The CAC’s input should reduce that risk—but apparently, it’s not.
The Fed’s Board of Governors met with the CAC on November 3, 2017. You can read the official record here. And here’s part of the council’s jobs input. (I’ve split it into bullet points for clarity, but this is a direct quote.)
• “The data indicate that despite the drop in unemployment, there has not been an increase in the number of quality jobs—those that pay enough to cover expenses and enable workers to save for the future.”
• “The 2017 Scorecard reports that one in four jobs in the United States is in a low-wage occupation, which means that at the median salary, these jobs pay below the poverty threshold for a family of four.”
• “The rate of low-wage jobs has remained relatively stagnant since 2012, and in six states (Alabama, Arkansas, Louisiana, Mississippi, New Mexico and West Virginia), more than one in three jobs is in a low-wage occupation.”
So according to the Fed’s own advisory council, lower unemployment isn’t bringing “quality jobs” to everyone, or even most people.
The number in that second bullet is startling: One in four U.S. jobs doesn’t pay enough to keep a family of four above the poverty line. It’s even worse in some states…but that doesn’t necessarily show up in state-level unemployment data.
As of December 2017, two of the states the CAC named (Alabama and Arkansas) had lower unemployment rates than the national average, yet one of three jobs in those states were in the “low-wage” category. But if all you saw was is the unemployment rate, you might think they were doing fine.
Federal Reserve officials know this, or should know it, because their own advisors are telling them about it. Yet all indications are they will proceed with another rate hike this month, and probably two or three more this year, in part because the United States is at full employment.