Fed's Harker Blames 'Prime-Aged' American Male Joblessness On Drug Abuse

Tyler Durden's picture

For 60 years the labor force participation rate of 25-54 year old men in America has declined. There are many reasons for this existential decline, but Philly Federal Reserve President Pat Harker explained today during a Q&A session that he is concerned that more 25-54 year old men are out of the workforce and blamed "drug abuse" for the problem.

  • Says decline in employment of prime-aged men, between age of 25 and 54, a source of “significant concern”
  • Opiate abuse is part of the reason for the decline in male employment in U.S., also “there are people who are just disconnected from the workforce”

That's a lot of druggies...

This is not the first time Fed officials have claimed 'drug abuse' as an excuse for the failure of their policies. 

As we detailed previously, via The Intercept's Matt Stoller, in 2011, unemployment was at a near crisis level. The jobless rate was stuck around 9 percent nationally, an unusually high number due to the continuing effects of the financial crash. House Democrats were aghast. “With almost five unemployed Americans for every job opening, too many people remain jobless because of a lack of work, not a lack of wanting to work,” said Congressman Lloyd Doggett, D-Tex. So in early November 2011, they introduced a bill to reauthorize Federal unemployment benefits, an insurance program designed to aide those looking for work.

Behind closed doors at the Federal Reserve however, the conversation struck a different tone.

The Federal Reserve’s mandate is to promote “maximum employment,” which essentially means: print enough money so that everyone who wants one has a job. Yet according to transcripts released this month after the traditional five-year waiting period, Federal Reserve officials in November 2011 were debating whether unemployment was caused by bad work ethics and drug use – rather than by the greatest financial crisis in 80 years. This debate then factored into the argument over setting monetary policy.

“I frequently hear of jobs going unfilled because a large number of applicants have difficulty passing basic requirements like drug tests or simply demonstrating the requisite work ethic,” said Dennis Lockhart, a former Citibank executive who ran the Atlanta Federal Reserve Bank.

 

“One contact in the staffing industry told us that during their pretesting process, a majority - actually, 60 percent of applicants - failed to answer ‘0’ to the question of how many days a week it’s acceptable to miss work.”

The room of central bankers then broke into laughter.

Charles Plosser, the president of the Philadelphia Federal Reserve, cited “work ethic” as a common complaint he heard in his district, both in rural and inner city areas. A contact of his who owned 60 McDonald’s restaurants said “passing drug tests, passing literacy tests, and work ethic are the primary problems he has in hiring people.”

His wife, he noted, had attended a meeting in Philadelphia where employers cited literacy, work ethic, and drugs as impediments to hiring.

It was hardly the first time these bankers blamed unemployment on the unemployed, rather than, say, bankers. In an April meeting that year, Richmond Federal Reserve President Jeff Lacker told participants that “Several firms told us of difficulty finding adequate workers, because they preferred to collect unemployment benefits or can’t pass drug tests.” He reiterated that point in November, saying that in West Virginia he was told by an employment agency that “unquestionably the biggest problem in hiring skilled and unskilled workers was the inability to pass a drug test.”

Lacker’s Federal Reserve district includes West Virginia. In August, he again spoke of “widespread reports about hard drug use, OxyContin and methamphetamine, in Appalachia and other rural parts of our District—in particular, Appalachia.”

Apparently his colleagues responded with laughter again, because he then said “Drug abuse and the hardship involved in unemployment aren’t really laughing matters.” Usage, he noted, isn’t higher than the national norm in West Virginia. “It’s hard to pin this down quantitatively,” he continued, wondering if there was “something meaningful there as a contributor to impediments to labor market functioning.”

These debates took place within the Federal Open Market Committee (FOMC), the Federal Reserve body tasked with “influenc[ing] the availability and cost of money and credit to help promote national economic goals.” The debate revealed a split within the Federal Reserve system between “hawks” who worry more about inflation than unemployment, and “doves” who believe that too many are going without jobs. Typically, “hawks” tend to lean to the right politically, and “doves” tend to lean slightly more to the left.

Lacker is one of the most “hawkish” members of the FOMC, which means he tends to be in favor of higher interest rates and higher unemployment to ward off inflation. In 2015, Lacker ascribed increasing inequality to the lack of college education among the poor

Sarah Bloom Raskin, a dovish member of the Board of Governors, countered by saying that unemployment was a function of the financial crisis. “The economy remains mired in the worst slump since that of the 1930s,” she said.

