Worker Perspectives on the Economy
Sunday, September 20, 2026
What does it mean to ‘tighten your belt’ when you’ve already run out of notches? Through a compelling combination of on-the-ground research and policy expertise, this session examined how workers who earn low to moderate incomes (LMI) are navigating rising costs, limited opportunities, and a challenging job market. Attendees gained insights on the effects financial distress of LMI communities have on labor market dynamics and economic mobility and resilience.
Featuring highlights from the Worker Perspectives research, this session revealed the daily realities of individuals struggling to make ends meet and illuminated how financial pressure shapes their consumption patterns, employment choices, and long-term planning. Attendees also heard perspectives from the Presidents of the Federal Reserve Banks of Cleveland and Chicago, and the Executive Vice President over Research at the Federal Reserve Bank of Atlanta on how insights from various economic stakeholders, including workers and job seekers, provides a unique window in economic conditions and helps to shape monetary policy considerations.
Through this session, policymakers deepened their understanding of how LMI populations experience the economy and the effect of their behavior on macroeconomic trends. Employers gained perspectives on evolving workforce needs and the financial pressures shaping their labor supply and worker decisions. Organizations serving workers and job seekers discovered actionable insights to better support economic mobility and build household resilience.
Related resources:
Speakers:
With special remarks from:
Sarah Miller:
Good afternoon, and welcome to Connecting Communities. Thank you for joining us for today’s webinar, When Every Dollar Counts: Worker Perspectives on the Economy. My name is Sarah Miller, and I’m the director of the Center for Workforce and Economic Opportunity at the Federal Reserve Bank of Atlanta. Today’s discussion will focus on recent insights from workers and job seekers from across the country through qualitative research conducted as a part of the Federal Reserve’s Worker Perspectives Project. We will share not just what we heard from workers, but we’ll also level set on why the Fed does this kind of research, how we do the research. We’ll share a wide angle view of what we wanted to learn from workers and job seekers, and where we hope to go with this research moving forward. We’re excited to kick off Workforce Month with this timely topic, and give you some food for thought as we approach the Labor Day weekend.
For those who’ve joined us today, whether you’re a researcher looking into economic or community trends, a policymaker considering approaches to support low- and moderate-income population stability and mobility, a practitioner providing direct services in your community, or an employer thinking about your workforce investments, and talent development strategies, we hope what you learn today from our research findings and from the discussion will be illuminating and meaningful for your work.
But, before we dive in, let me share a little bit about the flow of the conversation today and who you’ll be hearing from. First off today, I’ll be wearing a few hats for this session. I will serve as your moderator for the discussion, but I do have support on the back end, so please feel free to use the chat or the Q&A feature for any questions or technical needs during the call, and we’ll address those as best we can. I will also join two of my coworkers on this work as we share our findings and future direction on Worker Perspectives. I’m also looking forward to having a conversation later in the program with the Atlanta Fed’s director of research where she’ll share how she approaches different kinds of data to inform how she assesses contours in the economy.
And you’ll also hear from two regional Federal Reserve Bank presidents who’ll provide their perspectives on why and how insights from people living the economy every day, be it a worker, a job seeker, a business owner, that those insights help them to think about economic conditions, and how they approach setting monetary policy. But, let’s see who we’ll hear from today if we can pull up the slide of our speakers.
First, you’ll hear from Beth Hammack, president and CEO of the Federal Reserve Bank of Cleveland, and stay on with us until the end of the hour to hear from Austan Goolsbee, President and CEO of the Federal Reserve Bank of Chicago. In their respective roles as heads of regional reserve banks, both President Hammack and President Goolsbee serve on the Federal Open Market Committee, the Federal Reserve System’s monetary policymaking body, and they oversee economic research, monitor local economic conditions in their regions, oversee supervision and regulation of banking organizations, and provide financial services to commercial banks and the US government. I’ll also be joined by Paula Tkac. Paula is the executive vice president and director of research here with me at the Federal Reserve Bank of Atlanta. And in her role, she provides strategic leadership to the Atlanta Fed at both the organizational and research division level of the Fed. She also serves as the primary monetary policy advisor to the Atlanta Fed’s acting president, Cheryl Venable.
You’ll see on the next slide that I’m honored to be joined by two of my coworkers on this research. Kristen Broady is a senior economist, economic advisor, and director of the Economic Mobility Project at the Federal Reserve Bank of Chicago. Kristen’s a non-resident fellow at the Brookings Institution where prior to joining the Chicago Fed, she served as a fellow, focused on research and analysis of the impact of automation on the labor market, the racial wealth gap, returns to higher education investment, and the disparate economic impact of the COVID-19 pandemic.
Merissa Piazza is a lead policy analyst in the community development department at the Federal Reserve Bank of Cleveland. In her role, she conducts analysis and applied research related to workforce and economic development, as well as community capital and community development financial institutions, or CDFIs.
Today, you’ll see and hear from me, Kristen, and Merissa, but our other co-author, Elizabeth Simpson, is in the wings, and ready to answer questions that you may have for us. Please feel free to submit comments, reflections, questions, or even considerations for us throughout the session today in the Q&A feature. We definitely have a powerhouse group of folks on the call with us today, so if you’re looking to learn about worker experiences or hear from experts in economics and community development fields, you’ve come to the right place.
But, before we get started, a little bit of housekeeping. First of all, the views expressed during the session are those of the speakers, and are intended for informational purposes. They do not necessarily represent the views of Fed communities or the Federal Reserve System. Your microphones have been muted, but please do use the Q&A feature throughout the session to submit questions, and we promise to provide as many of them with answers as possible.
