WEBVTT - Surveillance: Gross Counsels Caution Despite Good Jobs Report 0:00:00.040 --> 0:00:02.640 Who you put your trust in matters. Investors have put 0:00:02.680 --> 0:00:07.000 their trust and independent registered investment advisors to the two 0:00:07.280 --> 0:00:11.360 four trillion dollars Why Learn more at find your Independent 0:00:11.400 --> 0:00:26.960 advisor dot com. Welcome to the Bloomberg Surveillance Podcast. I'm 0:00:27.040 --> 0:00:30.920 Tom Keene with David Gura. Daily we bring you insight 0:00:31.000 --> 0:00:35.560 from the best in economics, finance, investment, and international relations. 0:00:35.960 --> 0:00:40.559 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 0:00:40.640 --> 0:00:48.080 of course on the Bloomberg again. About niney minutes to 0:00:48.080 --> 0:00:50.000 go until we get the October job support. Joining us 0:00:50.000 --> 0:00:54.200 in studio is Ellen Center, chief US economist at Morgan Stanley. Morning. Ellen, 0:00:55.240 --> 0:00:58.680 what's the relative importance of this report? We had the 0:00:58.680 --> 0:01:00.640 FED meeting this week that the two a FED meeting, 0:01:00.960 --> 0:01:02.960 a dead meeting as we as we characterized it, looking 0:01:02.960 --> 0:01:05.520 ahead here to December. This is the first of two 0:01:05.600 --> 0:01:09.399 jobs reports will get before the next FED meeting in December. 0:01:09.480 --> 0:01:11.400 Put this into some context for us, Well, I hope 0:01:11.440 --> 0:01:16.360 that it's an unexciting report. Uh, but there's always with 0:01:16.400 --> 0:01:20.360 the employment reports, there's always the scope for a big surprise. UM. 0:01:20.400 --> 0:01:22.759 I think the sense is that, uh, you know, these 0:01:22.800 --> 0:01:26.760 employment reports are supposed to be that very important incoming 0:01:26.840 --> 0:01:29.240 data that the FED is watching as their data dependent 0:01:29.800 --> 0:01:32.360 UH and making decisions meeting by meeting. But they have 0:01:32.440 --> 0:01:36.360 lowered the bar so much for going in December. Uh. 0:01:36.600 --> 0:01:39.560 I can't say it's a foregone conclusion because everything can 0:01:39.640 --> 0:01:44.399 fall apart between now and then, But the employment report 0:01:44.880 --> 0:01:47.760 has a very low bar UH that it needs to 0:01:48.640 --> 0:01:51.080 rise above UM. And I think as long as we 0:01:51.200 --> 0:01:54.760 get UH anywhere between a hundred thousand and two hundred thousand, 0:01:54.840 --> 0:01:57.720 that's right in the pocket UM. And that's fine for 0:01:57.800 --> 0:02:00.360 the FED. And will it'll be sort of a hum 0:02:00.360 --> 0:02:02.720 report because it's going to come in not far from expectations. 0:02:02.840 --> 0:02:06.200 Is this report more important in the political context again? 0:02:06.240 --> 0:02:09.480 The election here next Tuesday. This is something that could 0:02:09.520 --> 0:02:12.640 be Trumpet died or bally hood or or the opposite 0:02:12.680 --> 0:02:15.000 here in the coming days. Is it more important how 0:02:15.040 --> 0:02:17.560 this is consumed by the political side of things in 0:02:17.560 --> 0:02:20.360 the FEDOM? Yeah, Well, you know, good data is always 0:02:20.400 --> 0:02:25.120 good for the incumbent party, and it's it's not unique. 0:02:25.160 --> 0:02:28.880 This happens every election cycle, where if the data looks 0:02:28.919 --> 0:02:32.359 really good and it's benefiting seems like it's benefiting one 0:02:32.400 --> 0:02:35.160 party the other party will exclaim that the government is 0:02:35.280 --> 0:02:38.400 manufacturing the numbers and that they are fake. You know 0:02:38.520 --> 0:02:40.600 what happens this morning, if we get a blowout three 0:02:40.680 --> 0:02:46.240 hundred thousand payrolls, you might see Uh, Republicans step up 0:02:46.240 --> 0:02:49.560 and say this data is manufactured in order to make 0:02:49.600 --> 0:02:54.320 a Hillary presidency look better. Um, And of course that's 0:02:54.360 --> 0:02:56.399 not the case. But we also want to be fair 0:02:56.440 --> 0:02:59.160 and say this is not different than any other election cycle. 