By Howard Schneider

WASHINGTON, (Reuters) – Federal Reserve officials are reluctant to give definitions of key terms such as “maximum unemployment” since adopting a revised approach to U.S. monetary policies that is geared towards ensuring a strong labor marketplace. They argue they don’t want to predict how many jobs will be created by the economy but rather feel they can help them get there.

They no longer hesitate.

Two paragraphs from the Dec. 14-15 meeting minutes revealed that the U.S. central banks officials had declared that the process was almost complete. In 344 words they listed a variety of reasons why the US central bank officials declared the process almost complete. They also stated that the market for jobs is already “very tight”, and was poised to make rapid progress in reaching their employment goals.

This would allow the Fed to raise interest rates, even though it had previously pledged not to until full employment is achieved.

However, in light of the ongoing discussion since the outbreak of the coronavirus epidemic, which saw more than 22,000,000 jobs disappear in an economic collapse that disproportionately affected lower-income workers, these minutes showed how far the Fed will go to ensure that the recovery of jobs is both broad and inclusive.

While wages rise, unemployment rates have fallen across the board. Fed officials claimed that there are still problems in the market for jobs. They are less due to monetary policies and more to ongoing disruptions by COVID-19 (factors like child care, school reopenings, and other factors that are not controlled by the Fed). They acknowledged that workers may be less willing to accept jobs in the future than they had expected.

GAPS STILL AVAILABLE

It was not mentioned that around 3.5million fewer workers were employed in November than February 2020. That’s according to the Labor Department monthly survey of households. Fed Chair Jerome Powell had promised the gap would be eliminated. And the shortfalls are disproportionate among women and among the less educated https://graphics.reuters.com/USA-ECONOMY/JOBS/mypmnbgwevr. The latest view of December will be provided by data due Friday.

(Graphic: https://graphics.reuters.com/USA-ECONOMY/JOBS/mypmnbgwevr)

Also, jobs recovery has not been geographically distributed. A mere dozen states, clustered in Southeast and Mountain West, have seen their employment levels rise since the pandemic.

(Graphic: A still disjointed recovery, https://graphics.reuters.com/USA-ECONOMY/JOBS/jnvwexybwvw/chart.png) In the Northeast and through much of the industrial Midwest, employment in some states remains 5% or more below pre-pandemic peaks.

WHY IS IT IMPORTANT TO RUSH

In August 2020, the Fed adopted a heightened focus on jobs at a time when inflation was low. It had also been this way for many years. More officials believed that the central bank had made mistakes by failing to encourage more job growth in the past and had instead raised interest rates without any clear inflation risks.

This was a mistake that the Fed would not repeat. It became an obstacle to the ability of the central bank to control the economy’s free flow last year when it experienced inflation.

The core goal of the Fed is to keep prices under control. Even though there is a risk that economic growth will slow down and employment may decline, the Fed feels the need to make financial adjustments to limit price rises. This could also be detrimental to lower income households who are more likely to suffer from pandemic-related job loss.

(Graphic: Participation and jobs, https://graphics.reuters.com/USA-FED/PARTICIPATION/mopanqrozva/chart.png) Just as the surge in inflation surprised the Fed, so did the behavior of workers, who did not flock into the record number of open positions at the pace expected.

Some Fed officials doubt that the U.S. will ever fully recover its labor force participation rate. It is slowly returning to pre-pandemic levels. James Bullard from the St. Louis Fed believes the participation rates should not be considered unusually low considering the trend downwards over the last two decades.

A record number of 1.5 jobs are available for each person who declares themselves unemployed, which is a remarkable feat.

(Graphic: More jobs than jobseekers, https://graphics.reuters.com/USA-FED/JOBS/egvbkmeoepq/chart.png) It is data like that which has brought the Fed close to declaring its work on the job front done. Even though the gaps remain, those who closely followed the labor discussion and encouraged the central bank’s aggressiveness on employment may be right.

Fed policy cannot fix a bad job market or a virus that is making workers reluctant to return to work.

Josh Bivens is the Economic Policy Institute’s research director. “This has just been too strange and overwhelming. They have to make adjustments.” Bivens admitted that it was infuriating to see the Fed not trying to maintain a healthy economy following the financial crisis of 2007-2009 and the recession, however, he acknowledged this time around is different.

Bivens stated that he doesn’t believe they have stopped the possibility of many jobs returning. As in 2017, it is not true that all of the risk are at one end. Although I believe inflation risk to be overdone and not zero, it does not exist anymore.