Please visit fedcommunities.org for articles, resources, and data from the Federal Reserve System. And finally, this session will be recorded, and the presentation, the video, and the podcast will be available on fedcommunities.org within about two weeks of this event. But, let’s get onto the programming. I’ll get us started today by turning the proverbial mic over to Beth Hammack, the president and CEO of the Cleveland Fed to kick us off as we dive into our discussion on worker perspectives in the economy.
Beth M. Hammack
Good afternoon, and thank you for joining today’s Connecting Communities webinar, Highlighting the Federal Reserve System’s Second Worker Perspectives Report. My name is Beth Hammack, and I’m the president and CEO of the Federal Reserve Bank of Cleveland. I’m glad event organizers asked me to participate in today’s session, because as a Regional Reserve Bank president, I seek out the perspectives of the people who live and work in the Fourth Federal Reserve District, and their insights are never far from my mind. Whether it’s the Sandusky, Ohio restaurant owner who told me recently that his insurance costs have tripled in the past three years, so that he’s had to make the tough choice to drop some coverage, and is instead betting on himself, or it’s the father working in a factory in Erie, Pennsylvania who shared that even though he works a full-time job, rising costs mean that he’s not able to afford to go to his son’s travel spring football games.
Stories like these bring the data to life. When combined with official data sources, they paint a fuller picture of the challenges and opportunities people are facing, and where the economy may be headed. Considering anecdotal information is a part of how I make more informed policy decisions, which is why research like the Worker Perspectives report is so important. Researchers from the Cleveland, Atlanta, Chicago, Minneapolis, and Philadelphia feds with the support of the Board of Governors, spoke to focus groups of workers in low- and moderate-income roles over several months. Their goal was to learn how these workers were faring with rising costs, and a challenging job market, and how confident they are in the future of the economy, and their role in it.
Over the course of this work, researchers heard four key themes. First, workers in low to moderate income jobs are stuck in survival mode with many working paycheck to paycheck. Second, with survival the main focus, workers were less able to think about their own economic mobility by learning new skills or looking for other jobs. Third, compensation remained the top priority for workers, but flexibility, work-life balance, dignity and growth were also important. And finally, in terms of the future, while most respondents expressed low confidence about the broader economy, they maintained personal optimism about their own ability to navigate economic uncertainty. Gathering qualitative data like these from individuals in low to moderate income roles gives me invaluable insights as a policymaker on how the economy is working or not working for everyone. I hope the study’s findings in today’s discussion will help you in your work supporting people like that restaurant owner in Sandusky, Ohio, the father in Erie, Pennsylvania, and the many other workers who are making tough choices to navigate an uncertain economy. Thank you.
Merissa Piazza
Thank you, President Hammack for those remarks and insights, as how do you use the perspectives of workers in your decision-making? Again, welcome, everyone in joining us. We are here today for a robust discussion about research related to the understanding of labor market experiences of workers who earn low to moderate incomes. My name is Merissa Piazza and I’m with the Federal Reserve Bank of Cleveland. You already met one of our co-authors, Sarah Miller, and now I’m joined by our co-author Kristen Broady for the Chicago Fed to discuss the research and findings. The Worker Perspectives Project was designed to speak directly with workers and job seekers from low- to moderate-income households to shed light on the why, what, and how behind economic and labor market trends. But, before we get into the findings, it’s central to first understand the context of why this is important to the Federal Reserve. Next slide, please.
You heard from President Hammack on how she uses firsthand accounts from people to guide her decisions. Under the Federal Reserve’s dual mandate of maximum employment and price stability, it’s important to understand economic conditions, from collecting data on macroeconomic trends, to talking to businesses, or talking to workers. It’s important to understand the economic activity of all people across the country. This research aims to capture the perspectives and lived experiences of workers in low- to moderate-income jobs. The insights from workers with less economic stability provide a unique window into the barriers they must navigate and the hard choices many households have to make. We sought to better understand the current state and a variety of economic topics such as household wellbeing, how people are consuming goods and services, whether their employment experiences were, and the challenges and opportunities they saw in the current labor market. What emerges from these conversations is a layer of nuance that numbers can’t provide. It’s a real insight into the decisions households are grappling with. That kind of understanding isn’t nice to have for policy or practice. It’s essential. Next slide please.
Between October and December of 2025, we ran 11 focus groups involving 63 participants. To qualify, participants had to be over 18, be part of an LMI household, and either employed or actively job hunting. Two sessions were conducted in Spanish, and one served as a validation check where we brought all of our findings back to participants to see what rang true. Please feel free to dig into our methodology on the website and learn more about the data collection process. This marks the second round of worker perspectives research. The first, back in 2022, aimed at capturing how workers were navigating the post-pandemic economy. Four years later, shifting economic conditions prompted us to return to the question. This time, we wanted to understand how workers were experiencing changes in costs and job opportunities, and how these experiences were shaping their choices at home and in the workforce. Next slide please.
As a note, we have a variety of research projects that may be of interest to you. We have highlights through key themes and in an executive summary, you can dig into the whole report, you can review the economic context, as well as examine our methodology. Links will be populated in the chat of this webinar so you can peruse the content as your leisure. Next slide please. Quotes like these provide insights into how workers who earn low- to moderate-incomes are thinking about their financial situation. Next slide please. At this time, I’ll transition to my colleague Kristen Broady at the Chicago Fed to discuss the overall economic context behind the report.