0:02:59.720 --> 0:03:03.359 We always have these exclamations of of falsehood, if you will. 0:03:03.400 --> 0:03:05.560 If the data is looking one way or the other, 0:03:06.040 --> 0:03:07.920 looking ahead to that that next FED meeting on the 0:03:08.919 --> 0:03:12.720 of December, what are the near term risks that they 0:03:12.720 --> 0:03:15.040 could crop up aside from from an election result that 0:03:15.040 --> 0:03:17.960 maybe goes against what people expect. Well, I think certainly 0:03:18.000 --> 0:03:21.919 if you if you had some sort of collapse in 0:03:21.960 --> 0:03:25.440 the hiring rate, Um that that we came. We just 0:03:25.480 --> 0:03:28.520 got very weak job growth in this report, and we 0:03:28.560 --> 0:03:32.079 get another job's report before that December meeting. Um, if 0:03:32.080 --> 0:03:34.600 the job growth is weak enough that the unemployment rate 0:03:34.639 --> 0:03:37.080 starts to tick back up. Uh. That is something that 0:03:37.200 --> 0:03:39.720 Janet Yellen indicated in her Q and A after the 0:03:39.760 --> 0:03:43.160 September meeting that she was laser focused on the unemployment 0:03:43.200 --> 0:03:46.040 rate needed to fall further. Uh. So job growth just 0:03:46.120 --> 0:03:48.400 isn't strong enough in order to get the unemployment rate 0:03:48.440 --> 0:03:51.320 to continue to take down. Uh. That might be something 0:03:51.320 --> 0:03:54.040 that leads to softer expectations of December, and then the 0:03:54.080 --> 0:03:56.840 Fed has a big decision to make. Uh do they 0:03:56.880 --> 0:03:59.720 get out there and and talk down expectations for December 0:03:59.800 --> 0:04:03.080 high on those reports, or do they continue to guide 0:04:03.120 --> 0:04:05.880 towards a December and just say, but we're not going 0:04:05.920 --> 0:04:08.120 to do much on the other side of it. Evidence 0:04:08.320 --> 0:04:10.680 Ellen Zenter with us with Morgan Stanley. What a spirited 0:04:10.720 --> 0:04:14.280 conversation we just had. Ellen over with surveillance on television 0:04:14.280 --> 0:04:17.120 with Peter Navarro and support of Trump economics. I want 0:04:17.120 --> 0:04:21.440 to back up and talk about this strange word mercantile 0:04:21.480 --> 0:04:25.880 is um, which comes over to a zero sum worldview, 0:04:26.480 --> 0:04:29.960 and maybe we get a zero sum America, whether it's 0:04:30.080 --> 0:04:35.000 President Trump or President Clinton. Help our audience understand what 0:04:35.279 --> 0:04:38.680 zero sum means in a center world. Well, zero sum 0:04:38.720 --> 0:04:41.800 would mean that no one's running a current account deficit, 0:04:41.920 --> 0:04:45.640 and that trade is completely fair and balanced on both sides, 0:04:45.680 --> 0:04:50.679 and that uh, we we have a basically a neutral 0:04:50.760 --> 0:04:54.200 trade balance with everyone. Right, we export a lot to others, 0:04:54.200 --> 0:04:56.320 and we import a lot from others, and at all 0:04:56.800 --> 0:04:59.920 evens out. But that's never the case, right or ever 0:05:00.120 --> 0:05:03.520 one's currencies would be on par Uh. Currencies are the 0:05:03.560 --> 0:05:07.360 great equalizer, and it just so happens that, yes, growth 0:05:07.400 --> 0:05:09.440 doesn't feel great in the US, but you know what, 0:05:09.760 --> 0:05:12.839 it's better than elsewhere, and our currency reflects that, and 0:05:12.839 --> 0:05:14.800 it means that we do have to take one for 0:05:14.839 --> 0:05:16.920 the team, so to speak. If there's a global team, 0:05:16.920 --> 0:05:19.240 we're taking one for the team right now because we 0:05:19.279 --> 0:05:23.279 are on stronger footing than our major global trading partners. 0:05:23.279 --> 0:05:26.560 What that's done, though, is make it very difficult um 0:05:26.640 --> 0:05:31.000 to digest when we ourselves are not growing that strongly. 