The United States is poised for a robust recovery in the second half of the year if COVID-19 vaccination efforts are successful, providing a “unique opportunity” to build a more inclusive economy, according to Eric Rosengren, president of the Federal Reserve Bank of Boston.
“The pandemic has highlighted the critical importance of finding ways to improve workforce development, increase workplace flexibility, and revitalize areas where many low-income workers reside,” Rosengren said in a virtual speech prepared for the Yale Economic Development Symposium on Friday.
Rosengren, who has spoken frequently about addressing economic inequality during his nearly 14 years running the Boston Fed, said the pandemic has taken an especially hard toll on customer-facing service businesses, which are large employers of Black, Hispanic, and Latino workers, including many women and young people.
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The jobless rate for younger workers is roughly double that for older workers, according to the broader U-6 measure of unemployment, and the rate of participation in the labor force for women has fallen more sharply, with the differential more pronounced by age, he said.
The U-6 rate — which adds in people who are working part time for economic reasons and those who are marginally attached to the labor force — is just under 10 percent for white workers. The rate is more than 15 percent for Black and Hispanic and Latino workers, according to the US Bureau of Labor Statistics.
And among younger workers, women’s labor force participation rates have fallen by over a full percentage point more than men’s during the pandemic, Rosengren said.
“The younger age categories are those where families might have child care issues during the pandemic which could cause a parent, likely a woman, to leave the labor force,” he noted.
Rosengren said the Federal Reserve’s decision to cut interest rates to near zero, combined with trillions of dollars in fiscal stimulus programs, has done much to help struggling businesses and workers. But as the recovery picks up speed, more needs to be done to make sure everyone benefits from the gains, he said.
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Before the pandemic, most employers said their biggest challenge was finding qualified workers. Rosengren said training workers in the changing skills needed by employers is important but should be coupled with efforts to make jobs more attractive. Labor force participation among women and people of color could be increased by providing flexible working hours and remote work options, health insurance, and medical and family leave, he said.
Echoing themes from President Biden’s “Build Back Better” initiatives, Rosengren said more partnerships between employers and government will be needed to bring people back into the workforce, with a key element being affordable child care and early-childhood education.
“I believe that as we think about recovery from the pandemic, we should take the time to look for ways that our economy can be reimagined for the better with what we have learned during this trying period,” he said.