Kristen Broady
Thank you, Merissa. Before turning to what we heard from workers, I want to talk about the economic environment in which these conversations took place. In aggregate, the post-pandemic recovery has been quite strong. Employment recovered much more quickly than it did following the great recession. Unemployment remained relatively low, and inflation has come down substantially from its 2022 peak. But, those aggregate indicators mask some important differences in how that recovery has been experienced. That’s where the idea of a K-shaped recovery becomes useful. Different parts of the economy have been moving along very different trajectories. Higher wage sectors and workers with greater access to remote work, generally recover more quickly, while many workers in lower wage, high contact occupations experience deeper disruptions. Those differences don’t simply disappear when aggregate employment recovers, and the labor market itself has changed quite a bit. We moved from the extremely tight labor market of the early recovery into something closer to a low fire environment.
Hiring has slowed, so workers may be more reluctant to give up the job they already have, even when the job doesn’t fully meet their needs. At the same time, lower inflation does mean lower prices. Inflation peaked at 9.1% in 2022, but has moderated substantially since then. However, households are still purchasing necessities at much higher price levels than they were before the pandemic. And for workers in the lower half of the wage distribution, the concern isn’t simply whether wages have risen, it’s whether those wage gains have been enough to keep pace with the higher cost of living. That’s why we see behaviors such as trading down, and we heard from people talking about buying less, switching to cheaper alternatives, cutting discretionary spending, and devoting more time to finding lower prices. The Worker Perspectives Report documents those behaviors across income groups. Finally, there are longer run changes occurring underneath all of this.
Demographic change is reducing the supply of experienced workers, while employers are simultaneously facing skills mismatches and increasing demand for workers with post-secondary education and training. One estimate projects a shortage of roughly 5.25 million workers with education and training beyond high school by 2032. And we also have to consider the impact of automation and AI. Historically, automation risk was concentrated heavily among routine and lower wage occupations, but newer forms of AI have broadened the set of tasks that technology can perform, so the issue isn’t simply which jobs will disappear, and increasingly which task and occupations are restructured, augmented, or potentially displaced. This is somewhat complicated in terms of an economic backdrop, relatively strong aggregate indicators, but substantial variation underneath them, and that’s essentially the economic story condensed into one slide. Next slide please.
Here we look at the topics covered. The focus groups covered a fairly broad range of issues related to workers’ economic and employment experiences. We asked about their current employment status, and income, as well as how rising costs were affecting household spending, and consumption decisions. We also explored their experiences in the labor market, including job search, what they considered to be a quality job, and the trade-offs they were making between compensation, flexibility, benefits, and other job characteristics. Education and skill development were another part of the discussion, particularly whether workers saw additional education or training as a viable path toward better opportunities.
And given the changing nature of work, we also asked about AI, both how workers were encountering it, in their jobs, and job searches, and what they thought it might mean for future employment opportunities. Finally, we asked about confidence, confidence in the labor market overall, and confidence in their own ability to find or maintain employment. Now, Merissa will talk about what we heard in the focus groups.
Merissa Piazza
Next slide please. Thanks, Kristen. Throughout the focus groups, the overall tone from participants was somber. Workers and job seekers described daily anxieties about cost pressures, stagnant wages, and limited economic mobility. Overall, their perspectives and experiences center around four key themes. One, workers talked about being stuck in survival. For many participants, rising costs and stagnant wages have made financial stability out of reach. Already strained budgets are forcing hard choices such as cutting back on spending, leaning on credit, and turning to formal and informal safety nets. Many talked about what we’re characterizing as not so upward mobility. Economic survival has taken precedence over economic advancement. Constrained incomes, limited capital, and the rising cost of living have left little room for participants to pursue educational or skill building opportunities. Still, those who had jobs said they felt fortunate to have them. People had a whole discussion about searching for jobs as well as job quality.
Almost all participants noted an active or passive job search, but struggled to connect with new job opportunities. Job quality characteristics were framed as something aspirational as opposed to an expectation, and many discussed perseverance. Confidence in the broader economy and labor market ran low across the board, but participants remained confident in themselves, and their own ability to find work even when that work didn’t fully meet their needs. Next slide, please.
Examining the first theme, these somber conversations all revealed that participants were stuck in survival in order to make ends meet. Many discussed rising costs, and this came up in every single conversation, with participants detailing the specific strains of trying to make ends meet both now and down the road. Some said they could cover bills, but were still living paycheck to paycheck while many voiced deep worries about long-term survival if prices stay high and wages stay flat.
Many talked about tightening their budgets and trading down. Participants mentioned trading down by buying cheaper or fewer goods. Some indicated they were going to salvage grocery stores. They stopped eating animal-based proteins. They donated plasma. They were foregoing medical care, or declining employer or marketplace medical insurance due to cost. Many were filling the budget gap through savings, credit, and safety nets. Participants used a range of strategies to make ends meet, including exhausting their savings, utilizing credit cards, or payday loans, leveraging public safety nets, and using the support from friends and family. In the end, many talked about the true cost of survival, and noting the increase in financial stress, and many did not consider themselves economically stable. Next slide, please.
This participant’s quote noted the survival mode we mentioned earlier. Participants across all focus groups and income levels were called the daily lives filled with distress over decisions they had to make, and an increased focus on survival as opposed to success. Next slide, please. The second finding was related to a lack of upward mobility participants felt. Most participants were either in an active or passive job search, and expressed dampened confidence in future opportunities. Employed participants expressed thankfulness for their jobs, and conveyed that they were less likely to try to find new job opportunities. Those who were unemployed expressed these concerns about finding a job that would bring them financial stability. Many who were doing side hustles or gig work indicated that these were necessary in order to generate enough income to cover their costs rather than means of agency. Many participants acknowledged that not having a four-year degree had a negative effect on their job prospects, but few were pursuing educational education.
