Newspaper article THE JOURNAL RECORD

Fed Should Not Blame Hiring for the Inflation Threat

Newspaper article THE JOURNAL RECORD

Fed Should Not Blame Hiring for the Inflation Threat

Article excerpt

If the U.S. economy has used up most of its capacity to grow, which is the claim of those hoisting the inflation warning flags, then something seems badly wrong with employment policies.

Employment capacity reached? Why the legislated goal not long ago was between 3 percent and 4 percent unemployment. And the April rate was 6.4 percent, which means 8.4 million potential workers were without jobs.

That doesn't include hundreds of thousands who have given up looking _ when you stop looking you're just not counted in the labor force _ nor does it say anything about those involuntarily working only part time.

The latter category includes around 6 million people, and there's a good chance their numbers might rise. About 15 percent of the newly minted jobs this year are part time. And hiring of temporaries accounts for more.

One in five teenagers is without work, one in eight adult blacks, one in three black teenagers, one in nine adult Hispanics.

While hard numbers aren't nearly as available, it is widely conceded that many thousands of individuals counted as full-time workers now hold service jobs that are a step down in pay and skills from their terminated factory jobs.

Those old jobs are gone, downsized out of existence. Rather than rehiring as demand rises, factories choose instead to put workers on overtime. The average factory work week is now 42.2 hours, highest in several decades.

While the factory work week numbers do suggest the economy's capacity has been reached, a point at which further demand produces inflation, the jobless and underemployed numbers indicate something else.

For one thing, they suggest the education system at all levels might not be producing qualified workers. A survey of small businesses in April showed 21 percent seeking but not finding qualified workers, highest since the mid-1980s. …

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