Economics/Class Relations

Workforce changes will continue to affect economy: ‘Power has shifted and it has shifted to labor,’ Richmond Fed president says

ByRichmond Times-Dispatch

The COVID-19 pandemic’s impact on the job market seems likely to have long-lasting affects on the U.S. economy, the president of the Federal Reserve Bank of Richmond said Thursday.

“We have been living for decades in a world of excess workers, driven by the baby boom, improved health, women in the workforce, immigration and offshoring,” Thomas I. Barkin said in a speech given online to members of the Virginia Bankers Association.

“These kept wages and benefits and effectively cost-driven inflation down,” said Barkin, who became president and CEO of the Federal Reserve Bank of Richmond in January 2018.

In 2021, however, as COVID-19 vaccines were introduced but workers continued to stay out of the workforce even as the pandemic seemed to recede, “the tables turned,” Barkin said.

“Labor is now painfully short,” he said. “Participation in the workforce has stayed remarkably stagnant since the spring, at about 1.5 percentage points below the pre-pandemic levels.”

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