0:05:31.600 --> 0:05:33.400 We don't have a strong of a labor market as 0:05:33.440 --> 0:05:36.120 we like, businesses are not investing as much as they like. 0:05:36.600 --> 0:05:39.680 And the easiest thing to point a finger two is 0:05:39.680 --> 0:05:42.920 is that somebody else's fault, and it's because they're stealing 0:05:43.200 --> 0:05:48.160 share uh from from from our well being UM. And 0:05:48.200 --> 0:05:51.080 that leads to this populous sentiment, which is a global 0:05:51.120 --> 0:05:54.520 phenomenon now in rising right, and that has been the 0:05:54.520 --> 0:05:57.480 trend here in the US as well. How long are 0:05:57.480 --> 0:05:59.000 we going to have to take one for the team. 0:05:59.000 --> 0:06:00.680 Do you think looking at the dollar your ninety seven 0:06:00.760 --> 0:06:03.920 to fIF Uh, it's been strong for a while. How 0:06:03.920 --> 0:06:05.640 long do you think that's going to persist? Well, I 0:06:05.640 --> 0:06:09.719 think it's going to depend on the global business cycle. Um, 0:06:09.920 --> 0:06:14.960 how close or other major global central banks to uh 0:06:15.080 --> 0:06:17.960 coming off that easing bias. Right, we are on a 0:06:18.000 --> 0:06:20.359 tightening bias. The Fed hasn't done much, but we're on 0:06:20.400 --> 0:06:23.120 a tightening bias because we're just a different place in 0:06:23.160 --> 0:06:25.919 our business cycle. Um. But you have the the e 0:06:26.040 --> 0:06:28.000 c B and the b o J, you know major 0:06:28.400 --> 0:06:31.120 global central banks out there, um that are still on 0:06:31.200 --> 0:06:34.000 an easing bias, and that's going to continue to keep 0:06:34.279 --> 0:06:37.640 pressure upward pressure on the dollar. So to the extent 0:06:37.680 --> 0:06:40.360 that their economies start to bear the fruits of that 0:06:40.440 --> 0:06:43.800 labor and those central banks can come off at easing bias, 0:06:44.120 --> 0:06:46.560 then you start to take some of the pressure off 0:06:46.560 --> 0:06:49.320 the dollar. Um. But this is a global cycle that's 0:06:49.320 --> 0:06:52.520 taking a long time to play out. And uh, you know, 0:06:53.360 --> 0:06:56.279 areas of of Europe are years behind us in terms 0:06:56.320 --> 0:07:00.040 of where they are in reparation post financial crisis. In 0:07:00.120 --> 0:07:02.520 the radio, I didn't get to this before. What does 0:07:02.560 --> 0:07:05.560 Hans Hdecker say about dollar for this year. How does 0:07:05.680 --> 0:07:10.680 Hans Rhdecker at Morgan Stanley dovetail a Zentner vision into 0:07:10.720 --> 0:07:14.320 his dollar call? Well, it's it's it's a Zentner vision. 0:07:14.440 --> 0:07:16.160 I like the way you put that, Tom makes me 0:07:16.200 --> 0:07:18.480 feel very important. Excuse me. It's a red Hans. I 0:07:18.480 --> 0:07:22.080 know you're listening. It's a Hdecker vision. Well, but it's 0:07:22.240 --> 0:07:26.760 it's so uh So Hans Rhdecker sits down with our 0:07:26.920 --> 0:07:29.240 the global economists, right, so it's not just my team 0:07:29.240 --> 0:07:31.000 and says, well, what is your what is your thinking 0:07:31.040 --> 0:07:34.880 around monetary policy? If if if the feed is going 0:07:34.920 --> 0:07:37.800 to continue to tighten, other global central banks are going 0:07:37.840 --> 0:07:40.160 to continue to ease. Well, that's going to play into 0:07:40.200 --> 0:07:44.560 how he feels about flows into the dollar UM and 0:07:44.640 --> 0:07:47.600 driving the dollar higher. I will tell you that. And 0:07:47.640 --> 0:07:50.520 you've talked to Rhedecker plenty of times. UM. If you 0:07:50.560 --> 0:07:53.600 want to have an hour long program, he can. He 0:07:53.640 --> 0:07:57.480 can bring you to tears talking about current account deficits 0:07:57.960 --> 0:08:01.360 matters for his forecasts. But but let's keep it simple. 0:08:01.600 --> 0:08:03.680 Let's keep it simple. A lot of that global central 0:08:03.680 --> 0:08:07.480 bank divergence matters for his calls. When he's thinking about 0:08:07.480 --> 0:08:11.240 the dollar. Just to me, it's an extraordinary jumble here. 0:08:11.240 --> 0:08:13.560 And again we want to congratulate you on your call 0:08:13.600 --> 0:08:15.360 of eighteen months ago that this would be a FED 0:08:15.400 --> 0:08:18.160 that would delay and delay the dots, don't come down 0:08:18.200 --> 0:08:20.840 next year all that much. Well, here's the thing, and 0:08:20.880 --> 0:08:23.360 this is something that our clients have been very, very 0:08:23.400 --> 0:08:26.840 focused on. Last year, the Fed hiked in December, and 0:08:26.880 --> 0:08:29.200 they hiked because they said, look, you're expecting it. It's 0:08:29.240 --> 0:08:32.880 been extremely well communicated. We expect little market reaction. What 0:08:32.960 --> 0:08:37.280 they underestimated was the global reaction to the perceived promise 0:08:37.320 --> 0:08:39.440 that they were going to follow it up with four hikes. 