Labor Market Slack

Our Fed “chair,” Janet Yellen, was bloviating about “slack” in the labor market. What cr*p. If you want to see the slack in the labor market, just watch the Ferguson videos. There’s your slack. The problem is you have to make about $60K (or more, in California for example) to be better off working than simply accepting benefits and staying home. Sure, you can work for less than that and take only partial benefits, but there is no real economic motivation to do so, except for developing a resume for the future or hoping for promotion.

But that future promotion or better job will almost certainly require relevant education and actual skills. Even about half of college graduates are working on jobs that don’t need a degree, because they took Political Science or Fine Art  or something else equally interesting (and undemanding) but for which there is no business demand. So they, in many cases, went into debt only to find that nobody needs an Ethnic Studies major and their costly degree has little or no economic value.

The apparent slack. the millions who have “left the labor force,” is not that there aren’t jobs, it is that a failed education and social system does not provide workers either capable of adding sufficient value to be economically employable at high wages, or economically motivated to work for low wages. Interest rates are of no relevance to the problem.

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