Daniel Tarullo, another dovish Federal Reserve governor appointed by President Obama, called the focus on drug use a “red herring.” He said, “We had that problem 25 years ago, 20 years ago, 10 years ago; we have it today; and we’re going to have it 5 years from now.” He cited housing debt from the largest housing bubble in history as a core driver of unemployment.

The transcripts illustrate how the controversial method of picking Federal Reserve officials plays out in setting monetary policy: The three men who cited work ethic or drug use as a cause of unemployment instead of the financial crash were picked by regional private sector businessmen to lead the local Reserve banks.

The Dodd-Frank financial reform law passed in 2010 mandated that the Federal Reserve Board in Washington approve the choices of private businessmen, but the Board has yet to reject any suggested candidates. The board members who cited the financial crash as causing unemployment were appointed by the president and confirmed by the Senate.

The concept of having private business interests selecting public officials has been criticized by experts. As Wharton professor and author of “The Power and Independence of the Federal Reserve” Peter Conti-Brown put it, “It’s not clear at all that the opaque and obscure process by which the private sector selects the Reserve Bank presidents produces superior central bankers than the public process used to select the remaining principal officers of the United States.” This controversial selection process risks having, as he put it, “a system for enhancing the influence of certain slices of society on our central banking policy.

Lacker and Lockhart are retiring this year. Advocates and experts are putting pressure on the Richmond Federal Reserve to replace retiring Reserve Bank Presidents with someone more attuned to the reality of unemployment. Fed Up, a coalition of advocates seeking to shift the Fed from its traditionally pro-bank policies, is seeking to have the regional bank President’s picked with more attention to the needs of workers.

Jordan Haedtler, deputy campaign manager of Fed Up, lashed out at Lacker’s comments as related in the newly released transcripts. “Even nine years into the recovery, workers are still struggling to get the wages and hours they need,” Haedtler said. “Yet with unemployment above double digits in huge swaths of President Lacker’s district in 2011, he was citing anecdotes about drug use and desire to collect unemployment benefits as key reasons why employers weren’t hiring. Rather than looking for solutions and talking to people who were out of work, he was seeking excuses from employers.”

President Donald Trump has a number of vacancies on the Federal Reserve Board to fill as well. He has been highly critical of Federal Reserve Chair Janet Yellen. He argued, without citing evidence, that she pursued monetary policy goals to help support Barack Obama and elect Hillary Clinton. If Yellen and Tarullo follow custom and step down from their board slots in 2018, Trump could appoint a majority of Federal Reserve board members within two years.

Despite the importance of monetary policy, the Federal Reserve keeps the transcripts of internal deliberations of the committee that sets monetary policy out of public view for at least five years. But the people who attend those meetings take other jobs — some in the financial services industry. In 2010, incoming House Oversight Committee Chairman Darrell Issa questioned whether it was appropriate for the Fed to withhold its deliberations for so long. “If the Fed’s full transcripts can be released sooner, they should be,” he said.

The debate in the Fed and within Congress was ultimately resolved. The Federal Reserve kept interest rates low. And in 2011, a new wave of recently elected Tea Party Republicans and Democrats finally compromised on language to cut unemployment benefits.

Neither West Virginia senator, Shelley Moore Capito nor Joe Manchin, would comment on Lacker’s discussion of the West Virginia drug epidemic and its relationship to unemployment. The Appalachia region, including West Virginia, went strongly for Trump in the 2016 election.

*  *  *

So "The War On Drugs" needs more funding.. just a little more... and middle-aged men will be working again. Still Janet Yellen has the solution...

*YELLEN: IMMIGRATION BEEN IMPORTANT SOURCE OF LABOR FORCE GROWTH

So immigration is helping labor force growth but middle-aged male American labor force participation is on a long-term trend of collapse?

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Pinto Currency's picture

Or using drugs because they can't find a job.
Nah.

D Nyle's picture

only if you pay your taxes on the profits(sarc)

Paper Boy's picture

That's funny because I thought it was caused by fiat-abuse?

WTFMOFO's picture

This is a revolt.  Why work when they take it from you to pay for others?  

Croesus's picture

I see that a lot around here;

The System, as it's designed, does not reward honesty, integrity, and a solid work ethic. The harder you work, the more they take.

You're better-off living on the dole, unless you're a dumbass like me, and your sense of pride doesn't allow you to.

jeff montanye's picture

make weed legal and more will pass the drug tests.

it will also make more opportunities for legal work and entrepreneurship.

itstippy's picture

The drug tests are for insurance purposes, not law enforcement purposes.  Any workplace that involves operating machinery requires a drug test because having that policy lowers their insurance costs.  In many shops you get fired for having a Blood Alcohol Level above .001 on a random drug test.  

