Why It's a Big Deal Hillary Clinton Plans to Shake Up the Fed
Why It's a Big Deal Hillary Clinton Plans to Shake Up the Fed
Hillary Clinton is taking on the United States Federal Reserve System, but in a wonky, bottom's-up way that shows her...
Hillary Clinton is taking on the United States Federal Reserve System, but in a wonky, bottom's-up way that shows her understanding of a complex and widely misunderstood organization. This is not "End the Fed" or even "audit the Fed" — she wants to rebuild it from its fundamentals at the regional level.
To paraphrase Mitt Romney, the Federal Reserve is people, my friend. Hillary Clinton's recent proposal to change the roster of Fed officials who ultimately make monetary policy and regulatory decisions might be the most effective Fed-reform idea since the financial crisis. Generally, the public pays attention to little more than the face of the organization — the Fed's chairperson, currently Janet Yellen — who announces and explains the Fed's decisions. But beneath Yellen functions an intricate and influential bureaucracy that's dominated by interests from the financial sector, the vast majority of them white men, and may well be blind to the reality of a vast majority of Americans.
The Federal Reserve was set up in 1917, in the wake of a financial crisis, as a private national bank that could serve as lender of last resort to other banks. If a bank needed money to make good on deposits, it could go to the Fed for a short-term loan. It was, since its inception, a bankers' institution, run for banks, by banks. But its role has clearly evolved as credit markets have developed and as the Fed's mandate was changed to pursue price stability (low inflation) and full employment at the same time, while helping to regulate the sector for which it also serves as lender.
As the Fed's mission has expanded, its governance has not. The Fed is run by a seven-member board in Washington, D.C., and a dozen regional bank presidents based in financial centers throughout the country (New York, St. Louis, Kansas City and Cleveland, among others). While the crew in D.C. is selected by the president and vetted by Congress, the regional bank presidents are chosen by the financial industry and tend to be either bankers or career Fed employees. Of the 12 bank presidents, two are women and only one is not white.
New York's regional president is Willian C. Dudley, previously a Goldman Sachs managing director. Robert S. Kaplan of Dallas was a former vice chairman at Goldman. Neel Kashkari, a known financial reformer, is nonetheless a former employee of PIMCO, one of the world's largest asset managers and a subsidiary of German financial behemoth Allianz. Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta is a former Citigroup executive.
Clinton's proposal would remove bankers from the regional boards of directors. Those boards choose the regional presidents and generate most of the information and perspective that the Federal Reserve governors use to set monetary policy. Clinton clearly understands how the Fed functions. Donald Trump has said he would not reappoint Janet Yellen as chair. Fine. But appointing the Fed chair is merely the most high-profile action a president can take in this regard. It doesn't change the system, and the Fed is known as the Federal Reserve System for a reason.
This is Clinton at her best – she knows how the government works. The region Federal Reserve boards do not get a lot of press. Most people do not know that they are staffed with chief executives from Morgan Stanley, Comerica, KeyCorp and private-equity firms like Silver Lake, and if they do know it, they do not understand its importance.
The Fed is generally a topic of political bluster. "I appointed him and he disappointed me," complained George H.W. Bush about Alan Greenspan, when the Fed chair refused to cut interest rates in the face of a recession that probably cost Bush his re-election in 1992. Before that, Ronald Reagan had to endure Chairman Paul Volcker raising interest rates so high in an effort to combat inflation that out-of-work construction workers were mailing bricks and wooden beams to the Fed in protest.
The idea that the Fed often acts contrary to the interests of working people is not new, but aside from requiring the Fed to pursue full employment in addition to price stability in 1977, presidents who are unhappy with the Fed have done little more than complain. Even after Greenspan disappointed Bush, Bill Clinton reappointed him to the post. When Greenspan retired, Ben Bernanke, an intellectual heir, took the helm. When he retired, Yellen, also an intellectual heir, took over. The power to appoint the Fed chair and governors is not, clearly, the power to change things.
Clinton is digging deeper. Changing the roster of the regional boards will hopefully help more accurate economic information trickle up to the chairperson and the federal governors. Perhaps, even, a labor representative or somebody with closer ties to the common American experience could become a regional bank president.
In her quiet way, tinkering with the inner workings of a near-century old quasi-government institution that is arcane to most, Clinton has a chance to achieve radical, lasting financial reform.
