The U.S. workforce is in shape to benefit from globalization and from increased specialization that is boosting productivity, Federal Reserve Governor Donald Kohn said on Thursday.
I think workers in the United States will be a) employed and b) realize at least some of the benefits of this productivity, Kohn said from the audience during a forum at the Boston Fed's conference on global imbalances.
Kohn said it was unclear what the global churn of workers meant for the implied U.S. rate of full employment -- the non-accelerating inflation rate of unemployment, or NAIRU.
It's not obvious what this does to the NAIRU. Churning might raise the NAIRU in theory, but in fact if anything the NAIRU has been drifting down a little, he said.
The U.S unemployment rate hit 4.6 percent in May, its lowest since July 2001. It has been below 5 percent, often seen as a line below which wage inflation pressures can start to build, for several months.
Kohn said U.S. corporate profit margins are high at the moment but could not rise without limit.
Over long periods of time and over lots of different economic stages, profit margins have tended to return to the mean, he said.
One potential negative outcome for U.S. workers could be the terms of trade issue, he said. The purchasing power of their incomes might be adversely hurt. But I suspect that will be a small effect over a wide variety of products. And so far, terms of trade have moved very favorably for the United States.