0:08:39.920 --> 0:08:42.400 Here we are today. Have they delivered one of those 0:08:42.760 --> 0:08:46.840 no um at the September meeting that we've just had, 0:08:46.880 --> 0:08:49.280 they lowered the path of the dots quite a bit, 0:08:49.960 --> 0:08:52.120 and now they're showing us that they would like to 0:08:52.200 --> 0:08:55.320 hike in December, and they, at best, which is how 0:08:55.320 --> 0:08:58.079 we should look at it, at best, intend to follow 0:08:58.120 --> 0:09:01.920 it up with two hikes next year. That's a much 0:09:01.960 --> 0:09:04.000 slower pace than what they were showing last year. Our 0:09:04.040 --> 0:09:06.120 clients are asking us, so do we get the global 0:09:06.160 --> 0:09:08.920 fallout that we did last year? Same as last year 0:09:09.080 --> 0:09:10.960 last year, or is everybody going to digest it better? 0:09:11.240 --> 0:09:14.040 Showing us already that the path at best is going 0:09:14.080 --> 0:09:17.280 to be much slower. I think we'll go far and 0:09:17.320 --> 0:09:22.240 trying to appease global markets. Gotta leave it there, Ellen Saner, 0:09:22.280 --> 0:09:25.319 thank you so much. With Morgan Stanley, it is Job's day. 0:09:25.440 --> 0:09:40.839 Much coming up on economics. It is Job's day. It 0:09:41.000 --> 0:09:44.200 is Job's day. Four days before the matter of an election. 0:09:45.000 --> 0:09:47.040 He is darkened the door of the Oval Office and 0:09:47.120 --> 0:09:49.240 Public Service to the Nation of the former Chairman of 0:09:49.280 --> 0:09:53.640 the President's Council of Economic Advisors, Alan Krueger. Are you 0:09:53.800 --> 0:09:58.400 overtly in supportive Secretary Clinton? Are you you know? Neutral? 0:09:58.600 --> 0:10:00.280 Are you? Are you going to come out for Trump 0:10:00.280 --> 0:10:03.320 economics this morning? What are you doing? Ellen? Next? News here? 0:10:04.400 --> 0:10:08.000 The uniformity of the economics profession against Donald Trump has 0:10:08.040 --> 0:10:10.760 been truly spectacular. I have to say I I am 0:10:10.840 --> 0:10:14.319 Tom and informal advisment to the Clinton campaign. Okay, very 0:10:14.400 --> 0:10:16.600 very good. I want to rip up the script here, folks, 0:10:16.600 --> 0:10:18.400 it's job today. We're gonna get to that in fifty 0:10:18.400 --> 0:10:21.880 minutes with all of our usual good guests. Professor Krueger, 0:10:22.840 --> 0:10:26.400 Jacob Winer in the forties, wrote the definitive piece on 0:10:26.480 --> 0:10:30.240 middle twentieth century mercantil is um. We didn't want to 0:10:30.240 --> 0:10:33.000 go back to that. We didn't want to repeat history, 0:10:33.080 --> 0:10:36.400 and a lot of courageous people from Atlantic Charter on said, 0:10:36.440 --> 0:10:38.200 we're not going to do it like we used to 0:10:38.240 --> 0:10:42.600 do it. Do we risk from Secretary Clinton and from 0:10:42.720 --> 0:10:48.160 Mr Trump tending towards zero sum America and an inward 0:10:48.160 --> 0:10:53.600 America that replicates the nineties. I think that's certainly a 0:10:53.679 --> 0:10:57.079 risk from the Trump campaign. I think Secretary Clinton has 0:10:57.160 --> 0:10:59.920 voted for a trade expansion in the past and voted 0:11:00.000 --> 0:11:02.600 against trade, so I think she's had a more nuanced view. 0:11:03.120 --> 0:11:05.720 But a candidate like Donald Trump, who says he wants 0:11:05.720 --> 0:11:08.199 to tear up long standing trade agreements, I think is 0:11:08.240 --> 0:11:11.880 a real risk to the global trading system that we have, 0:11:11.960 --> 0:11:15.120 and more importantly, to the stability that we've built up 0:11:15.120 --> 0:11:19.600 since World War Two. This overlays on your true expertise 0:11:20.320 --> 0:11:23.679 