BY MICHAEL MAIELLO
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The Tragedy of Janet Yellen
In December 2012, a new Federal Reserve governor and unseasoned monetary policymaker, Jerome Powell, told his...
In December 2012, a new Federal Reserve governor and unseasoned monetary policymaker, Jerome Powell, told his colleagues that the risks of continued stimulus likely outweighed the benefits. Vice Chair Janet Yellen, even then one of the most experienced policymakers in the Fed’s 104-year history, acknowledged the concerns but pushed back forcefully. She argued that “slow progress in moving the economy back toward full employment will not only impose immense costs on American families and the economy at large, but may also do permanent damage to the labor market.” In other words, if we don’t take risks now to get more Americans employed, the country might lose the opportunity to ever fully recover from the Great Recession. She reminded her colleagues of the promise they had made: “We communicated that we will at least keep refilling the punch bowl until the guests have all arrived, and will not remove it prematurely before the party is well under way.”
Read the full article here.
It’s Not Just Low Pay Stressing Out Part-Time Workers
Bill Moyers - July 24, 2014, by Neha Tara Mehta - Besides struggling to make ends meet because of low wages, millions...
Bill Moyers - July 24, 2014, by Neha Tara Mehta - Besides struggling to make ends meet because of low wages, millions of part-time workers in America also face uncertainty over when they will be called in to work. Irregular schedules and last-minute notice make it hard for these workers to find other work, go to school and make arrangements for child care or caring for aging parents.
As The New York Times reported last week:
About 27.4 million Americans work part time. The number of those part-timers who would prefer to work full time has nearly doubled since 2007, to 7.5 million. According to Bureau of Labor Statistics data, 47 percent of part-time hourly workers ages 26 to 32 receive a week or less of advance notice for their schedule.
In a study of the data, two University of Chicago professors found that employers dictated the work schedules for about half of young adults, without their input. For part-time workers, schedules on average fluctuated from 17 to 28 hours a week.
“Frontline managers face pressure to keep costs down, but they really don’t have much control over wages or benefits,” said Susan J. Lambert, a University of Chicago professor who interpreted the data. “What they have control over is employee hours.”
According to the National Women’s Law Center, food service workers experience a 70 percent average variation of work hours every month. For retail workers, the variation is 50 percent and for janitors and housekeepers, it’s 40 percent.
Lawmakers across the country are beginning to notice how irregular schedules complicate the lives of part-time workers, and are taking measures to address the problem. Employees of federal agencies now have the right to request work schedule flexibilities. Workers in San Francisco and Vermont can ask for a more flexible or predictable work schedule. In a report released in June, New York City comptroller Scott M. Stringer made a case for a legislation that would give employees the chance to make such requests “without fear of reprisal.”
Congress is swinging into action on this issue as well. On Tuesday, Representatives George Miller and Rosa DeLauro introduced the Schedules That Work Act. Miller admits that the bill may meet with opposition, but thinks that it will highlight “often callous scheduling practices.”
The Guardian reports that another version of the bill is brewing in the Senate:
Senators Tom Harkin and Elizabeth Warren are co-sponsoring of the Senate’s version of the bill. Carrie Gleason, co-founder of Retail Action Project, said [that] Warren will introduce the Senate version in upcoming weeks.
A single mom working two jobs should know if her hours are being canceled before she arranges for daycare and drives halfway across town to show up at work,” said Warren. “This is about some basic fairness in work scheduling so that both employees and employers have more certainty and can get the job done.”
Although some businesses are saying the bills would represent government overreach, the clothing store Zara has already promised to start giving its part-time employees two weeks notice on their work schedules.
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Report: Millions of Dollars in Fraud, Waste Found in Charter School Sector
The Washington Post - April 28, 2015, by Valerie Strauss - A new report released on Tuesday details fraud and waste...
The Washington Post - April 28, 2015, by Valerie Strauss - A new report released on Tuesday details fraud and waste totaling more than $200 million of uncovered fraud and waste of taxpayer funds in the charter school sector, but says the total is impossible to know because there is not sufficient oversight over these schools. It calls on Congress to include safeguards in legislation being considered to succeed the federal No Child Left Behind law.
