Part 8: Q&A

November 21, 2011

Waller, along with Fed economists Natalia Kolesnikova and David Andolfatto, answer questions from the “Dialogue with the Fed” audience in St. Louis and via webcast. The questions centered mainly on how demographic changes, economic trends and policies are affecting employment. Julie Stackhouse provides a wrap-up of the session in closing remarks.


Christopher Waller: All right, question and answer session. We'll bring out my co-panelists here. Again, if you want to ask a question, there's a little button on your mic, and it just makes it easy for everybody in the back to hear. I'll hear it just fine, but people in the back won't. So I'd like to bring on Dave and Natalia. Turn your mics on too. This is Dave, just in case you were wondering. (Laughter.)

David Andolfatto: Thank you, Chris.

Christopher Waller: Question in the back?

Male: Could you talk about the impact of small business on unemployment?

Christopher Waller: David? No warm-ups, baby. No softballs in here.

David Andolfatto: Oh, thank you. Well, small businesses, it's well-known that small businesses are a big driver of employment and in the U.S. economy and elsewhere. But what's less well-known, I think, is that small businesses also contribute a lot to job destruction. So they seem to be, you know, job drivers. They seem to be a source of much turnover in the labor market. To what extent that impacts unemployment, of course, depends on whether the hiring rates exceed the destruction rates. And that varies with the business cycle.

Female: You talked about, a lot about how the how the situation's different now with unemployment and that it's not responding to fiscal policies and the curves are not what you expect in all different situations. But I would like to hear you speculate about reasons why this is happening. I didn't hear any—you didn't really give any reasons. You just defined the situation.

Christopher Waller: Right. So one is, there was the housing crisis is not a normal thing that's going to help us out of this. Somehow I lost a slide in the edits today of my unemployment insurance benefits. So one argument is there's been some impact of unemployment insurance benefits. The numbers range between about a half—that the long extension of unemployment benefits has added between a half of a percentage point to unemployment to 1 1/2 percentage points. So it's had an impact, but it doesn't explain, say, 3 percentage points or 4 percentage points of unemployment. So that was one thing.

Like I said, the political uncertainty is what we hear, political regulation. These are the issues we hear from firms why they're—when we ask them point blank, "Why are you not hiring?" they say that's it. Now one of the last things is that, one of the things that happened for the last three recessions that's different from the other ones is that, starting in the '90-'91 recession, when firms lay off workers, they don't call them back. They used to. It was usually, you know, they laid you off, you might be off work for a month, two months, three months, and then they had a recall.

There were changes in policies, particularly in terms of how they charge for unemployment insurance in the '80s to the firms that the firms then said, "Once we let them go, we don't call them back." That means you're typically out of work longer looking for a job and you have to start up a whole job search. You just don't have that easy recall. So I don't know if I answered your question that time, but I try and shot.

Female: Yes. But don't you have a global perspective of what's happening too that would sustain high employment?

Christopher Waller: In the sense of...

Let her take a shot. Here's the labor economist. Let her do it.

Natalia Kolesnikova: Well, part of the problem with this recession is that there are long-term changes in the U.S. labor market, and we're just seeing kind of the effect of that. So part of that, I think, where you are going to is that, well, for example, we do know that there was what economists call polarization of the labor markets, is that we see growth in low-skill, low-pay occupations and high-skill, high-pay occupations.

And the middle is kind of deteriorating and the middle-skill, middle-pay. And that trend just accelerated during the recession. So firms trying to get rid of these workers, either they're being replaced by computer automation or being—jobs being sent overseas. And that's been the trend for the last three decades. It's not something new, just accelerated during the recession. So that's part—that's something that is new this recession.

Christopher Waller: Far in the back.

Male: Hi. Good evening. Of the long lines in the last comment that was made, could you maybe address the declining workforce and the prospects of a declining birthrate in the United States and the impacts on our unemployment going forward, and productivity.

Christopher Waller: You're the fertility expert.