on the minimum wage and on labor in America to 0:11:23.800 --> 0:11:27.840 find how you hear the primal scream from Senator Sanders 0:11:27.880 --> 0:11:32.680 and Mr Trump's supporters well, the passion for doing more 0:11:32.800 --> 0:11:34.560 to help those who have been left behind in the 0:11:34.640 --> 0:11:36.720 economy I think is real and I think needs to 0:11:36.720 --> 0:11:39.240 be addressed. But I don't think the right solution is 0:11:39.280 --> 0:11:42.680 to turn inward to build walls. UH. That hasn't helped 0:11:42.720 --> 0:11:44.280 us in the past, and that will not help us 0:11:44.280 --> 0:11:47.560 going forward. I think that we need to look for 0:11:47.600 --> 0:11:50.480 solutions that grow the size of the pie and for 0:11:50.640 --> 0:11:55.080 solutions that lead to more equal sharing of the benefits 0:11:55.080 --> 0:11:57.320 of economic growth, and I think those are out there. 0:11:57.400 --> 0:12:01.480 For example, of responsible increase in theminum and wage would help. UH, 0:12:01.960 --> 0:12:06.960 A greater UH wide, more widespread program of trade adjustment 0:12:06.960 --> 0:12:09.920 assistance would help. We've seen we've seen the minimum wage 0:12:10.200 --> 0:12:13.360 rise at the local level at some state levels. UH. 0:12:13.520 --> 0:12:15.040 Is it at all likely that we would see it 0:12:15.160 --> 0:12:16.920 rise at the federal level? Or is that ship sale? 0:12:16.920 --> 0:12:18.960 And is this something that is percolating is happening at 0:12:19.160 --> 0:12:22.080 a more local level? Now, Well, we we've seen this 0:12:22.120 --> 0:12:27.880 movie before in the nineties when Congress didn't raise the 0:12:28.040 --> 0:12:31.480 federal minimum wage, the states acted and then remember a 0:12:31.520 --> 0:12:34.440 new Gang Ridge led Congress raised the federal minimum wage. 0:12:35.080 --> 0:12:37.920 So I think that there's UH some hope that will 0:12:37.960 --> 0:12:40.400 see a reasonable increase in the minimum wage in the future. 0:12:41.160 --> 0:12:43.720 What's the what's the one thing say that Hillary Clinton 0:12:43.720 --> 0:12:46.200 took away from the the economic platform that Bernie Sanders 0:12:46.320 --> 0:12:48.240 espoused when when he was when he was still running 0:12:48.240 --> 0:12:51.360 for president. How would she bent? Uh? In response to 0:12:51.400 --> 0:12:55.080 what what Tom called that primal scream, Well, I think 0:12:55.120 --> 0:12:59.720 there are a number of areas where Uh she took 0:12:59.760 --> 0:13:02.920 on his ideas and they infused her ideas. I think 0:13:02.920 --> 0:13:06.000 the most prominent has to do with access to post 0:13:06.000 --> 0:13:11.640 secondary schooling, making college affordable, making college debt free, which 0:13:11.720 --> 0:13:15.000 was a major theme for Bertie Sanders and one that 0:13:15.120 --> 0:13:18.880 Secretary Clinton has adopted an espoused and seems passionate about. 0:13:19.559 --> 0:13:21.520 I want to just quickly hear close a loop and 0:13:21.600 --> 0:13:24.200 we were talking about earlier to the Chinese want a 0:13:24.240 --> 0:13:28.760 bigger pie. We're talking mercantilism. You supose that we need 0:13:28.800 --> 0:13:32.280 a larger pie, dude, The Chinese want a larger pie 0:13:32.280 --> 0:13:36.440 of trade. I think clearly trade has been beneficial for 0:13:36.520 --> 0:13:39.000 their economic development. I think what they need to do 0:13:39.040 --> 0:13:43.679 in the future is to generate their own demand, particularly 0:13:43.720 --> 0:13:48.000 with household consumption um. But as an economic advisor, I 0:13:48.040 --> 0:13:50.560 would advise them that they benefit from from from a 0:13:50.559 --> 0:13:53.800 bigger pie. No question. Jobs day, oh forty minutes or so. 0:13:53.880 --> 0:13:56.920 We'll get to that, and among other worthies, William Gross 0:13:56.920 --> 0:14:00.160 of Jenna's Capital will join chief worthy right now was 0:14:00.200 --> 0:14:03.120 Alan Krueger of Princeton, the former chairman of the President's 0:14:03.120 --> 0:14:07.600 Council of Economic Advisors, were waxing political Professor Krueger let's 0:14:07.600 --> 0:14:10.559 