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Ever watchful of your career success, Bwog sent our anonymous renegade chief expert to the World Leaders Forum for a lecture from Federal Reserve Board Governor Daniel K. Tarullo.
Worried about getting a job? According to last night’s World Leaders Forum lecture by Federal Reserve Board Governor Dan Tarullo, the employment prospects for college grads are fairly good. Unfortunately, he could not say the same thing for the labor market at large.
Before the economic doom and gloom commenced however, PrezBo took the time for an introduction. Our peerlessly coiffed leader expressed disbelief at conservative perspectives on the financial crisis. This was a fitting lead-in for Tarullo—a Clinton administration vet and Obama appointee who has long been calling for an overhaul of the financial regulatory system.
But as Tarullo said himself, he had not come to Columbia to discuss the financial crisis, but “what has happened in the aftermath of the financial crisis”— chiefly the bleak unemployment picture. Everyone knows the 9% unemployment rate that has been hanging like a millstone around America’s neck, but Tarullo argued that even this elevated rate “does not tell the whole story.” He cited the 15% unemployment for those without a high school degree, along with the roughly 6 million discouraged workers who have given up searching for employment. Even the unemployment rate for recent grads has doubled to 4.2%, despite such a number being less than half of the national average. On the plus side, the wage premium for a college degree has increased from 1.5 to 2 times the average than that of high school graduates.
The Governor broke this unemployment crisis down into two components— the “acute” or more cyclical unemployment from depressed aggregate demand and “chronic” structural employment issues. While acknowledging the chronic problems, Tarullo argued that the current dismal employment outlook is primarily a function of low aggregate demand, and that as a result, the situation requires an “immediate response.” Without strong policy to combat continued demand-related unemployment, it “could transfer from an acute to another chronic problem.”
He took time to address all the haters out there who claim structural factors, such as skills mismatch, are America’s chief labor problems. Fed data blows holes in such an argument he contested, and fiscal stimuli are desperately needed to aid our “economy slogging though the mud.” Specifically, he called for a Fed repurchase of mortgage-backed securities, which could aid the still beleaguered housing market.
All in all, it was a very wonky liberal policy address— a call for government action on the eve of a crucial vote on the part of the American Jobs Act. The message had to make at least one struggling Columbia alum very happy.
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@Anonymous ^post from someone clearly not an econ major
@Anonymous Thanks for taking the time to express the obvious: “the official unemployment rate doesn’t tell the whole story”. Explaining that is obviously the reason that Dan Tarullo thought coming to Columbia was a necessary thing to do. Thanks for the informative summary of his visit.
@A little bit harsh. Not everyone is an econ major, especially not writers for bwog.
@... whatever. economics is so dodgy. the fact that they take a label, like “unemployment rate”, which has a clear meaning that any reasonable person would deduce (what percentage of the population is unemployed?) and then fix it up with this whole “discouraged worker” nonsense is pretty intellectually dishonest if you ask me…
sure, pull out the retired folks and kids, that is totally reasonable. but why on earth would you ever present an “unemployment rate” with “discouraged workers”, the component that bears the most information, removed?
intellectual dishonesty.
it’s like this whole absolute advantage vs. comparative advantage game. in the former, advantage refers having an advantage with respect to other competitors in the global system. the latter uses the same term, but suddenly it refers to what is most intrinsically advantageous for a given player. if you have absolute advantage, you have an advantage over others… if you have comparative advantage, well, you suck… but it would be advantageous for you to do whatever it is you can do best. the two terms are frequently used together, but the latter is almost like a consolation for those who aren’t winning “don’t worry, you still have an advantage… it’s intrinsic though, so as a global player you still suck.. but we’ll call it an advantage anyway so you don’t feel too bad…”
and i disagree wholeheartedly. it’s structural. globalization is coming back to bite us in the ass (it was a good run!) and industrial redundancy due to efficiencies brought about by the massive communications revolution that just took place are combining to wallop the whole system.