Natalia Kolesnikova: Well, not in that—not quite in that aspect. There have been serious demographic changes lately. In fact, I saw this once that says that about half of the increase in long-term unemployment can be explained by demographic changes that began who were already employees before the recession started. There are two things that people might not think about, is that increase of number of women in the labor force is one factor.

We do see that, for some reason—we don't know why—but for women, the spells of long-term unemployment is—there's a higher frequency. And as we see more women in the labor force and they're more likely to have long spells of unemployment, then you'll have more unemployment as well.

The second factor is changes in the age distribution of the labor force. Again, we see that, even though unemployment rate itself is higher for younger workers, for older workers, actually, the unemployment spells are longer. So once older workers are unemployed, they tend to be unemployed longer. And as population getting older, again, we see kind of unemployment rate going up because of that.

Christopher Waller: Okay.

Male: One day in school we learned that as we make transition from an agricultural economy to an industrial economy, there was a lot of labor displacement. And I'm curious as, one, is my information correct? They told us that back in the '60s. Did it really happen? And is it happening again now with moving from a manufacturing base to a different type of employment here in the United States? And is that contributing in large part to some of this employment displacement that we're seeing now?

David Andolfatto: To the best of my knowledge, I mean, those trends are continuing. But they are secular changes that have been occurring for decades. And so, you know, they could potentially be reinforcing what's going on in the recent recession, but I don't think—it's clearly something else that has hit the U.S. economy to create such a violent reduction in employment and increase in the unemployment rate. I personally don't think that those forces are playing a major role in the current recession, although they're always underlying in the long-term trends. Yeah.

Male: What impact does the increase in the minimum wage have on unemployment, and in particular, on those who are younger or less well-educated?

Natalia Kolesnikova: The studies are kind of mixed, but most of them shows that the increase in minimum wage usually have very little effect on employment. So effect on unemployment, it's highly unlikely that there are a lot of effect of that. So the degree that I personally didn't see any sign is that even for it as a possible explanation. So if there is an effect, it's probably very small, and people not concentrate on that at all as far as I know.

Male: Does the St. Louis Fed track small business loans? What's the trend? And what method do you use?

Christopher Waller: I was going to say we'll have our bank supervision to answer that one.

Julie Stackhouse: Small business lending finance is tracked somewhat—thank you—on information that banks submit. Once a year they do report loans, small dollar loans to businesses. It's the best proxy we have for small business lending at this time. It's not excellent information to judge small business lending. So what we've done over the past few years is, we've supplemented that by really reaching out to the industry, to small businesses, and to groups that really work with small businesses to better understand, how do small businesses get credit? And is it from banks? And is what the data is telling us very helpful?

The data itself shows that banks' small dollar loans to businesses rose rapidly throughout the decade of the early part of the 2000s and then has dropped off significantly since the recession. But if you take a look at where that is, which is in somewhat larger banking organizations, not the traditional community banking organizations, we're pretty sure, although we're not positive, that it's largely due to the type of lending that is dependent on credit scores or real estate as collateral.

So it's not surprising you'd see that escalate in the middle part of the decade where everybody had good credit and we had a lot of real estate to pledge, and then you'd see it drop off when values declined and when credit scores were reduced. So that's sort of wow, but that's sort of what we would expect. So then we turned it and we said, "Okay, now how do small businesses get credit? If they have to rely on that, what are the alternatives?"

And what we've found is that it's a very tough job for a small business to find credit unless it has a stable balance sheet, it has a cash flow, it has solid income from sales that it can show that it can repay debt, and that it has some ability to pledge collateral. A year and a half or so ago, the Small Business Administration offered some guarantee programs. That added some enhancements that made some small businesses more eligible for bank credit. But by large, it is going to take the ability to show ability to repay to get bank credit, and right now small businesses are having a hard time doing that.

So that's maybe not precisely your question, but it's an age-old question of whether or not a bank lending to small businesses meets the standards for a bank to offer it, and often it is either an enhancement through collateral, it's through the ability to show a financial statement or a cash flow that's solid, and right now small businesses are having a hard time doing that, particularly if they're the, you know, sort of the mainstream type business. Does that answer the question? Okay.

Christopher Waller: Let's go in the back.

