, including the housing sector, financial markets, and the labor market. monetary and fiscal authorities responded in myriad ways to help the economy and our nation recover. but we should resist the temptation to implement programs with the goal of recreating the past. the unemployment rate has slowly recovered and is now 6. 3 percent from its peak of 10 percent in october 2009. some are skeptical, though, because the decline in the unemployment rate reflects not only increases in employment but declines in labor force participation. many interpret such declines in the participation rate as representing discouraged workers who have stopped looking for work. yet, labor force participation rates can also decline for demographic reasons. indeed, we have seen steadily declining participation rates since 2000, and we can account for about three - quarters of this decline in participation since the start of the recession in december 2007 because of increased retirements and movements into disability. demographic trends, driven largely by an aging baby boomer generation, are altering the age distribution of our population. more specifically, we are getting older, and the size of the working age population is shrinking relative to those over 65. it is widely recognized that this fundamental shift will require major changes in the structure of social security and medicare programs. yet even as we solve such fiscal challenges associated with an aging population, we have to face up to the changing skills that employers are seeking. we are seeing a mismatch of skills in the workforce and the jobs that are being created. many employers i have spoken to around the country talk about the fact that while they are hiring new workers, they are hiring a new type of worker : a worker who is more technologically sophisticated and productive. going forward our educational system needs to be upgraded to prepare young people for this changing labor market. we are simply not keeping pace. more specifically, business leaders i have met talk repeatedly about having trouble finding qualified candidates in the areas of science, technology, engineering, and math, or so - called bis central bankers ’ speeches stem jobs. as you know, the increasing needs for stem - trained workers is one of the trends that will drive labor demand and productivity growth in our future. the department of commerce estimates that stem employment grew at three times the rate of non - stem employment in the previous decade and is projected to grow at twice the rate of non - stem jobs through 2018. sadly, we are not doing an adequate job of preparing our workforce for these jobs. manufacturing is one sector in which firms have implemented new production technologies and are

standards of living are rising, in large part because of the widening embrace of competitive free markets, especially by populous and growing china and india. since the autumn of 2001, global gross domestic product per capita has grown more than 8 percent. and growth in developing asia, where so many of the world ’ s poor reside, has been considerably faster. open and free markets are the antithesis of violence. they rest not only on voluntary exchange but also on a necessary condition of voluntary exchange : trust in the word of those with whom we do business. to be sure, all market economies require a rule of law to function - - laws of contracts, protection of property rights, and a general protection of citizens from arbitrary actions of the state. yet, if even a small fraction of legally binding transactions required adjudication, our court systems would be swamped and immobilized. in practice, in virtually all our transactions, whether with customers or with colleagues, we rely on the word of those with whom we do business. if we could not do so, goods and services could not be exchanged efficiently. the trillions of dollars of assets that are priced and traded daily in our financial markets before legal confirmation illustrates the critical role of trust. even when the law is followed to the letter, appeals to legal authority guide only a few of the day - to - day decisions required of business and financial managers. the rest are governed by whatever personal code of values that market participants bring to the table. commerce is inhibited if we cannot trust the reliability of counterparties'commitments. indeed, the willingness to rely on the word of a stranger is integral to any sophisticated economy. this necessary condition for commerce was particularly evident in freewheeling nineteenth - century america, where reputation and trust became valued assets. throughout much of that century, laissezfaire reigned in the united states as elsewhere, and caveat emptor was the prevailing prescription for guarding against wide - open trading practices. a reputation for honest dealing was thus particularly valued. even those inclined to be less than scrupulous in their private dealings had to adhere to a more ethical standard in their market transactions, or they risked being driven out of business. to be sure, the history of world business is strewn with fisks, goulds, and numerous others treading on, or over, the edge of legality. but they were a distinct minority. if the situation had been otherwise, nineteenth - century market economies would never have achieved