Mises Wire

Janet Yellen on Workforce Development

As often noted, the Fed’s economists and bureaucrats operate on the assumption that everything they do is part of the solution, but they are never part of the problem. Yellen’s recent speech at the National Community Reinvestment Coalition is centered around the theme of “creating a just economy.” Allegedly, a just economy needs an institution with the authority to bail out banks, subsidize the world’s largest financial institutions, and explicitly aim to increase the cost of goods and services for people everywhere. 

To solve the problem of stubbornly high unemployment rates in lower-income areas, Yellen has some ideas. Spoiler: there’s nothing about halting the Central Bank’s interest rate manipulation, which destroys capital by misallocating resources and makes economies less wealthy. There’s also nothing about the effect of minimum wage laws on those trying to find work, but who are priced out of the labor market.

Instead, we get this, as solution number one:

Probably the most important workforce development strategy is improving the quality of general education.

As if merely “educating people” (having them spend 14 years of their lives in the classroom with government approved curriculum) can solve the problem of an increasingly stagnant economy. 

Yellen says:

While the job market for the United States as a whole has improved markedly since the depths of the financial crisis, the persistently higher unemployment rates in lower-income and minority communities show why workforce development is so essential. 

It appears that Yellen stumbled upon the fact that all the Fed’s tremendous Treasury buying and balance sheet expansion hasn’t really solved the employment problems in the lower-income community. And yet, the Fed has joined the “inequality” narrative.

The most obvious way to help the employment situation in these specific communities is actually to remove the restriction on hiring them! There is no mention of the fact that there are all these people willing and wanting to work, and yet cannot because it is illegal. That’s what the minimum wage laws do.

Yellen and other central bankers need more self-reflection. The economy is not fixed by their efforts, it is torn apart by their desire to use the tools of monetary interventionism to fulfill their goals. Central banks cannot create a “just economy” (a phrase with no definition), no matter how hard they try.

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