Male: Oh. Could you please update the population of nonparticipants to employee population? The study enacted '96 to 2003 was 122 million employees and 59 million nonparticipants. I think I'd feel more comfortable with the unemployment rate if the ratio of nonparticipants didn't change as a percentage of the employees.

Christopher Waller: Right. So I think I just looked. There's a hundred and roughly 45 million employed workers. So I don't know what that is right off the top of my head from the size of labor force. Can't do the arithmetic on the top of my head with those big of numbers. I mean, that's roughly—yeah, I mean, it's about 145 million workers, and U.S. population is about 313 million. So of the total population, it's just a little under 50 percent. That's kind of a rule of thumb you can use for almost all countries.

Male: That the percentage of nonparticipants to the total number of employed in the U.S. population.

Christopher Waller: Oh, the number of nonparticipants? Well, see, and it's—

Male: It's better that you gave us that it was 48 percent nonparticipants for every employee, employed person in the population if you will. You know, I think I could swallow the unemployment rate if that nonparticipation rate remained constant or held itself. But if the number of nonparticipants increased substantially from that 48 percent ratio, I would have a hard time with the unemployment rate.

Christopher Waller: Yeah, I'd have to go check the numbers off the top of my head and what the nonparticipation rate is. But it's about—I think I showed it was—

Natalia Kolesnikova: So—well, one of the reasons of the numbers for nonparticipants increasing is, again, aging of the population, that just, you know, people live longer, which is a good thing. But they're not in the labor force. So I'm not sure if that's what you're asking.

Male: Well, what I'm getting at is, the nonparticipants, including those who have basically given up looking for a job.

Christopher Waller: Correct. Correct.

Male: They are excluded from the definition of unemployment.

Christopher Waller: Correct.

Male: So I really question the 9 percent unemployment rate that everybody seems to be throwing out.

David Andolfatto: May I address that question?

Male: Sure.

David Andolfatto: I agree with you.


Male: And I would think the unemployment rate is double what that—

David Andolfatto: One should be very careful in devoting too much attention to the unemployment rate per se, because, for example, one way that the unemployment rate could come down is if people just—the unemployed workers just became discouraged and exited the workforce. And I don't think at that point we as policymakers should be necessarily happy. I mean, we may or may not be, but not necessarily.

So we have to be careful, and this is one reason—this is another reason why President Bullard does not want to tie monetary policy rules to measures of unemployment rate. I mean, among other things, the unemployment rate does not take into account, for example, the welfare of the working poor. And so, you know, perhaps a preferred measure of labor force activity might be the employment rate and not to pay too much attention to the unemployment rate per se.

Male: Just as sort of a follow-up to that, when you were referencing the—you were referencing earlier the reduction in the labor participation rate. And you really didn't have any good demographic reasons for that decrease. Has there been any effort by the Fed to see how many of the, or how much of the reduction in the labor participation rate is due to the discouraged worker?

Christopher Waller: Well, again, that trend was starting 10 years ago. So I doubt very much it was discouraged workers for a decade, particularly when the unemployment rate was at 4 percent for a couple of years in the middle of the decade. Some of this, again, is it's demographics. It's people going back to school. It's a number of things. I'd have to sit down and do a more careful study of what it is.

But, again, it was like there was a big run-up for 20 years, and then there was a 10-year decline that just accelerated in this drop-off. And a lot of it is, people go back to school during recessions. It's a perfect time to go back to school. The opportunity costs are low in terms of foregone labor income, so it's kind of a typical thing that we see in all sorts of educational things. And, usually, people drop out of the labor force when they do that. So, I mean, that—

David Andolfatto: I can add a little bit to that. So the conventional measures of unemployment, you're right, does not take into account discouraged workers. But I believe that the Bureau of Economic Analysis that does publish the official unemployment rate, I mean, they also have alternative measures for unemployment rates that do make some attempt to get at what you're suggesting, some measure of discouraged worker effect, things like that. And if you just go to their website, and it's all available, you'll see that, as you might expect, these alternative measures of unemployment rates here are higher than the official measures.

