A Jobs Economist Responds To William Dudley's Concerns About The Labor Force

In a speech at the Rochester Business Alliance on Monday, New York Federal Reserve President William Dudley highlighted what he believed to be structural problems within the U.S. labor force. He emphasized the need for American firms to invest in workforce development in order to prepare employees for new technologies. Dudley suggested that these initiatives should extend from the factory floor to corporate offices. "Workers who can build skills and remind nimble can do very well in today's economy," he told the business group, "while those who can't are much more likely to fall into lower-paying jobs and get stuck there." And Dudley doesn't believe that the Fed itself has the ability to close the skill gap. He said that monetary policy can help the economy recover by providing incentives for companies to invest and grow but that it cannot target specific skills mismatches. Tara Sinclair, Chief Economist at jobs site Indeed, agreed that the Fed's ability is limited, but she also maintained that a strong economy can help "solve the skills mismatch by proactively seeking the right workers or even offering to train them." "If the demand is there for the products then firms will have the motivation to produce them," Sinclair said, "and to make jobs attractive so the workers will gain the necessary skills." According to her, the skills mismatch has persisted because the jobs market has been too weak to incentivize employers to "really go after and develop the workers they need." However, Indeed's data indicates that, during July, labor demand increased in all sectors of the economy. If the trend continues, Sinclair would expect the skills gap to gradually diminish.