Fed Economists Disagree Over Construction Jobs’ Lesson on Economy
Washington Post (04/06/12) Peter Whoriskey
The housing market collapse left 1.4 million construction workers without jobs, pushing the unemployment rate in the construction industry above 17%. However, U.S. Federal Reserve economists disagree as to whether unemployed construction workers are worse off than others who lost their jobs during the economic downturn. Two economists at the Federal Reserve Bank of New York, Richard Crump and Aysegul Sahin, do not believe construction workers are “experiencing relatively worse labor market outcomes,” contrary to the opinion of two economists at the Federal Reserve Bank of Atlanta, Pedro Silos and Lei Fang.
The construction industry is the focus of a debate about how to handle unemployment, with one side insisting economic shifts have resulted in a mismatch between the skills possessed by workers and the skills needed by the economy. This means there are too many people right now with construction skills who are unprepared to enter other professions, and stimulating the economy with monetary policy or government spending will not improve the situation. This viewpoint is in contrast to those who believe the economy needs to be stimulated through government policy to reduce unemployment rates and that following every recession, the economy and workers make adjustments. These economists believe that unemployment in the construction industry, for instance, would decline if more money was spent on infrastructure projects.
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