Christopher Waller: Yeah. I think one of the—on that same point, one of the things they do—a big contributing factor are people that are underemployed. They're employed, but they want to be working fulltime, and they're working 20 hours a week. Or they may have temporary jobs instead of fulltime. They're at a temp agency instead of having a fulltime job at a firm. They're employed, but they're not fully employed in some sense. So, again, that's another reason why these are not perfect measures. But they give us some kind of rough temperature of what's happening in the labor market. Question over here?

Male: Is there a measure of jobs open for which no qualified worker has applied or is available?

Male: I've read something to that effect.

Christopher Waller: That's kind of my linebacker story from Notre Dame.

David Andolfatto: Did people hear the question? You should turn your mic on when you're—

David Andolfatto: Maybe somebody else knows. (Laughs.)

Male: Is there a measurement of the number of jobs or positions available for which there's no qualified candidate on the job or available for the job?

Julie Stackhouse: That wouldn't be just the linebacker. That would also be the international jobs that are going out, right?

Christopher Waller: Yeah, but jobs are also coming back into the U.S. now. In some sense, if there was any wage pressures or claims or issues, firms—actually, firms are starting to relocate labor back. Labor in China has gotten very expensive, seriously. It's gotten much more expensive, and U.S. firms are starting to think about repatriating jobs. I think somebody in our District just—who was it?

Natalia Kolesnikova: I don't remember the—

Christopher Waller: Westinghouse or GE or somebody just reopened.

Natalia Kolesnikova: GE was bringing back from—

Christopher Waller: Yeah, they're bringing back a plant from China and reopening it in the U.S. So this is what you would expect once wages start equalizing across countries. Jobs will start potentially flowing back into the U.S. There's a question over here.

Female: Two. It's related. We've heard the expression jobless recovery, and I worry when I see that chart, the curve that you showed, and all that kind of—that noise.

Christopher Waller: Yeah.

Female: What is that due to? Is there such a thing as the jobless recovery? Or is it that polarization of, you know, just different kinds of jobs at different ends of the skill level? Are these things related?

David Andolfatto: Well, I can say that this jobless recovery phenomenon is real. It happens. I mean, it's defined—first let's define it. And what the definition is is that real per capita output is rising while employment per capita is either steady or declining. And indeed, the implication is that productivity is rising, so more output is being produced without additional workers. This is a phenomenon that can persist for a long time. It has persisted.

I'm familiar with the recent Great Recession that occurred in Canada in the early 1990s. I happen to be Canadian. So there, throughout the 1990s the drop in employment in Canada was at the same order of magnitude that happened in the United States in this recession. And I think it took seven or eight years for the unemployment rate to drop below 8 percent from 12.

And employment just flatlined for almost an entire decade while GDP continued to rise. And then eventually, we came out of it, and now the fortunes have seemed to be turned around. But it's a phenomenon that happens, and that's what it refers to. I don't know what else to say about it. Do you have a particular question about...

Female: Just how it impacts some of the other statistics you're talking about.

David Andolfatto: Like what, for example?

Female: That curve. The curve that showed the noise.

David Andolfatto: The Beveridge Curve. Oh, the Beveridge Curve?

Female: Yeah.

David Andolfatto: Um, let's see. You're probably talking about the latter part of the Beveridge Curve where it appears to have shifted up. And it's hard to say, right? That jump up in that curve is typically interpreted—although it's not the only way to interpret it—it's typically interpreted as reflecting an increase in the degree of mismatch in the labor market.

It's just become technically a little more difficult to find suitable matches in the labor market. So the same amount of job creation effort yields—it's just less likely to match with a good employee. What that has to do with the jobless recovery per se, I'm not quick enough on my feet to link it in my head right now. So..

Female: Well, I just meant if there's a mismatch, then they're not hiring the people. And maybe it's because the productivity is—

David Andolfatto: Oh, I see what you're saying. So productivity is rising, and so that there's less demand for labor to fill. Well, I can say this. Productivity has been rising in most Western developed economies for the last 100-150 years. And the employment per capita has remained pretty much stable over that entire period of time, so one big long jobless growth experience. Rising productivity does not necessarily mean that employment is going to fall, especially in the long run. At least that's what the data says.