Even those with a four-year degree felt stagnant in their employment. Participants noted that their belief that either the cost of education was too expensive or this investment would not result in better employment. Next slide, please. As seen here, participants had to focus on month over month realities as opposed to the longer investments to establish further career pathways. Next slide, please. At this time, I want to transition to Kristen to discuss the other two findings of a report around job quality and perseverance.
Kristen Broady
Some workers shared that they felt like they were in a perpetual job search. They also talked about their wages, and the potential to make more money, not enough to get rich, but enough to survive, enough to have some financial breathing room. Flexibility with their work schedule and work-life balance were important considerations for many of the people that we talked to. In searching for jobs, some participants shared their frustration with applying for positions at multiple companies and never receiving a response from any of the potential employers. They also discussed their experiences with AI screening of their resumes and job postings that turned out to be scams. The workers we talked to had high aspirations about potential job quality, but their expectations were a bit more conservative. Next slide, please. One of the workers that we talked to described job quality as a job where you have a good work-life balance. It has to have room for advancement. More than 10 years in the same level can have you burned out. Next slide, please.
By the time we got to questions about confidence, we had already heard a lot about financial strain, job instability, and the difficulty of making ends meet, so it wasn’t surprising that confidence in the economy and in the labor market was generally low. Most participants described their confidence as having declined over the past year. Only a few offered particularly optimistic views of the broader economy. Participants pointed to rising prices, unemployment among people they knew, business closures, policy uncertainty, and a general sense that the economic conditions had become harder for them to navigate. What was more striking was the way they talked about themselves though. Even participants who described very difficult financial circumstances tended to express a strong belief in their own ability to keep going, to adapt, and to figure something out. There was a real sense of personal conviction and pride in their ability to maintain throughout the hardship.
And I think it’s important to distinguish that from simply being optimistic about the economy overall. They weren’t saying that they expected conditions to improve quickly or that good opportunities were necessarily going to appear for them. Next slide, please. The optimism we heard was much more rooted in necessity. In some ways, participants were saying, “I have to believe that I can manage this, because I really don’t have the option not to.” On the next slide, Sarah will talk about future research considerations.
Sarah Miller
Thanks, Kristen and Merissa. I hope that this has given you a lot of things to think about. It may have been corroborating to work that you do on the ground. We’re curious to see where some of our findings have been surprising for you to see, or any reflections or questions that you may have for us. What we’ve shared with you is a broad stroke of all of the findings from the focus groups that we’ve recently conducted, but there’s a lot of room to further explore some major issues that rose to the surface. For example, household financial stress. We know there’s a lot that goes into both the causes and the effects that that has on low- and moderate-income households. Reminder that the communities that we talked to represented households that made $85,000 or less, which does pretty closely reflect the average median income for the United States.
We’re talking about a substantial share of households. We also wanted to better understand employment experiences. Many people were talking about the necessity of supplemental income, having to manage multiple jobs and side hustles, holding on to employment if they had it, and troubles with their job search. There’s a lot more for us to unpack there, and the effects that the lack of ability to invest in themselves long-term is creating these upward mobility roadblocks. As we talked about, and Kristen framed in the beginning, the AI impacts is a rapidly evolving space, so we also want to better explore these experiences with AI impacts to job tasks, job structure, job stability, broader labor market effects, and all of these questions are things that we will continually ask, as we continue to capture these insights and conduct further qualitative research. But, since we are here to conduct the research to uplift these perspectives, we want you to be able to take this research, and move that towards a greater impact on the ground, for people that you serve, and people that work in your communities.
We want you to help us to shape this work. We do want to hear from you. What else would be helpful to know? What else would be helpful to influence policy change? What would be helpful to positively impact programming? We’ll drop it in the chat, or it’s already been dropped in the chat rather, but if you take a look at our methodology, you will have the full detail of the protocol of the questions that we ask. That is an evolving space, and we want that to be informed by questions that we can ask that will result in responses that are really meaningful to the work that you do. More to come on all of this, and I see there’s a couple of questions in the chat, but I did want to open up with a question, maybe I’ll start, Merissa, to you. What was the most surprising to you about this work that we just recently did as compared to a few years ago?
Merissa Piazza
Yeah, it was really interesting. I was fortunate to be a part of the last Worker Perspectives Research, and that came out of the pandemic, and I think people were looking, they were hopeful, even though many described pretty traumatic experiences during the pandemic, right, so during the last one, we had heard about eviction, and homelessness, and a lot of very personal stories about loss. In this one, it was a different conversation, but that one was, even though people experienced bad experiences, they were optimistic, where here, a lot of people had talked pretty truthfully and honestly about some pretty dire circumstances.
And I’ll also just say, I had mentioned it during our methodology, right, so we created these initial findings and went back to the participants and said, “What do you think about this?” And a lot of them said, “You need to sharpen your language and make it actually more somber. Use the word distress.” I think they really help ground truth the findings, not only from them, but using precise language to describe their characteristics. Sarah, I do have a question for you. How do you see communities … There’s a lot of practitioners on this call, a lot of applied researchers. How do you see communities and practitioners using this research to help guide policy and practice?
