Looking ahead to this week's meeting of the Federal Reserve Board governors, speculation has moved past current inflation (with last week's release of the Philly Fed data, showing the "core" consumer price index for May down in the 1% range) to where inflation is going to be a year from now.
With unemployment figures low, the theory goes, continued growth in the economy will lead to wage inflation -- if there aren't additional workers, new jobs will have to pay more, which leads current jobs to pay more in order to retain current employees.) Positive wage inflation leads to higher short and long-term interest rates.
But some teenagers -- mysterious to their parents in many aspects of their behavior -- are not even looking for jobs. The impact of that "slacker" behavior is to introduce slack into our seemingly tight job market: There are millions of potential employees available to our economy who are not even on our radar screen.
According to the Wall Street Journal, only 41% of Americans between the ages of 16 and 19 were looking for work, at last count. That's down from 55% two decades ago, representing 2,380,000 potential employees who don't appear on unemployment rolls (and therefore aren't "measurable" statistically when economists calculate unemployment figures and related inflation predictions.)
Abraham Mosisa, an economist for the Bureau of Labor Statistics, points out that teenagers not looking for jobs may be responding to the competitive environment for low-end jobs: They're competing with illegal immigrants and other low-skilled workers, including single moms who have been nudged off the welfare rolls in the past ten years.
This means that we're better positioned than the data shows to keep our unemployment figures at their healthy current rate as our economy continues to grow.
-- Jordan Graham, Mortgage Broker