Male: Excuse me, Chris. We have a question from the River Room.

Christopher Waller: Okay.

Male: And in fact it was emailed in, somebody watching via webcast. It's a general question to the panel. Do the panelists believe that the unemployment rate has any correlation as a trailing indicator of national education policy? And the questioner goes on to say, will No Child Left Behind, for example, have an effect? Or have other policies actually made a difference in this regard?

Christopher Waller: Well, I—go ahead. (Laughter.) I talked for an hour. Let somebody else talk.

Natalia Kolesnikova: Yeah. Well, I guess you can always talk a lot about education and importance of education. I don't want to go as far as No Child Left Behind policy, because, obviously, it was recent enough to make any difference for this jobless recovery. The issue, as Chris was pointing out in his presentation, is that even people with college degree, even though their unemployment rate is so much lower than otherwise, there are still quite a few of them who are unemployed.

And one problem there is that, even though the U.S. universities graduate more and more people, more and more people are getting bachelor's degrees in the last 30 or 40 years, if you look at what they're majoring in, then you'll notice that numbers of people with bachelor's degree in fields like engineering and sciences, in computer science, in kind of a high tech fields, did not change at all.

But the numbers in, you know, arts and journalism and, you know, kind of related fields sometimes tripled. And it's just, you know, even though education level of the country goes up, not necessarily everybody getting the most return on their higher educational skills. So that's one of the issues. And it probably is an issue in this recovery because, well, all the jobs that require higher-skilled people in engineering and related fields are just not available.

Christopher Waller: Oh, let's just get somebody not far back.

Male: Yes. In some of your slides you were indicating that there was a very high unemployment rate in the '81-'82 recession. I'm wondering if you could discuss any similarities between this recession and that one and how we got into it and how we got out of it—similarities and differences.

Christopher Waller: Right. So in the '81-'82 recession, if you remember, which you may not, but we had very high inflation. We had inflation of 12, 13 percent, and the Federal Reserve jacked up the interest rates. Our Fed Funds Rate that's now at zero was 20 percent. So you could imagine what this did to housing in the short run. Instead of a housing bubble that caused a crash, we caused a crash in housing, but when interest rates came back, one of the things that happens was it came back quickly.

So that was a very short, painful jack-up on interest rates. And then it kind of killed inflation, and then things came down and then they picked back up. And, again, there was this temporary unemployment phenomenon that firms would say, "Okay, stop. Go home. We'll call you back in a couple of months. Collect your unemployment. Don't take a job. Just sit there and we'll call you back."

And I used to be a Teamster, and that was what—all the guys I worked with in the late '70s, that's what would happen. They'd look at it like a vacation. "All right, we're going to out for a month, collect unemployment, and call me back, come back to work." That's gone. That's what I said. That's gone now. When a firm lets you go, it's gone.

And when you talk to firms about, "Well, things have picked back up. Why don't you hire these workers back?" they say, "It was so painful that if we're not certain we want to keep them, we're not bringing them back. So we've got to be very certain—it's so painful to let your workers go and so distressful on the marketplace and uncertainty and who's next and all that that we're not going to just bring them back and then three months later, oop, the economy is going south again, shut them all again." So that's where in the old days you'd say, "Ah, go home. Ah, come back. Ah, go home. Ah, come back." It was much†that doesn't happen anymore. So let's see if we can get some more questions. Right here.

Male: How big of a contributing role do you believe home ownership tax incentives, and maybe lesser so, interest rates have on the sickness of homeowner ability?

Christopher Waller: Like I said, it doesn't seem—oh, interest rates per se or the underwater issue? The fact that you have negative equity in your house?

I mean, typically, you'd think if you were trying to sell a house or buy a house, low interest rates would make it easy. A lot of buyers. It's easy to finance. Things like that. Again, it's not normally working like it would, because of this big disaster in the housing market in the U.S. So there's too many houses. People are under water. Even if you wanted to borrow at a low interest rate, your credit potentially isn't there.