now wax more job market. I did a chart today 0:14:10.559 --> 0:14:14.199 of the man's session, the idea of twenty four to 0:14:14.280 --> 0:14:17.320 fifty four year old men. Uh boy, it was good 0:14:17.320 --> 0:14:19.600 in the sixties and the structural change of women in 0:14:19.640 --> 0:14:24.080 the labor force, and it was ugly and they've come back, 0:14:24.200 --> 0:14:27.520 but they can't get back further. Give us your research 0:14:27.640 --> 0:14:33.280 now on that interesting separation and combination of men and 0:14:33.320 --> 0:14:36.240 women in the workforce. What's the dynamic you're focused on? 0:14:37.480 --> 0:14:41.040 Labor force participation rate trends are really fascinating in the US. 0:14:41.080 --> 0:14:44.560 In the post war period, labor force grew because more 0:14:44.560 --> 0:14:47.720 and more women joined the labor force. Men have been 0:14:47.760 --> 0:14:52.560 on this long term downward trend and that trend has continued. 0:14:52.720 --> 0:14:56.240 What's changed is that women are now mirroring men in 0:14:56.360 --> 0:14:59.840 terms of labor force. Participation of women peaked into thousand 0:15:00.680 --> 0:15:05.040 UM and that I think is significant because it means 0:15:05.080 --> 0:15:08.960 unless we have more population growth, primarily through immigration, it's 0:15:09.040 --> 0:15:11.240 unlikely we're going to see a major rebound in labor 0:15:11.320 --> 0:15:14.480 force participation. But now getting to the men, I have 0:15:14.720 --> 0:15:17.080 a new study that I presented at the Boston Federal 0:15:17.120 --> 0:15:22.440 Reserve Conference on October four where I found that around 0:15:22.560 --> 0:15:24.840 half of the prime working age men are out of 0:15:24.840 --> 0:15:29.280 the labor force suffer from a serious disability UH, either 0:15:29.360 --> 0:15:33.240 mental or physical. Almost half are taking pain medication on 0:15:33.280 --> 0:15:35.920 a daily basis. So I think we need to address 0:15:35.960 --> 0:15:39.520 the health concerns UH in order to raise labor force 0:15:39.560 --> 0:15:44.000 participation for for for that group in particular, when when 0:15:44.040 --> 0:15:45.920 when you look at the numbers today, what will they 0:15:45.960 --> 0:15:49.040 tell us about where the jobs your your your paper 0:15:49.040 --> 0:15:51.720 at that Boston Fed cards, Where the jobs? Where all 0:15:51.760 --> 0:15:54.320 the workers gone? Where the jobs today? Who is hiring? 0:15:54.400 --> 0:15:56.440 Is this still hiring? That's largely confined to the to 0:15:56.480 --> 0:16:01.040 the service sector. Well, we largely have a service sector economy. 0:16:01.280 --> 0:16:03.920 One of the interesting developments, however, is that in the recovery, 0:16:03.960 --> 0:16:09.920 manufacturing has started to increase jobs. I was talking with 0:16:10.000 --> 0:16:14.600 the CEO at Party City yesterday, and they're bringing jobs 0:16:14.600 --> 0:16:17.840 back because expenses are getting higher or abroad so I 0:16:17.880 --> 0:16:21.640 think we're seeing reassuring and manufacturing, but certainly it's the 0:16:21.640 --> 0:16:24.440 case that the bulk of job growth currently and in 0:16:24.480 --> 0:16:26.720 the future is going to come from the service sector. 0:16:27.480 --> 0:16:29.200 Take a quick diversion here for a sect. You mentioned 0:16:29.240 --> 0:16:31.080 the Boston FED conference. You were there, of course, Jenny 0:16:31.120 --> 0:16:33.880 Ellen giving that speech on on running a high pressure eccunty, 0:16:33.920 --> 0:16:36.000 suggesting that it could be done, not committing to it 0:16:36.040 --> 0:16:38.680 by any means, but introducing the concept. How did that 0:16:38.720 --> 0:16:41.960 play in the room. That's a good question. I spoke 0:16:42.040 --> 0:16:43.960 right after her, so I was kind of focused on 0:16:44.000 --> 0:16:46.880 my remarks, but I did read her remarks that I 0:16:46.920 --> 0:16:50.200 was there for them. UM economists have known for a 0:16:50.240 --> 0:16:52.520 long time that there are benefits of a high pressure economy. 