The Fed: Wages are rising in rural areas not cities, Fed’s Bostic says

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Senior economics reporter

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, listens during a conference in Chicago, earlier this month.

Rural communities in America are facing “an increasingly difficult plight,” but are also where wages for low-skilled workers are starting to rise, said Atlanta Fed President Raphael Bostic, on Tuesday.

Rural employers are having relatively more difficulty filling positions and are having to raise wages to attract workers, Bostic said in a speech in Montgomery, Ala. As a result, wages have increased in rural areas more rapidly in recent years, especially for less-skilled workers.

While jobs requiring less education may be more plentiful in urban areas, the supply of labor has kept up with this demand, he said.

Bostic’s comments add some color to a recent study of Google Trends conducted by DataTrek Research.

DataTrek found that most Google search interest in job openings came from rural areas, while the search term “ask for a raise” came from more urban locations.

Read: Rural America wants jobs, while urban dwellers are ready for raises, Google searches show

Overall, the rural population has less formal education on average, earns less income, has a higher poverty rate, is less racially and ethnically diverse, and has poorer health than the urban population, Bostic said.

The Great Recession has intensified labor force disparities between the regions, he noted.

Bostic said the Fed alone cannot expand economic opportunity for rural areas and that education, economic development and even migration policy must play a part.

The Atlanta Fed president said the overall economy is growing at a “reasonably solid pace.” He said business contracts don’t expect a surge of growth or an upswing in inflation.

“I don’t get much of any signal from the boots on the ground that a large, generalized expansion of business activity is in the offing,” he said.

While tax reform, if enacted, could alter the outlook, it is too early to know for certain about the impact from the Republican tax plan because “the devil is in the details,” Bostic said.

Bostic joined the Atlanta Fed in June. He will be a voting member of the Fed’s interest-rate committee in 2018.

Read: Yellen says market expects too much certainty from Fed guidance

And: Fed’s Yellen: It’s confusing with so many voices on the FOMC

Bostic backed the Fed’s current plan to continue to gradually raise interest rates, but said the pace of hikes depends on incoming data. He said he thought that recent weak inflation readings were mainly noise.

The central bank has penciled in one more rate hike this year and three more in 2018.

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