-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Chart Packs -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI INTERVIEW: Workforce Should Return to Pre-Covid Levels
U.S. labor force participation is likely to recover fairly quickly once the worst of the Covid pandemic lifts, former U.S. Labor Department chief economist Heidi Shierholz told MNI, pushing back against the notion that the crisis has inflicted permanent damage on the job market.
“I fully expect that we’ll see a much greater bounceback of the labor force participation rate as we get the virus under control,” said Shierholz, now president of the Economic Policy Institute.
“That’s what policymakers should be thinking of – not that we’re at 3.9% unemployment and so this is like the steady trajectory. This is so different and it’s really important that we plan for loosening as we get the virus under control and people come back to the labor force in droves.”
Workforce participation fell sharply during the pandemic and has recovered more gradually than Federal Reserve policymakers might have hoped given the strength of the job market.
Indeed, Fed officials faced with surging inflation have been forced to move away from their promise to await a more complete recovery in employment that includes a rebound in participation. Many have said that participation may take years to recover as preferences have shifted during Covid, including a wave of some million-plus new retirements.
“We are totally below full employment if we were in a non-pandemic world, we have a jobs gap on the order of 6 million jobs,” said Shierholz.
“But the labor market is massively tighter than it would be with a jobs gap that big if we were in a non-pandemic world. The pandemic is just keeping millions out the labor force due to health and safety concerns, parents and others with care responsibilities.”
FULL RECOVERY
Shierholz said the Biden administration’s latest fiscal package, including support for child-care, might help parents make a smoother return to the workforce. U.S. female labor force participation lags other rich countries that have implemented family-friendly policies, she noted.
“Once Covid is in the rearview mirror, there’s no reason to believe labor force participation won’t get back to pre-recession levels,” Shierholz said. With the passage of Biden’s Build Back Better legislation, “it could go even higher.”
Labor force participation peaked at around 67% in 2001 and has been trending lower since. Some of that is due to an ageing population, but the more pronounced declines appear partly cyclical, as evidenced by a rebound late in the last expansion.
Shierholz said the recent spike in inflation was crimping consumers’ bottom lines, but she was not concerned about a wage-price spiral that might embed price rises more deeply in consumer and business psychology.
“Inflation reduces people’s real wages, so I don’t want in any way to diminish that,” she said. “But when you look at inflation, it’s not coming primarily from the sectors where you’re seeing the strongest wage growth. It’s certainly not a dominant factor.”
Cleveland Fed economists Robert Rich also told MNI this week he is not very worried that wages will become a predominant driver of inflation.
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.