Sarah Miller
Yeah, absolutely. I hope you take a number of things from this research, but really the value of the depth of this lived experience of so many workers in our communities, their realities are just essential inputs for creating effective policies and impactful programming, and policy and programs made in isolation, the effect of that can often and unintentionally miss the nuances of daily life. But, from some of the things that were raised here that we’ve discussed today, I would love to see people use these examples as a way to better determine where those barriers are, and where on-ramps can be widened in their own regional labor markets, in their own communities. For example, with skill development, and education design, are there opportunities for more earn and learn opportunities, so the time and the capital bar is not so high a bar of entry for people to pursue additional skill development.
If you’re an employer, or working with employers, think through some of the policies that could positively improve retention, and lower attrition for workers with family responsibilities, and consider the income-to-cost realities, and how these imbalance in that ratio can affect the employment that they pursue. But, what’s most important, I think, as we continue this work is really to understand what the impacts are going to be to the job market and the on-ramps for workers that are in lower and moderate wage roles. Kristen, based on your research that you’ve done, how do you think that AI has (A) impacted the market so far, and what have you gleaned from this work that you want to better understand as we continue to ask these questions of workers on the ground?
Kristen Broady
So far, we’re seeing less that AI is eliminating jobs, but more that people are using programs like Claude, or ChatGPT, or Microsoft Copilot to augment what they’re doing. And so, people are going to have to know how to use AI. We need to consider that in terms of education, helping students to continue to learn, but also, how to interact with that technology as it continues to expand.
Sarah Miller:
Yeah, absolutely. And I’m just going through some of the questions that folks have submitted. I appreciate all the interaction in the Q&A. Someone says, “I may have missed it, but any findings about the cliff effect as it relates to wage increase or job changes?” That is exactly the type of detail that we want to be able to further explore with these topical briefs that will be coming out in the future. Please keep an eye on Fed Communities’ Worker Perspectives landing page, that’s where those will be promoted. But, yes, we did hear about some of those cliff effects, and we certainly heard a lot about concerns to either experienced or perceived a general erosion to the social safety net, and the effects that that has on that person’s overall financial composition and complexion, so there’s a lot more to explore there.
Someone else asked when this data was collected. The data that we are presenting today was collected between October and December of 2025. To the point of erosion to the social safety net, it’s important to note that just by happenstance when we were collecting these data, the government was also in the midst of the shutdown, and concerns about the SNAP program and things like that were definitely topics of conversation that became louder as that kind of government shutdown went on. But, as we think about moving this work forward, our objective is to consistently collect these type of data over a longer arc of time so that as there’s changes in the economy, in the job market, different pressures that are either pushing or pulling opportunity, that we can ask some questions more consistently, and get that kind of point in time analysis from what’s happening with workers now to what will they be doing later when those conditions are shifting?
I’ll just answer one more question here that was in the chat. I very much appreciate people coming on and sharing that. Someone says, “A common theme we’ve heard from employers and workers is the need to strengthen durable and foundational skills. This suggests that the education and training opportunities need to innovate programs that integrate strengthening of these skills in most training and education.” We will definitely explore more of that, and what we see as some of those barriers, but also opportunities, and how we mitigate some of these kind of bars to economic mobility.
As Kristen and Merissa both mentioned in their comments of the findings, many, many people were talking about, “I know my skills may be declining. I know I may not have the right type of credential or degree. I don’t necessarily have the right signals of where to go, especially in a rapidly changing marketplace, but I also don’t have the money, and I don’t have the time to be able to pursue that.” And many that were speaking to us with bachelor’s or beyond degrees, many also spoke about the trauma that they were carrying of that financial debt that’s followed them into their career and feeling, as Merissa said, stagnant in their employment opportunities.
I think there’s a lot to really unpack there. I do want to thank Merissa and Kristen for joining me today, and for taking us through all of the findings. We’ll try to continue to answer your questions in the chat, but know that your reflections, and your suggestions to us are really influential in how we think about scoping this work going forward. Please feel free to continue dropping those notes to us in the chat. But with that, I would love to welcome Paula Tkac into the conversation today.
Paula Tkac:
Hi, Sarah.
Sarah Miller
Hi, Paula. How are you? Thanks for joining.
Paula Tkac
I’m good, and right down the hall.
Sarah Miller
Yes, indeed. But, I just want to thank you so much for joining us today. As a reminder, Paula is our executive vice president and director of research at the Atlanta Fed. You have a very multifaceted role, to say the least, providing strategic leadership for the Regional Reserve Bank. You oversee both the research at a micro and macro level with issues affecting the economy, and the labor market, and you also serve as that primary advisor to the Atlanta Fed’s president on monetary policy. I know as all economists do, you wade through a sea of data to understand what’s happening in the economy, both from a downside and an upside risk perspective. I wanted to know over the past several months with data that you’ve been tracking, what are you seeing in the economy that might not be crystal clear from the headlines? And are you seeing any pain points, or promising indicators that have come to light in the data, or that are particularly striking for the low and moderate income households?
Paula Tkac
Sure. I think honestly, we could talk about this for the rest of the day, well beyond our 15 minutes. I want to jump on the back of the broad macro picture that was presented before you got to your survey results. And certainly, what we’re seeing here at the staff level is relatively consistent with that. I think everyone watching here knows that inflation has moderated since the pandemic recovery, but is still growing faster than the FOMC would like it to. And of course, even as inflation slows down, that doesn’t mean prices go down, right? It means the rate of increase slows. And so, we’re certainly seeing the cost pressures, especially on low- and moderate-income households continue unabated in that sense. And the longer the higher inflation goes on, of course, the more difficult it is if wages are not keeping up for those families to survive.
