(Repeats to additional customers with no changes to text)
By Howard Schneider
WELLSTON, Missouri Oct 18 The
crammed-to-capacity parking lot at a job training center in this
St. Louis suburb is exhibit A for why the U.S. Federal Reserve
remains at odds over the health of the U.S. labor market and how
quickly interest rates should rise.
Among those in the building on a recent fall day,
23-year-old Joshua Goodson described his recent work history as
a "dead end." Motivated by the prospect of a firm career
foothold, he is now in a program at the Family and Workforce
Centers of America that includes both a curriculum in heating
and air conditioning installation, and the "soft" social skills
needed to keep steady employment.
It will take a few months, but "I will get a job, and nail
it," he said.
As the nation's six year run of job creation reaches deeper
into neighborhoods like Wellston and nearby Ferguson -- site of
a police shooting two years ago that highlighted the depressed
economic conditions in some U.S. neighborhoods -- Goodson is
among a pool of sidelined workers returning to the labor force
in unexpected numbers and more readily landing jobs.
That subtle but surprising shift has stoked fresh debate
within the Fed over whether to risk slowing a process that is
finally drawing in marginalized residents like Goodson, and
showing up in middle and lower end incomes.
The discussion may be unlikely to stave off a December rate
increase. But it could influence the already glacial pace of
tightening expected by the Fed.
A Reuters analysis of federal labor flow data shows workers
are moving from outside the labor force directly into jobs at a
record pace. That is what Fed Chair Janet Yellen and others
hoped would take hold as the economy rebounded from a crisis
that left millions jobless or caused them to stop looking for
work and leave the labor force altogether.
It is also something trainees in this high unemployment
pocket northwest of St. Louis hope will continue as they learn
construction, business administration and other skills,
confident there will be steady jobs at the end.
For Goodson, it is a chance to set aside a turbulent period
in his life that included participation in the Ferguson riots
two years ago.
"I want to change my life, better myself, try to get a skill
or trade that could benefit me as a career," he said in an
interview at a facility that is working to prepare an often
young and often black clientele for jobs that are, at present,
plentiful around St. Louis.
A HANDOFF TO THOSE ON THE SIDELINES
Job growth during a recovery typically first absorbs the
unemployed -- people without a job who are actively looking for
one -- before reengaging those who have dropped out. Over the
past two years, there's evidence that has now begun to happen.
The flow of workers from outside the labor force directly into
jobs has grown to more than double the number captured in
statistics as moving from out of the labor force to unemployed.
Seven years since the recession ended, loose monetary policy
is "supporting the reabsorption of workers who have a relatively
hard time finding employment," said John Robertson, a senior
policy adviser to Atlanta Federal Reserve bank president Dennis
Lockhart. It's a development policymakers want to understand
better to judge if there are "structural limits" to how far it
can proceed, he said.
With a national unemployment rate at five percent and other
labor-related measures near long run averages, some policymakers
argue their employment goal has been met and that interest rates
should rise to stay ahead of the inflation that typically comes
with a tightening jobs market.
Others are hesitant, noting as Fed chair Janet Yellen did
last week that a "high pressure economy" may be what's needed to
repair some of the damage from the crisis.
An eroded middle class or a poorly educated and compensated
work force, she has argued, could impair the country's economic
potential. The Fed's bias through much of the recovery has been
to risk more inflation in favor of a fuller jobs rebound, and at
her most recent press conference Yellen said she was encouraged.
"We were not really certain that this is something that
would happen," Yellen said of an uptick in the labor force
"The economy has a little more room to run than might have
been previously thought."
AN ENCOURAGING TURN IN INCOMES
After years of income stagnation, the steady demand for
labor finally showed up in 2015 census surveys showing median
incomes rising for the first time since 2007, with the strongest
wage gains at the lower end. That's helping nudge people like
Toshia Verheggen to take the trouble to retrain.
As her son reached school age, Verheggen, 37, heard about
LaunchCode, a nonprofit that trains non-computer experts as
coders and places them in apprenticeships. She landed a job
early this year, moving from a labor force nonparticipant to
writing software programs for a retirement benefits manager.
"Employers are bringing more jobs and more applicants are
trying to get into the funnel," LaunchCode executive director
Mark Bauer said of the current labor situation in St. Louis.
The movement of people like Verheggen into jobs is helping
answer an important issue - whether the dislocation of workers
during the crisis would be permanent, scarring their finances as
well as the country's potential, or reverse as conditions
Adults who are neither in jobs or looking for work are not
considered part of the labor force. Their numbers have risen by
a third in the last 15 years to more than 94 million, and grown
as a share of the over-16 population from 32 percent to 37
While that sometimes figures into political rhetoric, it is
mostly driven be demographics and personal choice as people
retire, attend college, or stay home to care for family.
More telling is the number not in the labor force who say
they want a job, meaning they would like to work but are not out
looking. That number stands at around 6 million, roughly 2.3
percent of the population over the age of 16.
From a recent high of around 2.7 percent in 2012, that
number has been falling towards its pre-Recession norm of close
to 2 percent. To reach that level, a million more people would
need to get back into work.
Carolyn Seward, chief executive of the workforce center
where young adults like Goodson are training in heating and air
conditioning, said people are ready to engage but still
midstream in their plans. Now would be the worst time for job
creation to slow.
"It is going to take another ten to fifteen years" to dent
unemployment rates of 10 to 25 percent common in St. Louis'
northwestern suburbs, Seward said. "There has been such a
(Editing by David Chance and Edward Tobin)