Federal Research Vice Chair Janet L. Yellen, speaking at the The Brimmer Policy Forum, Allied Social Science Associations Annual Meeting, argued that asset purchases by the central bank in 2008, 2009, 2010, and extending into 2011 will create 3 million jobs by 2012. She cites four research papers by economists who work within the Federal Reserve system as proof. The sources are convenient since these people are employed within the system that Yellen helps run.
These research studies showed specifically that:
the macroeconomic effects of the FOMC’s full program of securities purchases, including the first round of purchases that was initiated in late 2008 and early 2009, the modification of the reinvestment policy that was announced last August, and the second round of purchases that was initiated in November. Those simulation results indicate that by 2012, the full program of securities purchases will have raised private payroll employment by about 3 million jobs.
Her statement underscores assertions by The White House and Congress that it is their actions and none other that have created and will create jobs. Only about one million new jobs have been added to the economy in the last year. The Fed and White House would argue that the situation would have been much worse without the help they provided. That will never been known. Each new job would have to be analyzed and its addition to the workforce would have to be tracked back to its source.
A statement by The White House a year ago demonstrates how complex the claims of job creation are to unravel and reconcile. The Council of Economic Advisers did an analysis which said the $787 billion stimulus package had added 1.5 to 2 million jobs. The figure is not as precise as Yellen’s. The White House did not have had access to her army of researchers.
Last October, Vice President Joe Biden wrote to the President that ”We continue to show consistent progress on your commitment to create or save 3.5 million jobs by the end of calendar year 2010.” The joblessness numbers for the year just past would not seem to support Biden’s statement, unless The White House saved well over 2 million jobs which might have been lost. It is another claim which will have to remain unproved.
One thing is for certain. The White House and Fed have added about 6 million jobs to the economy in the last two-and-a-half years if they are to believed. The problem is that no one can find them.
Douglas A. McIntyre