Parsing the Pandemic’s Effects on Labor Markets

By Susan M. Collins

November 18, 2022

Boston, MA

66th Economic Conference

Federal Reserve Bank of Boston

Full-Text Speech (pdf)

Takeaways from Boston Fed President Susan M. Collins’ November 18, 2022 Remarks

The Fed’s focus on the U.S. labor market is grounded in its dual mandate to achieve price stability and maximum employment. Restoring price stability remains our current imperative as monetary policymakers, and it is clear there is more work to do. Understanding how the pandemic is affecting employment in the short and longer term, while challenging, is essential for that effort.
There has been a significant amount of work on COVID-19 and the labor market among academic economists as well as researchers within the Federal Reserve System. This conference brings together leading experts on the topic, enabling us to benefit from their perspectives and learn about remaining questions to be answered.
Answering key questions about the pandemic’s effects on labor demand and labor supply is important for calibrating monetary policy and reducing inflation back to 2 percent. By raising rates, we are aiming to slow the economy and bring labor demand into better balance with supply. I remain optimistic that there is a pathway to re-establishing labor market balance with only a modest rise in the unemployment rate – while remaining realistic about the risks of a larger downturn.
Potentially long-lasting effects of the pandemic on the labor market, such as increased remote work and accelerated automation of service-sector jobs, are likely to have differential effects across the workforce. Understanding these differences is important for achieving the Fed’s mission of a vibrant, inclusive economy in the wake of COVID-19.