And they are often the families that have the least amount of buffer, if you will, whether it’s wealth, or even social networks, and families, there are limits to those buffers and those abilities to ride out those pressures. In terms of the labor market at an aggregate level, so thinking across the whole entire US, the labor market seems pretty stable. Again, it has moderated from the post-pandemic recovery where hundreds of thousands of jobs were being added every month. Now we’re down to very much lower numbers, but those are reflective of both a moderation of demand for workers, but also a moderation in the supply of workers, right? Some changes demographically in our economy, and due to immigration policy, have decreased the labor supply. And so, as we think about firms and workers out there being matched into jobs, we do see a low number of jobs being created, but I don’t want anyone on here to think that that doesn’t mean that folks can find jobs.
There are millions of workers every month who are leaving jobs and joining new jobs. It’s just the total number that we’re seeing has moderated overall, so it’s fairly broad. Amidst all of that, I think one of the big themes that we’re hearing, and we heard it today from your research, relates to uncertainty. I don’t know that I heard the word uncertainty, but I heard a lot of, I’m still confident that I can do the things that I need to do, even if maybe I’m a little less confident about where the economy is going. And we hear that from businesses as well. There are a lot of moving parts to that uncertainty. One of them is AI that you mentioned, a major structural change affecting literally every part of our economy, and probably all of our daily lives. And it’s unclear how that will sort itself out in terms of the demand for workers in different jobs, how that will sort itself out in terms of the cost of providing goods and services.
It could well be that AI can make things cheaper to produce, and that could help bring down the cost of goods and services, which would certainly help on the inflation side. But, it’s also the case it’s going to take a very, very big transition, and we’re living through it right now in all of the uncertainty that comes along with it. I would say overall we see a low fire, low hire, low quit, you guys called it job hugging, but we certainly see that writ large when we talk to businesses as well. Our biggest questions really get to the heart of the conversation here today, and that is what does wage growth look like? Wage growth is what allows working families of every sort, and every income level, to earn wealth and save that away, and also, to keep up with the increasing price and the cost of living.
We watch a lot of these statistics in great detail. But, what I think is one of the positive things that I don’t necessarily think is in the headlines is the US economy is very resilient. We have weathered a lot of shocks over the past several years, even over the past, let’s say two years, and the economy continues to be strong, and the consumer continues to be the backbone of the US economy. And so, we’re watching nimbleness in action. We’re watching people do what we heard in your survey, which is take care of what they can take care of, and be confident in their own abilities. And so, that gives me a lot of confidence and good feelings about where we’re going in the future.
Sarah Miller
Certainly. And that was absolutely underscored in the tone of when people are talking with less optimism about the labor market as a whole, but with that personal resilience, that personal agency and conviction. And like you said, speaking to that uncertainty, we did see a lot of I’m uncertain, but this whole notion that we’ll get through this, even as they were talking about the future of AI, what are the effects that this is going to have on my job? And we’ve been here before, it’s going to be okay, but again, that’s something that we’re really curious to continue asking about as the realities of that change moment to moment.
Paula Tkac
Definitely.
Sarah Miller
Now, as you mentioned, the economy being so resilient, you’ve been at the Fed since 2000, so you’ve seen some things happen. A lot has happened in that time and over your tenure. From your experience advising on monetary policy, what are some of these early indicators of risk that you look for, and that help to shape how you think about policy decisions?
Paula Tkac
Wow. I get asked this question a lot, and I really wish I could give you a little top 10 list of here’s the things to look at, and if they’re okay, then we’re okay. And if they’re looking different, or don’t look so great, then be concerned. I think honestly, especially reflecting over my time here, my 26 years, which is hard to believe, time with the Federal Reserve-
Sarah Miller
Congratulations.
Paula Tkac
Thank you. One of the reasons I really became enamored with economics and chose this profession is because things are always changing. If I gave you a top 10 list today of let’s say the things that my staff were looking at, and it would encompass some of the things I’ve already talked about, like wage growth, and the various different price distributions, and things like that, it would change tomorrow, or if not tomorrow, three months from now, or six months from now. We are a very complex and dynamic economy. If I think back to my time, when I started, we were just ending the dotcom bubble, and I came here, and we went through a financial crisis, didn’t think that would happen in the United States. We went through a global pandemic, also not on the bingo card for things that would happen in the United States.
And through every experience have learned about how our economy adjusts, and is nimble, the worker side of it, and the business side of it, and quite frankly, the policymaking side of it, so all the folks who are on this call that might be in policymaking institutions at any level. I think one of the things that’s different now is that everything seems to be moving much more quickly, and that requires a nimbleness that, again, I think we talked about that we’re seeing in some of the workers, but it requires all of us to be that nimble. The days where you could get a job, stay with a job, and continue to progress up a career ladder over a large span of time don’t seem to be around very much anymore. All businesses of all sizes are undergoing disruption, both because of AI, but just because of, again, the fast-paced nature, and the level of change and opportunity that can be disruptive.
