Latest News Affecting Gold Price
- Some Ex-Cons Are Finally Finding Jobs: But Does The Fed Care?
While CNN doesn’t dedicate much time to covering the subject, we’ve repeatedly pointed out that, contrary to what conventional wisdom might lead one to believe, incarceration rates among white Americans have risen since 2000 while incarceration rates for minorities have fallen.
The US prison population is finally shrinking after swelling to more than 2 million people, placing the US among the countries with the largest prison populations. Nearly one in five inmates are incarcerated on nonviolent drug charges.
And in 2000, there were 449 white inmates per 100,000 citizens while in 2014, the rate increased slightly with 465 inmates per 100,000.
In recent years, opioids have devastated many predominantly white rural communities, sending many young men to prison, while also causing a surge in drug-overdose deaths. Whether you believe this downward mobility among white men is the cause – or a symptom – of the endemic ills associated with it, data appear to show that the recent uptick in the employment participation rate is a signal that the labor market truly is beginning to tighten.
That means millions of working-age men are sidelined. Opioid abuse and high incarceration rates could be drivers. Some 10 percent of adult men not in prison had a felony conviction in 2010, up from less than 5 percent in 1980, research shows. And criminal histories are a hiring barrier -- as Zito’s story illustrates.
Many working-class whites struggle to find the types of manufacturing jobs that their parents held, which once provided a home and a better life for many. But manufacturing jobs have been declining for more than 30 years. Over the past two decades, robots are increasingly taking over more of the manufacturing jobs that are left.
Beginning about four or five years ago, the participation rate ticked slightly higher. The marginal gains may not ultimately mean much when measured against the yearslong decline that began long before the baby boomers began leaving the workforce in droves. Still, trying to nurture better conditions for the workforce’s most marginal members should be a priority for incoming Fed Chairman Jerome Powell, Bloomberg reports.
Setting aside the notion that the Fed’s policies seem to consistently and implicitly favor the wealthy, raising the participation rate – and reducing the ranks of the 20 million working men who have inexplicably left the workforce – would be a major political coup for the incoming Fed chair. It might even help restore of the central bank’s credibility.
While Janet Yellen delivered another 25 basis point rate hike, as was widely expected, today's meeting was her last as the leader of the FOMC. Bloomberg claims one reason her successor should "tread lightly" when it comes to raising interest rates would be to preserve this hard-fought progress along the labor market's most marginalized edges.
Michael Zito got a job in July, and that game-changing development likely owes a lot to a tight U.S. labor market.
The 57-year-old New Yorker spent 27 years in prison after killing an acquaintance who he says broke into his Brooklyn apartment and beat his wife. When he was released on Dec. 12, 2016, he had never used a mobile phone.
He had no home, no living relatives, and no computer skills. Yet eight months later, he landed work in building maintenance.
“I have a low-paying job, but I have a paycheck, which I’m happy for,” said Zito, who makes $11 an hour keeping antique elevators running at a 1920s building in Queens. With the money, he hopes to move out of a shelter soon. Plus, he says, “it gives me a little bit of extra job experience.”
Stanley Richards has witnessed the healing properties of low unemployment. As executive vice president of the Fortune Society, the nonprofit that helped Zito get a job, he’s seen companies become more willing to hire his clients as the shadow of the 2007-2009 recession fades.
Construction had been a really hard sector to place people, Richards said, but “because there are so many opportunities in that industry now, we have been able to partner with companies who are hiring our people."
To be sure, the Fed isn’t playing a zero-sum game. Cautious tightening shouldn’t trigger a hiring or growth slump -- it will just slow progress. Economists reckon that rates are still low enough to boost growth, despite recent increases.
Bloomberg also references the worsening economic inequality in the US and implores the central bank – to our eternal amusement – to do more to combat this troublesome trend.
Goldman Sachs Group Inc. economists say America’s labor market is operating at two speeds. On one hand, employed workers who change jobs do so quickly - at 4.1 percent last month, headline unemployment is tight. On the other, people sidelined by the recession for structural reasons - from felony raps to outdated skills - are only slowly trickling back in.
Job-finding prospects for the non-employed have gotten better and “could improve further in a labor market as tight as in 1999-2000,” they wrote in a research note this fall. That may boost the labor-force participation rate by a few more tenths of a percentage point.
“For the Fed, the implications of this divided labor market are double-edged,” the Goldman economists wrote. If the low short-term unemployment rate matters more for inflation, as they suspect, letting the job market run creates the risk of overheating. “The FOMC seems to find this trade-off unappealing and is likely to continue to tighten steadily as a result.”
Ultimately, whether Powell’s policies benefit men like Michael Zito - the ex-con who spent nearly 3 decades behind bars – is incidental. The central bank has repeatedly demonstrated that a stable equity market is its enduring aim.
And although lawmakers and the media made a fuss about Powell’s only marginally more permissive views about financial industry regulation, his approach to monetary policy will be familiar.
After all, there’s a reason Trump didn’t choose Taylor.