Search Results
Journal Article
Lifetime Earnings Differences across Black and White Individuals: Years Worked Matter
In this article, Andrew Glover, José Mustre-del-Río, and Emily Pollard go beyond point-in-time measures of earnings and examine lifetime earnings differences between Black and white individuals. They find that, on average, Black individuals earn about one-third less than white individuals over the course of their lifetimes (a difference equivalent to about $550,000), though the size of this gap varies by sex and education level. In addition, they find that differences in years worked, which are not captured by point-in-time measures, contribute substantially to earnings differences between ...
Journal Article
What Explains Lifetime Earnings Differences Across Individuals?
Expected lifetime earnings are a key factor in many individual decisions, such as whether or not to go to college and what kind of occupation to pursue. However, lifetime earnings differ widely across individuals, and uncovering the factors that explain these differences can be challenging. Some characteristics, such as race and sex, are observable. But other intangible characteristics, such as work performance, are more difficult to quantify. To what degree observable characteristics explain lifetime earnings is an empirical question. {{p}} Jos Mustre-del-Ro and Emily Pollard use a unique ...
Journal Article
Why Has Monetary Policy Tightening Not Cooled the Labor Market Enough to Quell Inflation?
Despite a year of rapidly rising interest rates, labor markets remain tight, likely contributing to the persistence of inflation. We create industry-specific versions of the KC Fed’s Labor Market Conditions Indicators (LMCI) to examine labor market tightness in different sectors. We find that labor markets in the services sector—which have contributed substantially to recent labor market tightness and inflation—are less sensitive to changes in interest rates, increasing the lag for monetary policy transmission.
Journal Article
As Manufacturing Weakens, Consumers Pull Back
The United States has faced two recent downturns in manufacturing: one from 2014 to 2015 and one that has been ongoing since 2018. We examine consumption growth at the state level to see how consumers have responded to the current downturn relative to the last. We find that during the current downturn, changes in consumption growth at the state level have been negatively correlated with the state?s share of workers in manufacturing. In contrast, we find the opposite relationship during the 2014?15 downturn.
Journal Article
Decline in Number of Workers with “Some College” Is Boosting Healthcare Wage Inflation
Compared with the pre-pandemic period, the labor force contains about 1.5 million fewer individuals who have some post-secondary schooling but less than a bachelor’s degree. As a result, vacancies for jobs that require a post-secondary certificate or an associate degree remain elevated, especially in health-related fields. These shortages have contributed to higher wages in the fast-growing healthcare field and are unlikely to resolve quickly.
Journal Article
KC Fed LMCI Implies the Labor Market Is Closer to a Full Recovery than the Unemployment Rate Alone Suggests
By consolidating information from a broad range of labor market variables, the Kansas City Fed Labor Market Conditions Indicators (LMCI) provide a consistent gauge of labor market tightness. Adjusting the unemployment rate to incorporate information from the LMCI suggests the labor market is closer to a full recovery than the unemployment rate alone implies.
Journal Article
The KC Fed LMCI Momentum Indicator Suggests Monetary Policy Is Beginning to Weigh on Labor Markets
The Federal Open Market Committee has been quickly raising the federal funds rate to lower inflation. However, services inflation remains high, supported by a tight labor market with high wage growth. Recent readings in the LMCI momentum indicator suggest monetary policy tightening is beginning to weigh on labor markets, which may eventually lead to lower services inflation and lower inflation overall.
Journal Article
KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market
A tight labor market tends to raise wages and lower unemployment, but an overly tight labor market can cause inflation. Labor market momentum, as measured by the Kansas City Fed Labor Market Conditions Indicators (LMCI), can signal whether the current level of activity in labor markets is inflationary.
Journal Article
Labor Market Cooling Has Been Uneven Across Industries
The U.S. labor market has cooled over the last two years but remains healthy overall. However, an industry-specific version of the KC Fed’s Labor Market Conditions Indicators (LMCI) suggests pockets of tightness and weakness have appeared in a few industries. Tightness appears to be limited to less labor-intensive industries, limiting upside risk to inflation. Weakness, on the other hand, has appeared in the interest-rate-sensitive information industry, which may be vulnerable to further labor market cooling.
Briefing
A New Approach to Industry and Occupation Recoding in the CPS
This paper presents a new approach to recoding industry and occupation in the Current Population Survey (CPS) from 1976 to 2019. This recode uses the three- and four-digit Census codes present in the CPS to create consistent aggregate categories that closely align with the detailed and major industry and occupation categories used in the 2019 CPS. This approach yields more consistent aggregate categories than previous recoding schemes. This approach can also successfully be applied to recoding industry and occupation in all panels of the Survey of Income and Program Participation (SIPP).