Federal Reserve Governor Michelle W. Bowman gave a speech entitled Working Women in the Pandemic Era, where she talked about the challenges women face in the labor market. The surprising parts occurred when she deviated away from this subject and instead focused on outlining ways in which government intervention can harm the labor market. She begins with her own experiences working as a community banker in Kansas in 2009 when:
At that time, many in the community received benefits from well-intended programs created to provide assistance, which often made it very difficult for small employers to find employees. This was often because, as I learned when trying to hire employees at our local chamber of commerce, the benefit from taking a job was much less than the benefit one could receive from the government at that time while not working.
Finding that hiring was difficult because when faced with the choice of getting paid by the government not to work, or accepting employment at a paying job, many people choose the former option. She continued:
This is one major similarity between the current experience and the last recession, except that in this episode, the benefits many received were far in excess of what they could earn from working.
The thing about central bankers is that every time they say something agreeable, they have a way of following it up with something which is most definitely not agreeable. Being incentivized to refrain from seeking employment is bad enough, but instead of critiquing market intervention or the effects of increasing money supply, they’ve turned the narrative upside down by considering the government largesse as an increase to personal savings. As explained:
So much so that the benefits provided to a large number of Americans resulted in a significant increase in savings, which is only recently beginning to decline and likely leading many who had not yet decided to re-enter the workforce to find work.
With a national debt at $30.7 trillion and interest rates only recently on the rise, it’s difficult to believe that America has become a nation of savers, or that these higher rates won’t cause a systematic problem soon enough.
This concept of increase in savings is always troublesome, since the cost of living is still on the rise and asset prices remain elevated, so even if people were saving more, given that their money buys less and less each passing day, is anyone really saving?
The article does contain some good takeaways however, such as:
One study conducted before the pandemic found that when both parents work, women spend 50 percent more time on childcare than men.
But in the conclusion, the mystery behind labor force participation returned:
There is no magic wand that will draw workers back into the labor force, especially when generous government benefits programs are provided for those who are capable of working.
The article then looks to investigate the issue further to determine how more people can enter the labor force.
…there are some lessons to draw from experience and research regarding approaches that encourage people to work.
As much as they may not like to admit it, the reality is that when given the opportunity to get paid not to work, many will take it. There are other countless reasons for people to avoid seeking gainful employment, including government shutdowns and the corresponding push to keep people indoors, government spending programs, and the increased cost of living which can further discourage and disenfranchise people from seeking work. Time will tell, but the higher the rate of currency debasement, the more people will become desperate and in turn look for alternative ways to obtain money that may keep them out of the labor metrics.
