24 United States The EconomistJuly 20th 2019
2 called“TheWorkingDad’sSurvivalGuide:
Howto SucceedatWorkandatHome”.
Americahasa workaholicculture,hesays.
Motherswho puttheirfamilies firstes-
chew thatculture, resulting in costs to
theircareers.Butfatherswhodosoarevio-
latingboththeworkaholiccultureandtra-
ditionalgendernorms.
AccordingtothePewResearchCentre,
womenarethesoleorprimarybreadwin-
nersin40%ofAmericanhouseholds,and
15%ofmotherswithchildrenyoungerthan
18 earnmorethantheirhusbands.Inhet-
erosexual unions, families often decidethata fathershouldstayathomebecause
hehasbeenlaidofffromworkorthemoth-
erhasahigher-earningcareer,saysBrad
HarringtonoftheBostonCollegeCentrefor
WorkandFamily.In2016,6%offathers
werestay-at-home.Thatnumberislikely
togrowaswomenachievehigherlevelsof
educationthanmen,and Americanjobs
shiftawayfrommale-dominatedprofes-
sionsto female-dominatedones.Unless
normsaboutwho shouldberesponsible
forwhatchange,theopt-outpenaltywill
becomea biggerproblemasmorefathers
makethechoicetostayathome. 7H
eaven helpanyone who complains of
a labour shortage to Neel Kashkari,
president of the Federal Reserve Bank of
Minneapolis. “We just don’t have enough
people to build,” said the head of an afford-
able housing organisation in Aberdeen,
South Dakota, on July 11th. A local wind-
turbine maker grumbled about his strug-
gles to expand his headcount. Mr Kashkari
showed little sympathy: “If you pay more
they will come,” he says.
Mr Kashkari has been sceptical of such
pleading for years, convinced that the la-
bour market could be hotter. His doubts ap-
pear to have spread. When testifying to
Congress on July 10th Jerome Powell, the
Fed’s chairman, said that “while we hear
lots of reports of companies having a hard
time finding qualified labour, nonetheless
we don’t see wages really responding.”
It may seem strange that anecdotes
would matter to monetary policymakers,
given the swathes of statistics at their dis-
posal. But the Fed devotes a non-trivial
amount of energy to gathering them. Eight
times a year they are compiled in a publica-
tion known as the Beige Book, based on in-
terviews with business folk and “commu-
nity contacts” across America.
Since 1983 the Beige Book has been re-
leased two weeks before each meeting of
the Federal Open Market Committee
(fomc). The gap, according to the Minne-
apolis Fed, was supposed to send the mes-
sage that the information was not timely,
and therefore “did not have a major influ-
ence on policy.” Still, financial analysts
pour over every new edition. Anecdotes
from the Beige Book pepper the minutes of
each fomcmeeting. And although weath-
ered economists will say that data and
models determine policy, the stories aresupposed to serve as reality checks.
For years the Beige Book has revealed
that workers are neither as abundant, nor
as cheap, as employers would like. When
complaints of shortages started popping
up in it in 2011, they were laughable. (The
unemployment rate was then above 8%.)
But they became more plausible as unem-
ployment fell. And when theory and data
pointed to fears that a burst of inflation was
round the corner, gripes from business
owners reinforced the view that a rise in in-
terest rates would be necessary to get in
front of it.
“Those anecdotes did matter,” says TimDuy of the University of Oregon, adding
that “they matter less now.” This is because
the inflation that was supposed to arrive in
2018 never did. As unemployment sank be-
low 4%, wage growth remained in line with
the sum of inflation and productivity
growth. That has raised doubts about
whether the labour market is as hot as peo-
ple thought. On July 10th Mr Powell
quipped that “to call something hot, you
need to see some heat.”
Signs of coolness have been around for
years, in the data and in the Beige Book. In
September 2017 contacts in New England
reported that they were adapting to the
“tight-supply landscape” by expanding on-
line, building stronger relationships with
job-market candidates, and “active com-
munity engagement”. In October 2018 some
businesses reported “non-wage strategies”
to recruit and retain workers, such as flex-
ible work schedules and longer holiday
time. If employers were really so desperate
for workers, Mr Kashkari has argued, they
should be bidding up their price.
The voices found in the Beige Book are
skewed towards businesses, who will tend
to prefer an abundance of workers and re-
sent the hassle of having to train up less-
qualified recruits. The lack of excessive
wage pressure and muted inflation have al-
lowed a new set of stories to become more
prominent. As part of recent “listening ses-
sions”, union leaders and local develop-
ment organisations have shared their tales
about how the hot economy is forcing em-
ployers to pull in some of America’s most
marginalised workers. In a speech on July
16th Mr Powell said he had heard “loud and
clear” about the benefits of the long recov-
ery for low- and moderate-income Ameri-
cans. Previously the most prominent sto-
ries supported interest-rate increases. The
newer ones highlight the risks of killing off
the expansion.
If inflation were rising above the Fed’s
2% target, its leadership would be picking
different tales to emphasise. And if, as in-
vestors expect, the Fed cuts interest rates at
its next meeting on July 30th and 31st, Mr
Powell will probably cite uncertainties
about trade and global growth, as well as a
downward drift in inflation expectations.
(The latest Beige Book, published on July
17th, contains plenty to support him.)
But if Mr Powell wants some more anec-
dotes, he could pick them up from the rest
of Mr Kashkari’s trip. A breakfast to discuss
substance abuse included complaints
from participants that, despite a local un-
employment rate of merely 2.7%, employ-
ers were still being far too sniffy about hir-
ing ex-felons. “They can stack shelves,”
said one reproachfully. Such stories might
mislead and they can easily be cherry-
picked. But at the moment these anecdotes
seem to be carrying more weight than com-
plaints from employers. 7ABERDEEN, NORTH DAKOTA
The Federal Reserve is changing whom it listens toMonetary policyStorytime with the Fed
Mr Kashkari, on safari