WTFMOFO's picture

I'm an x-combat soldier.

I'm an x-engineer.

I'm an x-business owner

I was successful at all of them  When I hit 40 I said "I'm a fucking fool".  I wasted most of my life working my ass off (from the age of 15 until 40).  Not anymore.  I sold the business and checked out.  Wife is a "director" in the healthcare field.  She loves her work and makes good money so she chooses to work.  Me, I raised the kids, grow a garden, have some chickens, kill deer in my yard for meat and today I btchered 2 rabbits to eat.  I'm happier than a pig in shit and am in great physical condition from all the work around my hobby farm.  No neighbors and 1/4 mile back in the woods out in the sticks.  I was a sucker for a long time.  I don't miss the 5000 sqft McMansions but I do miss my drunken brothers at the contry club playing "press when pissed" for $20 a hole.

Priorities.

1980XLS's picture

You the man.  I want to be just like you when I grow up. (not saracasm)

FreedomGuy's picture

It looks like it's not just the snowflakes who are out of touch. The reasons are many and I know many of them firsthand. None of it has to do with drug abuse.

I fill out job apps in the always automated systems and 100% of the time I have to check off that I am not in any of the preferred minority groups. Having had my position eliminated three times in seven years, including when I finished in the top 6% of sales rankings...you start to get tired.

I am reasonably certain that if I could check anything from disabled to a preferred minority I would double or triple my odds of interview and hiring. Throw on top of that the government policies that make anyone cautious or even resistant to hiring and well...I am ready for a Fed member to show up at my local bar and spout this insane bullshit. If he only ends up unconscious with the glass from the beer mug I shattered in his scalp, he will be fortunate.

Working is already perilously close to being for fools and the naive only.

Shemp 4 Victory's picture

I blame clinical schizophrenia for quantitative easing.

In vain, in vain, punitive psychiatry was abolished.

YouJustMadeTheList's picture

In a similar report, the number of 25-54 yo men who would like to shover a pitchfork up Harkers ass has reached a permanently high plateau.

jeff montanye's picture

and it will only slowly taper off after his death.

what unutterable smarmy blowhards.

piss on them and their wretched world.

junction's picture

Just stop hiring people for the Federal Reserve, let it slowly shrivel up by attrition.  And for those remaining at their "empty suit" jobs, surprise drug tests and zero tolerance for test failure.

jeff montanye's picture

porn watching on company time too.

oh and not enforcing the control fraud laws too while we're about it.

garcam123's picture

From the Fabulas Furry Freak Brothers of the 60's and I'm a diciple(sp?), You can get along with weed and no money better than you can with money and no weed.  So fuck off, smoking weed is living....not drug abuse like suckin nicitine, alcohol or opiods or meth.....they're the druggies.....not 10 zillion innocent potheads!

Weed and hemp are God's gifts to mankind and I ain't a god guy......just sayin......this Depends crowd should take a few hits!

Slingsby's picture

Makes me miss the ambitious 80's where we would do coke so we could work longer hours so we could make more money so we could buy more coke.

Ahhh... The good old days.

ersatz007's picture

 “With almost five unemployed Americans for every job opening, too many people remain jobless because of a lack of work, not a lack of wanting to work,” 

 

 

Ironically a friend of mine works at Walgreens and they can't get people to come in and apply or pass the extremely simple computer test if they do apply.

They've had a help wanted sign out for months.

Mena Arkansas's picture

Yeah, let's blame the victims.

Whatever let's you sleep.

Asshole.

Moe Hamhead's picture

Drugs didn't keep Hussein Obama out of the White House job.

jeff montanye's picture

personally i think president trump, after all the appointees are in place and the shakedown cruise has returned to port, ought to visit colorado and hit one of the recreational mj spots and say this is a better way to handle it than prisons.

whether he has a space cake is up to him.

JRobby's picture

By design

If you get to where you can't afford Big Pharma's offerings,  the CIA fills in the lower price purchaser demand.

The White Male Must Be Extincted!

A rope leash's picture

The drug tests fail mostly for weed. It stays detectable in urine for weeks as opposed to days as with most other substances.

 

People have the freedom to ingest what they wish even though law enforcement tries to stop it. Employers have the right to test employees, so a lot of potsmokers don't even bother. It's possible that the trend toward 1099 employment is also related to drug testing requirements.

