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What May's Job Data Means For The Middle Class Labor Market

NOEL KING, HOST:

And here for a bit more analysis is Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis. Good morning to you, Neel.

NEEL KASHKARI: Good morning. Thanks for having me.

KING: How would you describe the recovery right now?

KASHKARI: I think the (clearing throat) - excuse me - economy is recovering at a brisk pace, but we're in a deep hole. And we still have a long way to go before we put all of those Americans back to work. We're somewhere between eight and 10 million Americans who are not working today who should have been working if the pandemic had not been hit. And we need to put those folks back to work as quickly as possible.

KING: What is your answer to this mystery, why employers can't find employees even though so many people are out of work?

KASHKARI: I think it's the same three - the three answers that the reporter talked about, which is child care issues because schools are still not fully reopened, people are still nervous about the pandemic, and I do think the enhanced unemployment benefits are having some effect. The good news is all three of those factors should get a lot better in a few months when schools fully reopen, hopefully around Labor Day, if the virus continues to decline and those unemployment benefits are going to expire. So I think - I'm optimistic we will see a lot more labor supply, people come off the sidelines, beginning in this fall.

KING: OK. So we might just have to wait a few months. I want to ask what you think about the carrot-and-stick approaches. So we have businesses, kind of across the spectrum - it's fascinating - offering hiring bonuses for people who - willing to come on and work at the same time that states are cutting jobless benefits early hoping that that's going to push people back into the workforce. What do you think about these two approaches? Are they useful? Are they helpful?

KASHKARI: I mean, I think - because it's complicated, I do think they are useful and can work together. If you're stuck at home because your children's school is still closed, then cutting those enhanced unemployment benefits doesn't help you. It doesn't motivate you to go get a job because you still have to find a way to care for your children. Or if you're nervous about getting on a city bus because you're nervous about COVID, that also - those - you know, cutting the benefits doesn't help you. And so - I mean, I do think these are complicated issues, and, you know, we ought to be patient in helping people get back to work.

KING: I know that you've been talking about very real concerns about the number of women who have left the workforce. Why is this such a big problem?

KASHKARI: Well, it's a huge problem not just for those individual women and for their families, but we're talking about the fundamental economic potential of our country. If we're going to end up leaving five or 10 million Americans, many of whom are women, on the sidelines for the long term, it obviously affects them. But that means our economy's potential is much lower than it otherwise would be. And the higher inflation readings that we've been seeing in recent months, those might be here to stay. I'm optimistic that those women want to work, that their spouses want to work, that other Americans want to work. But we need to help them get back in the labor force for their sake, but for all of our sakes.

KING: You know, it took about a decade for the labor market to recover after the 2008 financial crisis. You were at the Treasury Department at the beginning of the recovery. Obviously, these are two really different situations. But is some - is there anything we can learn from that time about how to accelerate the recovery this time around?

KASHKARI: Well, I think Congress has already gotten that message, given how aggressive they have been in responding to the COVID crisis, in helping families, you know, make ends meet. But we can't declare victory. Don't declare victory prematurely. You are exactly right; it took 10 years to put everybody back to work after the financial crisis. That is far, far too long. It's unfair, but it also holds back our economy. So let's continue to be aggressive in bringing people back into the job market. It's in their interests, but it's in all of our interests.

KING: Neel Kashkari, president of the Federal Reserve Bank of Minneapolis. Thank you so much for your time this morning. We appreciate it.

KASHKARI: Thanks for having me. Transcript provided by NPR, Copyright NPR.


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