Warning- it’s not very funny if you’re a member of the 99%.
Federal Reserve Bankers Mocked Unemployed Americans Behind Closed Doors
by Matt Stoller, The Intercept
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.”
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.”
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.”