 

Works for me.  Who wants to be a slave, anyway?  Fuck pissing for them...that's kind of sick...what a bunch of whinging nannies they are.

garcam123's picture

I pissed for years, just quit smoking between jobs.  I was a construction manager for the coolest construction projects you can imagine, projects in the Carribbean and all over the US.  Historical restoration and general construction, US Post Office in central Puerto Rico, stuffed with hot ass, smoked my weight in weed with my crews! Remember, I'm the guy who had an account at the whorehouse in Antigua!  Been tryin to keep good weed off of the street for 40 years!

GreatUncle's picture

Try omega man - the defence is already worked out.

Design a virus to attack people with melatonin ... problem solved.

PS I ain't got alot of melatonin.

You cannot attack what is not there.

Nobodys Home's picture

The Drug Abuse is the Feds "injections". We all addicted to dat!

BandGap's picture

I'd light up these fuckers till my knuckles hurt.

How about a guy can't find a job and gets hooked into drugs (opiates) that the feds allow to be passed out like candy. Fuckers.

Fucking companies now making money off of drugs sold to people who get constipated by people taking opiates the government (under the guise of "pain management") almost mandated.

I had two knee surgeries and a hip replacement in the last five years. Never took the shit they were handing out because there is no better way of getting better than taking a good shit. On at least three occasions, two with doctors, I raised eyebrows and got into discussions as to why I won't touch their opiates. Pain is the way to stimulate the body to do something.

 

The New Feudalism's picture

Drug abuse? Sure, but whose? Give the Fed F'ers a drug test. You have to be on drugs to do what they do.

small axe's picture

we'll always be nothing more than trailer trash in the eyes of these alleged "people"

 

Nobodys Home's picture

I'm saving for a cash buy on a trailer ...I must be trailerless trash :)

GreatUncle's picture

Yep ... Clinton made sure we understood this how all people in her mind are "deplorables".

Bad slip of the tongue that ... should have really said slaves.

buzzsaw99's picture

i'd put a bounty on those maggots if it were up to me.

Nobodys Home's picture

Yah, well it isn't! STFU! ...err...How much?

buzzsaw99's picture

Let's put it this way, you would have competition.

... Jabba's put a price on your head so large every bounty hunter in the galaxy will be looking for you. I'm lucky I found you first. [/Greedo, Star Wars, A New Hope ]

GreatUncle's picture

For so long now we thought this ... nothing changed they just continue over and over.

To stop this needs the ultimate event ... else it will just keep rolling on.

 

koan's picture

Just a piece of the puzzle, by claiming drug abuse they can avoid their own policy failures and give a point to the pharmas, because the pharmas want to end legal marijuana (or completely control it).

Clinton was going to do that for them, remains to be seen what The Donald.

Who do you want as Donald's successor 8 years from now?
Jared Kushner or Ivanka Trump?

edifice's picture

2 words: quota hiring. STEM fields are quota hiring women, to make it all equal. Education, no education; skills, no skills; it doesn't matter. If it bleeds, it's in.

Nobodys Home's picture

I'm with her. --> The Vagina pusher.

edifice's picture

And pear-shaped beta/omega males in IT allow it. They do the work for the women. it's a sad sight.

canisdirus's picture

Just women? What about all the immigrant imports?

Also, historically, back when women were generally afraid to enter the field, the only women I encountered were in some kind of ancillary position. PMs, data entry, documentation, etc. The handful of female programmers I met (could count them on one hand) were exceptionally skilled. I haven't encountered a female tech professional in over a decade, though.

CultiVader's picture

Not this pothead. I'm making a living in the weed business here in norcal, out of the official workforce, and I'm not on hard drugs. Neither are the people I do business with. I weed them out whenever they show. Its easy to tell who is because they can't keep a schedule. The Fed and it's unelected officers are the least of my worries. They should smoke some of my weed and rethink their positions, as they are a big part of the problem.

garcam123's picture

Spent a summer a couple of years ago in Garberville, wouldn't mind a place to park for the summer up there, kinda sensitive to the subduction probabilities.  Not much of a trimmer, but I can market and play the shit out of a guitar!  I even surfed Cresent City a few times. Stayed right on the beach at the Rv park, right as they were finishing the new yacht basin and it was, is so beautiful! Epic Beautiful!

I'm kinda sensitive to the Cascadia Subduction Zone snap likelyhood, but WTF, i'm lookin for and astroid anyway.  So.......rockon Brother!