0:16:52.560 --> 0:16:55.000 There's a famous paper by Arthur Oakin and the Brookings 0:16:55.000 --> 0:16:58.400 Papers with the title the high Pressure Labor Market. Larry 0:16:58.440 --> 0:17:01.080 cats and I wrote a paper nine on the high 0:17:01.120 --> 0:17:03.760 pressure labor market of the nineties, which I was actually 0:17:03.800 --> 0:17:06.200 pleased to see that Cherry Ellen had cited. So I 0:17:06.240 --> 0:17:09.080 think there are many benefits of the high pressure economy. 0:17:09.560 --> 0:17:12.640 UM wage growth is one. I think we see more 0:17:12.680 --> 0:17:16.800 opportunity for disadvantaged workers, for younger workers, I don't think 0:17:16.840 --> 0:17:19.439 it has that big an effect on labor force participation, 0:17:19.480 --> 0:17:20.879 but I do think there are many benefits of a 0:17:20.960 --> 0:17:23.840 high pressure labor market. Professor Krueger ellen Sander was on 0:17:23.960 --> 0:17:26.440 earlier and she I believe made the statement. I don't 0:17:26.440 --> 0:17:28.480 want to put words in her mouth, but she suggested 0:17:28.520 --> 0:17:31.639 that too many of the jobs today are what we 0:17:31.680 --> 0:17:35.479 would call less quality jobs. Are they? I mean, how 0:17:35.520 --> 0:17:37.119 do I you know, I know when you're you know, 0:17:37.800 --> 0:17:39.600 darker than the door of the Oval Office. You got 0:17:39.600 --> 0:17:42.120 to say a certain tune. And Jason Furman has done 0:17:42.160 --> 0:17:45.960 that with terrific research at the White House. But help me, 0:17:46.040 --> 0:17:49.280 here are these quality jobs. I think the job growth 0:17:49.320 --> 0:17:51.920 that we've seen looks a lot like the makeup of 0:17:52.000 --> 0:17:53.959 jobs that we have, and I think what we need 0:17:54.000 --> 0:17:56.320 to focus on is how do we raise wages? In fact, 0:17:56.640 --> 0:17:58.320 Jason Furman and I have an op ed in the 0:17:58.320 --> 0:18:02.400 Wall Street Journal this morning where we uh point out 0:18:02.680 --> 0:18:06.359 that in many cases, companies are taking non competitive practices 0:18:06.440 --> 0:18:09.239 to keep wages low. There was an example of a 0:18:09.240 --> 0:18:13.560 court case in Detroit where eight hospitals settled a suit 0:18:13.680 --> 0:18:17.120 for non competitive practices where they raised nurses pay, gave 0:18:17.119 --> 0:18:19.239 out a settlement of ninety million dollars because they had 0:18:19.240 --> 0:18:22.959 suppressed pay. Non compete classes are far too common. So 0:18:23.080 --> 0:18:25.400 I think that there are steps that we can take 0:18:25.440 --> 0:18:27.960 to make the labor market more competitive. Little rays pay 0:18:28.040 --> 0:18:34.119 across the board. Thank you monopson No, no, this is 0:18:34.160 --> 0:18:37.280 a major deal, folks. I go One of the great 0:18:37.320 --> 0:18:40.399 tests I have of an economics textbook is I literally 0:18:40.440 --> 0:18:43.680 go to the index and see if they even mention 0:18:44.320 --> 0:18:48.880 monopsony because Monopsony, to me, Professor Krueger is white underrated 0:18:50.640 --> 0:18:53.280 political debate. This is not monopoly. We're not trying to 0:18:53.320 --> 0:18:57.600 get Oriental and I don't want Baltic Mediterranean, Professor Krueger, 0:18:57.640 --> 0:19:00.440 we need a clinic right now on how man opsity 0:19:00.600 --> 0:19:04.400 is important and it's not monopoly? Is it? To me? 0:19:04.640 --> 0:19:08.760 It is rubber plantations in Singapore. That's always a model 0:19:08.760 --> 0:19:12.240 I'm used where your price you just you get the 0:19:12.240 --> 0:19:15.960 price you get. Monopsony is the flip side of monopoly, 0:19:16.320 --> 0:19:19.640 means that there's one buyer as opposed to one seller. Now, 0:19:19.680 --> 0:19:21.880 one of the things that we've learned in economics research 0:19:22.119 --> 0:19:24.960 is that you can have monopsony apart from a company town, 0:19:25.320 --> 0:19:29.320 not only in those rubber plantations. But companies can reduce 0:19:29.400 --> 0:19:33.359 competition by requiring their workers to sign on compete agreements. 