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The Federal Reserve Can Help Close Gender and Racial Wage Gaps by Pursuing Full Employment

With questions of race and inequality dominating the national dialogue and the Federal Reserve’s debate over interest rates heating up, a new report argues that the Fed has an opportunity and responsibility to close race and gender gaps in the labor market by pursuing full employment.

Read the report here.

In Mind the Gap: How the Federal Reserve Can Help Raise Wages for America’s Women and Men, the Center for Popular Democracy’s (CPD) director of strategic research Connie Razza and the Economic Policy Institute’s (EPI) research and policy director Josh Bivens recommend that the Federal Reserve pursue genuine full employment rather than be satisfied with steady job growth that consistently fails to boost wage growth. Better wage growth iscrucial to ensure that gender and racial wage gaps close for the right reasons - with wages rising for all groups but more rapidly for groups currently disadvantaged in labor markets.

“Because the vast majority of American workers have seen near-stagnant wages even as economy-wide productivity growth has constantly risen, there’s ample space for wage gaps to close without anyone losing wages,” said Bivens.  “The Fed has a powerful role in shaping labor market trends and raising wages—by pursuing full employment, it could help to close these wage gaps among workers.”

Over the past 35 years, the vast majority of workers saw wages essentially stagnate despite a 64.9 percent growth in productivity. The limited progress made toward closing the gender wage gap in this period is even more disappointing given the outright decline of men’s wages. Wage disparities between white earners and Latino or Black earners, meanwhile, have increased during this same period.

The past 35 years also shows a steady downward trend in price inflation, meaning that monetary policy has been contractionary over much of this period, contributing to the poor wage performance for most workers over this time period. The authors recommend that the Federal Reserve not consider an interest-rate hike until indicators of full employment, particularly wage growth, have strengthened. To promote wage growth, the Federal Reserve should set a clear and ambitious target for wage growth, which can be tailored to the price-inflation target and pegged to increases in productivity.

“Failure to aggressively target and achieve genuine full employment by keeping interest rates low and setting a clear and ambitious target for wage growth explains a large part of why wages continue to stagnate,” said Razza. “There is increasing talk about raising interest rates, but it would be a terrible mistake for the Fed to do so. Raising interest rates too soon will slow an already sluggish economy and will disproportionately harm women and people of color.”

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 The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with innovative base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial justice agenda.

Huffington Post - February 26, 2013, by Camille Rivera - In March of 1968 -- just three weeks before he was assassinated -- Dr. Martin Luther King Jr. declared in a speech that one of the great lessons of the civil rights struggle was that it was not just about integration -- but also about economic justice.

"We know now that it isn't enough to integrate lunch counters," Dr. King said. "What does it profit a man to be able to eat at an integrated lunch counter if he doesn't have enough money to buy a hamburger? ... What does it profit one to be able to attend an integrated school, when he doesn't earn enough money to buy his children school clothes?"

Unfortunately, 45 years later, we can still ask those questions.

New York is one of the richest cities in America, but it also has one of the widest income inequality gap in the nation: A report last year found that the top one percent of income earners made 32 percent of the income.

We have far too many hard-working New Yorkers, many of them people of color, working at or below minimum wage, often without overtime and benefits. They work in car washes, fast food restaurants, as airport security guards and in food service and small supermarkets.

That's Why UnitedNY, Make the Road NY, New York Communities for Change and labor organizations like the Retail, Wholesale and Department Store Union and 32BJ SEIU supported the workers when they formed an unprecedented coalition across all industries last summer, and held a big rally and march in New York City on July 24.

Since then, there have been actions, a boycott and a one-day fast food walk out -- all of which generated a great deal of public support. Five car washes have voted to join RWDSU; some supermarkets have settled unfair labor practices suits and agreed to pay a combined $750,000 in lost wages and back pay.

That's also why UnitedNY and the Center for Popular Democracy released a report on the ongoing plight of low-wage workers in New York City at a "Workers Rising" symposium on Feb. 13. The report spelled out the problem -- and organizing efforts -- and offered a list of recommendations to improve wages and working conditions for those at the bottom of the socio-economic ladder.

The recommendations range from supporting legislation to allow paid sick days for workers, to establishing a Mayor's Office of Labor Standards to ensure that employment laws are enforced, to urging New York State to allow the City to set a minimum wage higher than the State minimum, due to the higher cost of living in the five boroughs. These proposals are the result of conversations with workers who have struggled for far too long to make ends meet. They are the result of hearing from families who have lost loved ones who could not afford to take time off from work to get the medical care they needed before it was too late.

Hundreds of workers, advocates and community members turned out for the symposium, which featured lively panel discussions about strategies to help lift low-wage workers into the middle class. The energy inside those rooms was electric; the air was thick with hope and dreams.

A gaggle of elected officials was on hand for the Workers Rising event, including two declared mayoral candidates -- Public Advocate Bill de Blasio and former city comptroller Bill Thompson - as well as City Council members and others.

The report came just one day after President Obama said in his State of The Union speech that America should not be a place where working people who make minimum wage are still in poverty.

"That's wrong," he told a joint session of Congress. "In the wealthiest nation on earth, no one who works full-time should have to live in poverty."

Obama called for raising the federal minimum wage to $9 an hour, with indexing tied to cost of living increase. That's certainly a lot better than $7.25, which is the minimum wage at the federal level and in the State of New York, but nowhere near enough in New York City.

