Left Side of the Aisle #58 - Part 5

Outrage of the Week: unemployment is the fault of uneducated, lazy workers

Jeffrey Lacker is the president of the Federal Reserve Bank of Richmond. He's part of the Federal Reserve system. And he knows what the problem with our economy is, specifically, what causes unemployment. It has nothing to do with lack of stimulus, nothing to do with corporations sitting on two trillion in ready cash and doing nothing with it, nothing to do with lack of demand.

Oh, no, none of that. The biggest reason, he says, is "labor market inefficiencies" such as the difficulty of matching workers with skilled jobs. In other words, he means we need more job training - more exactly, job retraining - the same bumper sticker that has been fed to us for more than 40 years and that makes the inadequacies of workers' skills the sources of their problems - along, that is, with the reluctance of workers to just move wherever the jobs are without being concerned with silly things like having a stable life.

Those "inefficiencies," he claims, could account for as much as 5.9 percentage points of the 8.1 percent unemployment. That would make the unemployment rate just 2.2%!

And just like one of those late-night TV commercials for The Amazing Gizmo-thingy, "But wait! There's more!" You know what the other big thing is, the other main source of unemployment? Unemployment compensation! If it wasn't for unemployment compensation, Lacker tells us, allowing all those lazy slobs to loll around without working, the unemployment rate would drop another 1.7 percentage points!

So what part of unemployment is not due to the shortcomings of workers, according to this member in good standing of the Masters of the Universe? Just one-half of one percent!

Of course, even after that, Lacker might have some trouble dealing with the fact that while the "official" unemployment rate is 8.1%, a broader measure which includes discouraged workers is at 14.5%. What's more, the employed as a portion of the population was at an historically low level in April of just 58.4%. The number of long-term unemployed is down but still at a stunning 5.1 million, and even that decline is largely because of people having used up all their unemployment. And the number of part-timers who want full-time work was up in April to 7.9 million.

Meanwhile, half of American families are surviving on incomes no more than twice the federal poverty line and in a ranking of 34 countries with modern economies done by the Organization for Economic Cooperation and Development, the US ranked fourth in income inequality - or, if you prefer, 31st in income equality. Only Chile, Mexico, and Turkey came out worse.

But according to the president of the Federal Reserve bank of Richmond? The real problem is lazy, uneducated workers who dare to want to set down roots.

Fortunately for us, he is not the only voice in the Federal Reserve system; there are some others who are more rational. But Jeffrey Lacker - who is well-named as he seems to lack a lot of things, such as compassion, understanding, and a basic connection to the economic reality in which most of us live - Jeffrey Lacker is the Outrage of the Week.

Sources:
http://www.csmonitor.com/Business/2011/1202/Unemployment-rate-How-many-Americans-are-really-unemployed/Official-unemployment-rate-Down-in-April-to-8.1-percent
http://www.businessweek.com/news/2012-05-07/lacker-says-fed-easing-cant-fix-structural-unemployment
http://www.dailyfinance.com/2011/12/16/census-shows-1-in-2-people-are-poor-or-low-income/
http://www.cbsnews.com/8301-201_162-57343397/census-data-half-of-u.s-poor-or-low-income/?tag=strip
http://blogs.reuters.com/david-cay-johnston/2011/12/09/keeping-people-in-poverty-by-trying-to-bring-them-out-of-it/