0:19:33.960 --> 0:19:35.760 Adam Smith, if you go back to the Wealth of 0:19:35.840 --> 0:19:38.760 Nations and which you wrote an incredible introduction for within 0:19:39.240 --> 0:19:42.200 the world that at the moment, but thank you. If 0:19:42.200 --> 0:19:44.080 you go back to the Wealth of Nations, Adam Smith 0:19:44.080 --> 0:19:46.760 said that employers, whenever they get together, they tacitly talk 0:19:46.840 --> 0:19:49.800 about how do they collude to keep wages low. So 0:19:50.040 --> 0:19:52.159 there's been this pressure in the job market for a 0:19:52.200 --> 0:19:56.480 long time, and I think that's one of the reasons 0:19:56.560 --> 0:20:00.479 why we've seen job vacancies rising. Company he's saying they 0:20:00.480 --> 0:20:03.080 can't get enough workers, but they've been reluctant to wages. 0:20:03.240 --> 0:20:07.320 The price economics think in Chicago. Here Chicago is his school. 0:20:07.440 --> 0:20:11.440 It's out West, Professor Krueger, it's just just sell of 0:20:11.520 --> 0:20:14.960 the cubs. You're the white sox um. If you look 0:20:14.960 --> 0:20:18.200 at the price theory of Monopsony, our listeners are saying, 0:20:18.200 --> 0:20:20.800 Professor Krueger, you don't know what you're talking about. If 0:20:20.840 --> 0:20:23.320 we have to raise wages, we're going out of business. 0:20:23.359 --> 0:20:27.400 How do you respond to entrepreneurs in America who say, 0:20:27.480 --> 0:20:31.040 we've got a collude, whether it's direct, indirect, monopsusy whatever, 0:20:31.480 --> 0:20:33.320 or we go out of business. How do you respond 0:20:34.119 --> 0:20:35.919 This clearly isn't the case. I mean, we hear this 0:20:35.960 --> 0:20:38.160 whenever the minimum wage goes up, and we only see 0:20:38.200 --> 0:20:40.960 more and more job growth. If workers have more wages, 0:20:41.000 --> 0:20:42.879 that's going to help the macro economy, that's going to 0:20:42.960 --> 0:20:45.840 help consumption, and the whole economy will grow. I was 0:20:45.880 --> 0:20:48.760 astonished reading your your piece with Jason from this morning. Uh, 0:20:49.320 --> 0:20:53.359 the portion about non compete clauses you write of American 0:20:53.359 --> 0:20:55.480 workers have signed them. Why Why are we seeing so 0:20:55.560 --> 0:21:00.119 many noncompete clauses in employment contracts today? What's remark well 0:21:00.119 --> 0:21:01.800 to me as we're seeing him in places where they 0:21:01.800 --> 0:21:07.119 clearly don't belong, for warehouse workers, for fast food restaurant workers. 0:21:07.160 --> 0:21:10.160 And it's I think a very clear example of companies 0:21:10.200 --> 0:21:12.680 trying to restrict competition to make it so that they 0:21:12.680 --> 0:21:14.639 have more of a tied workforce, to make it so 0:21:14.680 --> 0:21:16.919 that they don't leave for higher wages down the street. 0:21:17.320 --> 0:21:22.000 And that's restricting competition. Uh, and that has really run 0:21:22.040 --> 0:21:24.120 a muck and I think it's a sign of the 0:21:24.160 --> 0:21:27.639 imbalanced and bargaining power between workers and companies help us. 0:21:27.760 --> 0:21:30.080 Let's circle around here the minute a half we've got 0:21:30.160 --> 0:21:33.040 left with you, Professor Krueger. If we have an election 0:21:33.520 --> 0:21:35.639 in both candidates say we don't want to be a 0:21:35.720 --> 0:21:40.040 rubber plantation in Singapore. We don't want to have monopsimistic 0:21:40.119 --> 0:21:44.679 tendencies in the United States. State the case for your candidates, 0:21:44.720 --> 0:21:50.480 Secretary Clinton, how is she going to make us less monopximistic. Well, 0:21:50.560 --> 0:21:52.600 I think she got both the positive and the negative. 0:21:52.640 --> 0:21:55.119 I mean, Donald Trump has stiffed his workforce in the past, 0:21:56.000 --> 0:21:59.600 has really shown no commitment to raising wages for middle 0:21:59.600 --> 0:22:03.399 class workers. Certainly his tax plan wouldn't help middle class 0:22:03.440 --> 0:22:07.960 compared to high income folks. Uh. Secretary Clinton has spent 0:22:08.000 --> 0:22:11.280 her career trying to provide more opportunities for disadvantaged workers. 0:22:11.840 --> 0:22:13.639 And there's a lot that the administration could do. One 0:22:13.640 --> 0:22:16.199