Ben Bernanke Makes History, But No News

My piece on Ben Bernanke’s historic press conference for TAP online is about how even though he made history by holding the thing, he didn’t make news by offering any relief to the struggling labor market:

It’s hard to avoid the conclusion that demographic biases are driving policy at this point. Unemployment is lower for college-educated people than for those with only a high school diploma. It’s lower for white people than for blacks and Hispanics. And it’s lower for middle-aged people than for the young. Not coincidentally, both the Federal Reserve Board and the United States Congress are full of middle-aged white people with college degrees who mostly socialize with other middle-aged white people with college degrees. The editors of major business and political publications look pretty similar. The result is a bubble in which condemning the country to years of higher-than-necessary unemployment as a precautionary measure seems to make sense. And with fiscal policy off the table in congress, it looks like those of us outside the bubble are just going to have to live with it.

Beyond those brute statistics, it’s worth emphasizing that the health of the labor market is generally more important to more downscale people than it is to upper middle class professionals. A prosperous person, by definition, is usually spending a fair amount of money on non-necessities and can respond to tough times or unexpected hardship by economizing a bit on luxuries. Further down the economic ladder, that kind of approach isn’t nearly as viable, and the more common response is to try to make ends meet by working extra shifts or a second job. That’s an arduous lifestyle, but the availability of “work longer hours” as an option has a lot of value. A prolonged labor market slump means that strategy is generally unavailable, that mere willingness to do more work is no guarantee that work will be available.