Retrain workers, banker urges
Globalization an opportunity, not a threat, for U.S., a Fed leader says
The Federal Reserve on Wednesday released another upbeat report on the U.S. economy, noting job gains, wage increases and moderate inflation.
The continued advance in the United States is part of a remarkable global expansion as major economies from North America to Europe to Asia grow at the same time. But if they are to keep growing at a healthy pace in coming years, the United States and other developed nations will have to fix several underlying problems, said Robert Kaplan, president of the Federal Reserve Bank of Dallas,
Kaplan, speaking Tuesday night at the CERAWeek by IHS Markit conference downtown, said the United States, Europe, Japan and China will have to find solutions for slowing workforce growth, sluggish productivity and high levels of government debt, which could stifle economic growth.
The central banker said the United States needs to do more to retrain workers who
have lost jobs to automation and, to a lesser extent, globalization. U.S. immigration policy, he said, should favor skilled individuals, but “we should recognize immigrants are a big part of workforce growth.”
“To think we will cut immigration and grow as fast, those two things don’t fit together,” Kaplan said.
In the United States, he said, 46 million workers with a high school education or less are highly likely to see their jobs restructured or eliminated at some point — lost, first and foremost, to technological advances.
Kaplan warned that blaming globalization and free trade for the jobs lost to automation could lead to poor policymaking.
“With these issues, globalization is an opportunity now for the United States; it’s not a threat,” Kaplan said. “That’s the reason we’re talking about how important trade is, how important immigration is. Those are likely opportunities for the United States, but we’ve got to get that diagnosis right.”
The slowing workforce growth and sluggish productivity wouldn’t be as big a problem if governments didn’t have so much debt, he said. With the economy expanding, the United States should be shrinking its deficits. But the U.S. tax reform bill, as well as the government’s recent budget deal, will add to the federal debt.
He said the national debt, now above $20 trillion, is reaching “unsustainable levels that will worsen the path of future debt growth.”
Kaplan said he believes the Federal Reserve should raise interest rates three times this year, in an effort to keep the economy from overheating. The nation’s unemployment rate is at 4.1 percent, and U.S. forecasters believe that could sink into the 3 percent range by the end of the year.
There aren’t many examples, he said, of times when the United States overshot full employment and then had “a soft landing.” collin.eaton@chron.com twitter.com/collineatonhc