Powell Says Don't See Wages Moving Higher Yet

Q: RE labor market, do you see labor shortages as temporary bottlenecks?

- A: There are a number of things going on there. The tension between high-level of employment and yet many companies saying they can't find workers.

• What's going on there? There are workers that don't have the specific skills that employers are looking for...there may be geographical differences... one big factor would be schools aren't open yet so there are people at home taking care of children at home...the virus is weighing on people so some people don't want to back to work.
• Significant number of people said they've retired.. Hard to say whether they will come back in as the labor market strenghtens.
• We don't see wages moving up yet. Presumably we would see that in a really tight labor market. We may well start to see that. My guess would be that you will see people coming back into the labor force and the labor market will reach equilibrium. Maybe pay will go up.
• Unemployment insurance benefits will run out in September. To the extent that's a factor, which is not clear, it will no longer be a factor fairly soon. My guess is it will come back to this economy where we have equilibrium between labor supply and demand. It may take some months, though.