But, it’s also, again, a great thing when you think about it creating innovation. There are a lot of jobs in existence now that were not in existence before. Some of what we look at here is something called firm dynamism. It’s about the rate at which firms in some sense die off, and don’t make it, and the rate at which new firms are founded, and the rate at which firms grow. And I know we do a lot of work here in the system with the small business credit survey, and that really gives us part of what we look at as we seek to understand how the economy is really adapting over time. New business formation accounts for a lot of jobs. And again, as we’re seeing the pace of AI, I think we’re seeing different kinds of innovation in those new startups, and that will help us understand what the upside looks like for AI while we also are concerned about whatever labor displacement there might be, and how those workers can then go through workforce development programs, and become re-skilled, re-tooled, and ready for the jobs that are becoming more plentiful.
Sarah Miller
Right. And I totally appreciate that. If only we had key performance indicators for the economy that we could all use on a Likert scale, and rate like we’re going into performance review time, that would be-
Paula Tkac
Well, the FOMC does have price stability and maximum employment, so we do rate ourselves on those.
Sarah Miller
Of course, yes, yes.
Paula Tkac
But, there’s a lot behind those numbers-
Sarah Miller
Oh, of course, yeah.
Paula Tkac
… and that’s what we seem to understand.
Sarah Miller:
And you mentioned a whole bunch of different data points that inside of all of that, and how you’re trying to weed through to understand what’s changing, where’s the dynamism, what is this resilience, where are risks and opportunities to help us fulfill that dual mandate of price stability and full employment? But, some of that data … How do you deal with the macro trends that you’re seeing at a population level with these nuanced findings that you’re getting from individuals on the ground or from businesses? What insights do you hope to glean from both that broaden specializing, and how do you really mesh those together? I know a lot of people on the call deal in that same space too.
Paula Tkac
For sure. And I’m guessing everyone finds it as challenging and as exciting as I do, because I think it really is both an art and a science to bring what I call quantitative data, the experience and expertise of our economists, and the hard data that we see together with more qualitative data. And so, that could come from surveys, it could also come from the focus groups and things like in worker perspectives. Yeah, so I use the term here in Atlanta, Mixed Methods Policy Analysis, and we like to look at topics with that wholistic view, so here’s an example. We’ve done some work, and you know much more about this than I do. But, in Jacksonville, and now in Orlando to look at both the labor supply and labor demand side of a particular area. In these two communities, we’ve talked with … In the same sort of convening, we’ve talked with businesses about what are they looking for, and workers about what are the barriers in that particular place.
That helps us learn a lot. It helps us learn where there might be gaps. And so, we can then begin to think about, all right, how nimble is the labor supply, or is the labor force, how nimble are the businesses? But, it also helps shine a light on some of the characteristics or the intersection of employment with a lot of things that go on in these communities. You could talk about home affordability, you could talk about transportation, you can talk about healthcare, including mental healthcare, and education, childcare.
When we get into those focus group discussions, we hear a lot more granularity about maybe the barriers, the tensions, again, both from a business side and a worker side. And that really helps us understand where some of this more macroeconomic data may go in the future, right? If anyone comes to you and says, “Well, I have a bunch of statistical data, and I know exactly what’s going to happen a year from now,” I can promise you they’re wrong.
And one of the things we do is use these convenings to generate questions for us about what do we need to dig into? Where do we need to think about maybe there’s a risk, or a need in order for, let’s say, the labor market to become stronger, or more solid, or what are the barriers that are inhibiting maybe some small business formation? That could be something like access to credit, right? And so, those are the monetary policy transmission channels that ultimately help us gauge whether policy is correctly set, or at least as best you can in real time.
Those kinds of things are the way we try to bring them together. I will say there’s not a formula for doing it. It’s lots of conversation. It’s lots of curiosity, so being curious about the big picture, and saying, “Well, what’s different in the small or more granular data?” And then, sometimes, again, using that granular data to go back and re-interrogate the other data. If I’m seeing the macro data say consumption’s very resilient, but then I hear from focus groups that low and moderate income folks are displaying all the behaviors that you mentioned, trading down, and limiting their purchases, we start to get a picture of a K-shaped economy, and so, we start to better understand how much support there is for continued consumption growth.
Again, thinking about a big picture macro mandate, this more micro level contextual qualitative data really helps us to stress test our understanding, and that helps us put some guardrails around what do we think the risks are to the upside that some pressures might moderate, or what are some risks to the downside that some pressures might increase?
Sarah Miller
I totally agree, helping to take some of that within context of what’s happening really on the ground from what we’re seeing at that macro level. But, I really appreciate your call to be curious, to not presume that we know exactly what’s going to happen, to come back and road test where we thought this was going to go, and why it didn’t. Those are all really, really important principles that we hold, because the Fed, one of our biggest value adds that we bring to the conversation in advancing economic opportunity really is from a research perspective. It’s our job to understand what’s happening in the data, and to uplift those findings, and shine a light on what’s going on. We aim to gather, and analyze, and highlight workers’ experiences, and what that could mean for employment behavior, but it’s not our job to set that type of policy or program.
Paula Tkac
Exactly.
Sarah Miller
And there’s a ton of people on the call today that are in those positions that are setting policy, that are creating programs that can really change some realities. What would you hope that people take from this body of research, or what we’ve been talking about today, and how can they use these insights to really increase some economic opportunity for more people in their areas of focus?
Paula Tkac
Sure. I guess, one thing I would say is I hope that folks take a moment, and are curious about their own reactions. What did people hear today that they didn’t expect to hear? What is affirming what they see in their own communities, because I think that’s, again, a great jumping off point to make sure that we try to cover, make up for our blind spots. We all have them, and that’s a really great thing, and I’m hopeful that the worker perspectives can increase awareness of those things. I would say I think it’s a great jumping off point to find out what’s going on in a particular community.
