Unemployment Dropped Below 6% -- So What's the Bad News?

http://www.alternet.org/economy/unemployment-dropped-below-6-so-whats-bad-news


The jobs report on Friday showed the economy created 248,000 jobs in September and the unemployment rate fell below 6.0 percent for the first time since the early days of the recession. This is good news for workers. While we are still far from anything resembling full employment, it is getting easier for people to find jobs.

If the economy keeps creating jobs at this pace, workers will finally have enough bargaining power to see some real wage gains, thereby getting their share of the benefits of economic growth. But this is also the bad news in the story. There are many powerful people who want to keep these wage gains from happening.

Immediately after the jobs report was released, James Bullard, the president of the St. Louis Federal Reserve Bank, was on television insisting that the Fed had to start raising interest rates. Bullard complained that the Fed was behind schedule and needed to slow the economy to prevent inflation.

There should be no ambiguity about what Bullard was saying. He knows that higher interests will keep people from getting jobs. If the Fed raises interest rates it will discourage people from buying homes and cars. Fewer people will refinance mortgages, which has been a way for tens of millions of people to free up money for other spending over the last few years.