Fed policy can not solve labor market ‘puzzle,’ Kaplan says By Reuters

(Reuters) – Monetary policy can not do much to solve the labor market “puzzle” where employers are having difficultly finding workers even as millions of Americans remain unemployed, Federal Reserve Bank of Dallas President Robert Kaplan said on Thursday, repeating his view the Fed should reduce its support for the economy “sooner rather than later.”

“If you were in a person-to-person job, you need more inducement to come back to that job,” Kaplan said in a virtual event held by Rice University, adding the availability of pandemic unemployment benefits gives workers the option of waiting for a better job rather than taking what is on offer.

That creates an imbalance between demand for and supply of labor which the Fed is ill-equipped to address. “When unemployment benefits run out, we’ll find a balance.”