Again, back to, is this really happening here in my space? What is the array of programs? Again, we know we don’t have within our sphere any of that policymaking, but hopefully, the information here can help folks understand whether or not some of the policies that are in play in their areas, or that they might be thinking about as potential solutions, let’s say it’s on a Cliff-related issue, how to reach out and find out more information, and how to interrogate whether a policy that seems like a good idea can be stress tested a little bit, and determine whether it’s very likely to succeed.
I hope people are engaging in that sort of synthesis. Again, you said there’s a lot of folks on the call who are doing the, here’s what I see in the big picture, here’s what I see in the small picture. The way I think about combining the two of those, and hopefully this resonates with folks, is if you’re thinking about a decision to let’s say, buy a car, I can go to Consumer Reports, and I can read all kinds of things about this car, and that car, and horsepower, and insights, room, and all these other things, and features. But, before I buy that car, I really want to go test drive that car, and a whole bunch of other cars.
I’m going to ask Sarah, you like, “Well, you got one of these cars. How do you like it? What did you not like about it? What would you do differently about it?” It helps me make a better decision. And so, I think probably on the call today are a lot of folks who are in the day-to-day at a very granular level with the very workers that you have surveyed. And so, one of the things that I hope that people can carve out some time for is also to think about these bigger picture trends, because if they aren’t in your community, they may be in your community soon, and there may be other areas of the country or other communities that have begun trying to address some of these issues, or provide a bigger, I’ll use the word community again, a community within which to talk about some of those solutions.
I know it’s hard to take time out of a day, especially that’s got a lot of urgent problems to be thinking about the bigger picture, but even those on the call who are, I hope they do that. And the ones who are designing policy, I hope they dive in and do some focus groups with the people who might be affected, and find out there are some things that they could add to make it even better.
Sarah Miller
Absolutely. Keep in mind the big picture, but also ask some of these questions too to the people that you’re aiming to serve. We just dropped in the chat some lessons that we’ve learned through this qualitative and community engaged journey, so I encourage you all to take a look at that. But, Paula, thank you so, so much for joining us today, and sharing your wisdom and reflections on how you think about economic resilience. And with that, I want to turn us now to some parting words from president and CEO of the Chicago Federal Reserve, Austan Goolsbee.
Austan Goolsbee
Good afternoon. I’m Austan Goolsbee, President of the Chicago Fed, and I wanted to leave you with a final thought about why we do projects like this, and why they matter. As you know, the Fed must draw on many sources of information, economic indicators, surveys, round tables with businesses, many others, and each of those helps us better understand what’s happening. This project offered a chance for us to hear directly from workers in an in-depth substantive way. The focus groups allowed people to explain in their own words how they’re navigating work, their family responsibilities, rising costs, daily decisions, and we heard a lot. One participant said, “My rent’s never gone down. I’ve never had a bill go down, but I’ve had my salary stay the same for years.” And when they said that, you could hear concerns about affordability. You could get a glimpse of why people hate inflation so much.
And from people’s stories, we can see why they take on additional work, delay major purchases, postpone career changes. At the end of the day, broad economic trends come from individual choices multiplied millions of times. We are proud that this report reflects collaboration across the entire Federal Reserve System with colleagues from multiple Reserve Banks, having brought their expertise to bear. Thank you to all the researchers who conducted these conversations, the community partners who helped convene the participants, and especially to the individuals who shared their own experiences. Their candor about the challenges and aspirations that they face has strengthened this work. At the Fed, as you know, we often say that we are data dependent, and projects like this remind us that data means more than just numbers. We can deepen our understanding just by listening, so thank you again to everyone for taking part in this effort.
Sarah Miller
Thank you, President Goolsbee for sharing some final thoughts. Data certainly does mean more than numbers, and we look forward to continuing this work, to hear directly from workers, and have their experiences inform the research that we do, and how we work with you all on the call, and in your communities. I’d like to extend a sincere thank you to all of our speakers today for lending their expertise and voice to the conversation. Special thank you to Presidents Beth Hammack, and Austan Goolsbee, and Paula Tkac for their thoughtful reflections, and thank you to all of you for joining us today. You all do the hard work to create more and better opportunities for the people that you serve and represent, and we look forward to being a thought partner with you and sharing more research on worker perspectives in the future.
And finally, as we head into Labor Day, I would be remiss if I didn’t thank the many, many workers and job seekers who so graciously shared their time and lived experience with us through this research endeavor. I know I speak for all of my colleagues who have supported this work when I say, without their willingness to speak openly and honestly about their realities, and day-to-day decision-making, this research and these insights would not be possible. It’s with their partnership that we were able to bring their realities to light, and incorporate their perspectives into how we work to create an economy that works for all.
Quickly, before we end the session, just a couple of requests. You will get a post-event survey. We’ll send that to you immediately. Please complete that so that we can improve our work, and continue to bring you timely and relevant topics. Materials from today’s event will be available on YouTube in the Connecting Communities website within about two weeks of today’s event. Do visit fedcommunities.org to access all of the articles we’ve shared with you today and many other resources on community development across the Federal Reserve. You can follow us on all our socials. We’re on LinkedIn, X, Instagram, and Facebook, and don’t forget to subscribe to Fed Communities newsletter by clicking the About Us tab and subscribe. And then, finally, mark your calendars for Thursday, October 8th for our next Connecting Communities webinar, Building Community Capacity to Harness Opportunity Zones, 2.0 Investments. Registration is now open. Thank you all for joining us, and we hope to see you soon.
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