February 23, 2021

Fed Chair Powell Agrees with Van Hollen: We Need Targeted Help for Long-Term Unemployed Workers

During today’s Senate Banking Committee hearing, U.S. Senator Chris Van Hollen (D-Md.) questioned Federal Reserve Chairman Jerome Powell on the urgent need to address the crisis of long-term unemployment and people who have dropped out of the labor force during the pandemic but still want to work. Chairman Powell agreed on the need for policies specifically targeting these workers. Senator Van Hollen has previously introduced legislation to address this issue and has repeatedly discussed the matter with senior Biden Administration officials. A full transcript of their exchange is available below and video is available here

U.S. SENATOR CHRIS VAN HOLLEN (D-Md.): I want to focus my questioning on the issue of long-term unemployment. In a speech you gave on February 10th, you pointed out that the unemployment rate would be close to 10% if you adjust for the Bureau of Labor Statistics misclassifications and people who dropped out of the labor force since the pandemic. This includes over 4 million Americans who are counted in the unemployment figures but are long-term unemployed, and millions more who have dropped out of the labor force during the pandemic, but would like to get back into the workforce. 

You noted in that speech the concerns of damage from persistent long-term unemployment, what it inflicts on workers personally and their families, and the negative impact on productive capacity for our entire economy. You stressed that monetary policy alone can’t do this – it requires a fiscal response. 

So, here is my question: beyond the overall impacts that the bill before us or other fiscal responses we’ll make in terms of increasing overall economic growth, based on your experience, would you agree that it’s important to very intentionally develop policies to help the long-term unemployed individuals who, even during good economic times were unable to get into the workforce?

FEDERAL RESERVE CHAIRMAN JEROME POWELL: I do. And this really is a longer-run thing, but I would say it is particularly relevant now. As I also mentioned in those remarks, industries are always growing and shrinking, and workers are moving from one industry to another – that is just a market-based economy working. In this situation, you have that accelerated in a big way.

So we may find that many of the people who are not going back to work and are not back at work now, may really struggle to find jobs because businesses are being automated. We hear that all the time – that computers and automated answers are becoming more and more common. So I think those people are really going to need help to get back into the labor force and get their lives back. And that will take, I think, the kind of investments you’re talking about.

VAN HOLLEN: I appreciate that. And we are talking about a focus and an intentional investment beyond the investments that we are making for overall economic growth, right?