Or you're coming from a house—you know, I know people who would love to—they moved, but they're still stuck with their house back where they are. And they've had to turn it into a rental and become landlords, and they didn't want to do that. But they still moved. But the interest rates weren't helping them sell it. I mean, if you're owning a condo in Miami, good luck. You know, you're just not going to get rid of it.

Natalia Kolesnikova: If I can add a little bit to that. So Chris was talking a lot about importance of housing market for this recovery. There is one piece of information that somehow doesn't get a lot of attention, and it is creation of the new households. So the formation of the new households that's part of the kind of puzzle that's who buys new houses.

And so even if we work kind of that excess supply of houses that we build, as Chris was saying during his presentation, in 2010, if I'm not mistaken, if you look at the formation of new households, it's about 75 percent down from previous national levels. So there are just like new families just not happening or, you know, college grads moving back with their mom and dad instead of, you know, go out there and buy a house. So that's another—

Christopher Waller: I know. I know.

Natalia Kolesnikova: I'm sorry, Chris.


Male: The Fed's method of attacking the unemployment problem generally has been through massive spending, which is sort of Keynesian economics. I kind of have the idea that Mr. Bullard isn't a hundred, and that the results have been less than successful, obviously. I have the idea that Mr. Bullard isn't in 100 percent agreement with that policy. I don't know whether I'm right or wrong on that. But I was wondering what your opinion is.

Christopher Waller: I am not going to speak for President Bullard. (Laughter.) I get in trouble when that happens. He beats me over a club the next—or with a club the next day. I mean, there's been an enormous amount of debate about the stimulus effect and the multiplier of, you know, spend $1 of government spending, how much does GDP go up? Does it go up by more than $1?

And, I mean, most of the evidence for decades was it's certainly less than $1 and close to zero. So, for me personally—I'm just speaking personally here—the fact that this has come back out of the woodwork after—to me, it's like a vampire. We thought we put a stake through its heart, and it just keeps coming back. I don't know of a lot of serious evidence that this is going to get you out of this. But I could be wrong.

David Andolfatto: I'd like to ask a clarifying question. When you said the Fed, did you mean the federal government or the Federal Reserve?

Male: The Federal Reserve.

Christopher Waller: Oh, no, we don't buy. We just—

David Andolfatto: We don't spend.

Christopher Waller: Yeah, we don't spend. No, the federal government is—is that what you meant by the stimulus plan? Or you mean by us buying—

David Andolfatto: Yeah. No, he meant our stimulus, our asset purchase program.

Male: I'm referring to the—Mr. Bernanke and the Federal Reserve.

Christopher Waller: Ah, I'm sorry. I misunderstood.

Male: I'm not referring to the St. Louis Fed.

Christopher Waller: Well, that I definitely have to pass on.

David Andolfatto: Well, I mean, I can—

Christopher Waller: No, you can't. (Laughter.)

David Andolfatto: No, just clarify the Federal Reserve Bank does not spend money on goods and services.

Christopher Waller: Yeah.

David Andolfatto: We were restricted to purchasing assets—U.S. Treasuries. In an earlier program we were—you know, we're creating money, but it's not like we're distributing it willy-nilly to the population. We're restricted to purchase various assets. So is that what you meant?

Male: Doesn't work.

David Andolfatto: There is—people have different opinions.


Christopher Waller: Way in the back.

Female: I'm just wondering, have you looked at the GDP over a 10-year period and its growth in relationship to the unemployment?

Christopher Waller: Well, I mean, I showed, you know, unemployment went up in that 2000 recession. And then it came down to around 4 to 4 1/2 percent for the middle part of the decade, and now it shot back up. During that period, GDP growth up from 2000, 2007 was kind of on average, I think typically about 3 percent, 2 1/2, 3, 3 1/2 percent. So GDP growth has been right around 3 percent for—like Dave said, it goes back to 150 years. And unemployment kind of goes up, goes down. So there's no—GDP just grows over time for 150 years. Unemployment kind of does this. There's no clear trend up or clear trend down in it.

