid. I'm excited to read parts two and three coming up.

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Feb 15, 2023Liked by Claudia Sahm

I agree - the Fed needs to be more transparent and communicative of its decisions.

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We still live in the real world where "the best way to solve a labor shortage is with more workers, not fewer customers." No post on these matters would be complete without reflecting how the federal government as a whole, in policy and program, is increasing the labor supply. Inaction, as in immigration puts more responsibility in the hands of the Fed. Programs and action as in CHIPS, IRA etc produce domestic jobs (? how many, how quickly) and have ? effect? This all must be on the table now.

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Tremendous insights Claudia. Thank you. No wonder Kelton recommends people to subscribe to you.

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We’d get better information from the Oracle of Delphi. The Fed Governors act like the Doges of Renaissance Venice. Who could forget the obfuscation of Alan “The Maestro” Greenspan? Financial reporters were so desperate for clarity some judged what Greenspan was going to to by looking at the thickness of his briefcase to see if it was overstuffed or understuffed with papers/files. This is absurd. Millions of jobs and small businesses hang in the balance.

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Claudia, I have heard that there is the unemployment rate and another rate referred to as something like "labor pool participation rate". My understanding is unemployment is a measure of those who are looking for work but can't find it and where as the actual labor pool may include those designated as "unemployed" but also those who are unemployed but not currently looking for work for one reason or another. If my understanding is correct and there is a larger pool out there once we include those not working and not looking for work, what policy suggestions would you make to lure more people into the active labor pool? And as always, correct any misunderstandings I present.

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Thanks Claudia.

How do we get this message across loud and clear to this who make and influence policy?

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Two questions:

1) Why doesn’t the Fed use U-6 from the BLS which includes part-time (but seeking ft) and discouraged workers? January was 6.6%

2) How are job openings measured? With 20 years in the corporate world, I can say that the hiring (demand) is often very disconnected from the posting. Posting job 30 years ago had a cost. Now the cost is zero. So, there are likely many postings that are placeholders (for budget or next year). There are also postings, often for sales and support that never get taken down.

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