The UnitedNY/CPD report said raising the minimum wage to $10 an hour would allow full-time workers to make just $20,000 a year. The report also noted that more than 110,000 full-time workers live in poverty.

Any way you look at it, an increase in the minimum wage is overdue, and needs to be enacted immediately. If it can't be approved on the federal or state levels, those of us here in New York City must find a way to increase it locally. It is clear that $7.25 an hour is not enough to make ends meet, and the time for change is now.

All in all, the symposium helped to foster real conversation between elected officials, policy experts, and the low-wage workers themselves about the economic issues that are plaguing New York's workforce. Symposium attendees left the conference energized, engaged and filled with hope. They would have made Dr. King proud.

Source: Huffington Post

About a hundred people are walking north from downtown Charlottesville, Virginia, the scene of a white supremacist rally and riot this month, to Washington, D.C., 111 miles away. The journey—a nonviolent response to the violence of the hate groups that descended on Charlottesville—is expected to take ten days.

They are led by the Reverend Cornell William Brooks, a civil rights lawyer and former president and CEO of the NAACP.

Read the full article here.

Federal Reserve bank presidents are pushing back against a rising chorus of voices saying the central bank’s century-old structure needs to be overhauled to reduce bankers’ influence over its operations and policies.

Presumptive Democratic presidential nominee Hillary Clinton and the party’s draft platform have echoed calls for change by left-leaning activists, a drive that could gain new attention this week during the party’s convention in Philadelphia.

At issue is the role played by private banks in the Fed’s 12 regional reserve banks, which supervise financial institutions, provide financial services and participate in the central bank’s monetary policy-making.

By law, private banks elect six of the nine members of each Fed bank’s board of directors, choosing three to represent the banks and three to represent the public. The other three are appointed by the Washington-based Fed Board of Governors to represent the public.

Critics say the setup creates an inherent conflict of interest, akin to the proverbial fox guarding the henhouse, and has resulted in too little diversity among the leadership of the Fed system.

“Common sense reforms—like getting bankers off the boards of regional Federal Reserve Banks—are long overdue,” Mrs. Clinton’s campaign said in May.

Fed leaders in recent public comments and interviews have defended the status quo as effective, though Chairwoman Janet Yellen said during congressional testimony in February “it is of course up to Congress to consider what the appropriate structure is of the Fed.”

Meanwhile, regional Fed bank officials have played down the potential for conflict of interest, noting that the directors aren't involved in bank supervision, and the directors who represent private banks don’t participate in choosing the Fed bank presidents. The officials also see value in having close ties to the banking community. Patrick Harker, president of the Philadelphia Fed, said most of the bankers in his district are from small firms, not the big financial institutions that can worry regulators.

“The banker from a small town in Pennsylvania provides incredibly important insight” about local conditions, and “I worry about losing that insight,” Mr. Harker said. He agreed bankers could provide input through advisory groups, but he said having them on his board, meeting every 15 days, provides a level of instant insight into the economy and financial system that would be hard to replace.

William Dudley, president of the New York Fed, told reporters in May, “The current arrangements are actually working quite well, both in terms of preserving the Federal Reserve’s independence with respect to the conduct of monetary policy and actually leading to pretty, you know, successful outcomes” in terms of hitting the Fed’s goals of maximum employment and low, steady inflation.

Another issue for some advocates of change is the regional Fed banks’ status as quasi-public, quasi-private institutions. The Fed board in Washington is a wholly government entity that ultimately oversees the regional Fed banks. But when private banks become members of the Federal Reserve system, they are required to buy stock, and in turn receive dividends from the Fed. So the private banks in a sense own the regional Fed banks, though they can’t transfer or sell the stock.

“It’s pretty indefensible for the Fed to be the only regulatory institution” in the U.S. “that’s owned by the industry it regulates,” said Ady Barkan, of the Center for Popular Democracy’s Fed Up Campaign.

Fed officials say the critics misunderstand the Fed’s ownership structure. Cleveland Fed President Loretta Mester said in an interview the quasi-private status of the regional Fed banks helps ensure the independence that is needed for good policy-making in an economically diverse nation. If the regional banks were made fully part of government, she worried, Washington’s power would grow, raising the risk of politics influencing the policy debate.

Ms. Mester said “yes, the banks have stock” in the Fed. “But that’s not owning the Fed in the sense of a corporation, right? It’s making sure that there’s representation from the district as part of the Fed structure,” she said.

Richmond Fed leader Jeffrey Lacker also worried making the regional Fed banks pure governmental entities might promote short-term thinking that would lead to bad policy outcomes.

Fed Up worked with former senior Fed staffer Andrew Levin, now a professor at Dartmouth College, on a proposal to make the Fed banks wholly government institutions, as are the central banks in all the major economies. His proposal also would eliminate the regional Fed board director slots reserved for bankers and have all the directors selected in a public process involving the Washington governors and local elected officials.

Mr. Levin said he’s somewhat mystified Fed officials appear to be rejecting almost all the major reform ideas now being debated. They “might not have much influence on the outcome if they wait too long to engage in the debate,” he warned.

Mr. Harker, the Philadelphia Fed president, worried “there are always unintended consequences anytime you make a change.”

But Mr. Barkan countered “it’s true the system could be made worse than it is now, but we think it could be made better.”

By MICHAEL S. DERBY

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