Female: Then it's been relatively slow.

Christopher Waller: Pardon?

Female: It's been relatively slow

Christopher Waller: GDP growth in the last four years has been much slower than we would have thought coming out of this recession. It's barely 2 1/2 to 3 percent. Normally, it would be 4 1/2, 5, 6 percent coming out of this recession. Julie, how many more?

Julie Stackhouse: I know there are more questions, and maybe if you're really lucky, when you're heading out, you can grab one of these guys and ask them. But I didn't say that, Chris, so, you know. I know they do need to finish up tonight too, so we will have to cut the questions off. So I think that there was a lot here tonight. I'm going to take a little bit of a shot at recapping some of the important points, because I think what you heard is there is not an easy answer to the sticky high unemployment level.

It's probably more complicated than you even thought it was to begin with. But some of the things we did talk about was the fact that some of the research here at the St. Louis Fed has shown that about half of the lost jobs directly or indirectly related to housing. So we know housing is flat, and we know that individuals that are or were in that industry have a special challenge to face as they look at re-skilling for jobs that are consistent with both the background and skills they might have.

We also talked a little bit about the added complexity of underwater mortgages. Now, unlike Chris, who's an economist, and economists—you know, I love working with economists because it's just an equation, and for me it's an emotion. What do you mean you might leave an underwater house? You have a moral obligation to pay your mortgage if you can. That's my upbringing in Minnesota.

So we might get into a debate of, "Well, you say that can happen, but that might not be the right thing to do if that's your debt obligation." In any event, whatever the complexity, pure or complicated, we do have the added factor that people with underwater mortgages are making those decisions or not on whether or not they can move to areas where jobs might be more plentiful, assuming that those skill sets are the ones that are needed.

We talked about firm behavior and the fact that in today's environment, when firms discharge workers, those workers are not called back as they typically were several decades ago. So you have the need then to have firms convinced that policy, whether it be things like healthcare policy or regulation or other things, be more certain before they're willing to hire that next employee. So that adds to the complexity.

We talked a little bit about the long-term unemployed and that the fact that we have so many people in that category during this recession, and again, the complexities that that brings. Perhaps some incentives on whether or not it encourages you to seek employment quickly if you have extended benefits, but beyond that, the consequences if you don't. The lemon effect that Chris mentioned. There is—if you are unemployed for a long period of time, people ask, "Why were you unemployed for a long period of time?" So we have those special challenges with that group.

And then we talked about the importance of education. I thought it was really a great question to raise, you know, "Are we educating our kids right?" Certainly, there's the foundational getting the high school education piece. But we also talked a little bit about the fact that, even if you get the high school or the college education, it has to be the right education. It has to be in the right industry.

And that really hit home for me. I have a high school senior this year, so we're going to have a new lecture on picking the right field of education. I understand it. I understand it's very interesting right now to explore yourself in college. But maybe that's something that we need to as parents be thinking about very carefully is, you know, that exploration into areas of interest versus areas that get you a job may be, for me anyway and for my family, a discipline we should think about talking about more.

And, finally, we talked about some of the demographic changes. And we talked about how that wasn't necessarily going to be an easy answer. I know there was an earlier question, and I picked up on it, "Won't the fact that we have fewer people entering the workforce take care of this problem over time?" And I'm willing to guess you would say, to some extent if there are more people exiting the labor force for retirement and other purposes than entering, in a macro sense, that helps with the number of people that are in it. But I'm not sure it helps with having the right skills, and that inevitably, as we look at the jobs that are out there, matching skills is also important.

So I'm not sure if we left you with all the answers tonight or not, but I hope we left you with at least an understanding of how policy changes, as much as they may—that we would like to see the silver bullet—are not going to be quick to find. In effect, if economists were able to solve this puzzle, I suspect by now, really three years since the start of the Great Recession, there would be agreement, and we don't have it.

But I'd like to thank Chris and our panelists for really building the dialog tonight to introducing the—to you all the complexities associated with it and perhaps leaving you with some food for thought, for further conversations as we look for opportunities to talk more perhaps next spring. So thank you all very much.