The report, titled “The Tip of the Iceberg: Charter School Vulnerabilities To Waste, Fraud, And Abuse,” was released jointly by the nonprofit organizations Alliance to Reclaim Our Schools and the Center for Popular Democracy. It follows a similar report released a year ago by the same groups that detailed $136 million in fraud and waste and mismanagement in 15 of the 42 states that operate charter schools. The 2015 report cites $203 million, including the 2014 total plus $23 million in new cases, and $44 million in earlier cases not included in last year’s report.
It notes that these figures only represent fraud and waste in the charter sector uncovered so far, and that the total that federal, state and local governments “stand to lose” in 2015 is probably more than $1.4 billion. It says, “The vast majority of the fraud perpetrated by charter officials will go undetected because the federal government, the states, and local charter authorizers lack the oversight necessary to detect the fraud.”
The report makes these policy recommendations:
■ Mandate audits that are specifically designed to detect and prevent fraud, and increase the transparency and accountability of charter school operators and managers. ■ Clear planning-based public investments to ensure that any expansions of charter school investments ensure equity, transparency, and accountability. ■ Increase transparency and accountability to ensure that charter schools provide the information necessary for state agencies to detect and prevent fraud.
It also says:
State and federal lawmakers should act now to put systems in place to prevent fraud, waste, abuse and mismanagement. While the majority of state legislative sessions are coming to an end, there is an opportunity to address the charter school fraud problem on a federal level by including strong oversight requirements in the Elementary and Secondary Education Act (ESEA), which is currently being debated in Congress. Unfortunately, some ESEA proposals do very little reduce the vulnerabilities that exist in the current law. If the Act is passed without the inclusion of the reforms outlined in this report, taxpayers stand to lose millions more dollars to charter school fraud, waste, abuse, and mismanagement.
The charter school sector has expanded significantly in the last decade and now educates about 5 percent of the students enrolled in public schools. The Obama administration has supported the spread of charter schools; President Obama’s proposed budget for fiscal year 2016 includes $375 million specifically for charters, a 48 percent increase over last year’s actual budget.
Proponents say charters offer choices for parents and competition for traditional public schools. Critics say that most charters don’t perform any better — and some of them worse — than traditional public schools, take resources away from school districts, and are part of an effort to privatize public education.
The report says that any “effective, comprehensive fraud prevention system” should include:
■ Taking proactive steps to educate all staff and board members about fraud; ■ Ensuring that one executive-level manager coordinates and oversees the fraud risk assessment and reports to the board of directors, oversight bodies, and school community; ■ Implementing reporting procedures that include conflict disclosure, whistleblower protections, and a clear investigation process; ■ Undergoing and posting a fraud risk assessment conducted by a consultant expert in applicable standards, key risk indicators, anti-fraud methodology, control activities, and detection procedures; and ■ Developing and implementing quality assurance, continuous monitoring, and, where necessary, correction action plans, with clear benchmarks and reporting
The report details cases across the country, among them:
The District of Columbia In February 2015, the DC Public Charter School Board unanimously voted to revoke the charter of the Dorothy I. Height Community Academy Public Charter School. The DC Attorney General is suing the founder, Kent Amos, for diverting public education funding to a private company for his personal profit. That private management company paid Amos more than $2.5 million over the last 2 years. Over the past 10 years, the school has paid the private entity more than $14 million and, while costs to the private company declined over that time, management fees rose. The charter board’s oversight report showed “no pattern of fiscal mismanagement.” Members of the DC Public Charter School Board have described their limited ability to oversee for-profit management companies, which face no requirement to disclose salaries or other pertinent information.
Michigan In April 2014, Steven Ingersoll, founder of Grand Traverse Academy, was convicted on federal fraud and tax evasion. He did not report $2 million of taxable income in 2009 and 2010. The school’s audit revealed a $2.3 million prepayment to Ingersoll’s school management company. The school’s later decision to write down $1.6 million of the loan put the school in a deficit position for the first time. Ingersoll then used half of a $.8 million loan for school construction to pay down some of his debt to the school.13 After the founder’s ouster, his daughter-in-law continued to handle the finances of the school.
Ohio In January 2015, the state auditor released a report of the results of unannounced visits by inspectors to 30 charter schools. In nearly half of the schools, the school-provided headcount was significantly higher than the auditors’ headcount. Schools are funded based on headcount, so these inflated figures amount to taxpayer dollars siphoned away from students. Among the seven schools with the most extreme variances between reported head count and the auditors’ headcount, almost 900 students were missing, at a cost of roughly $5.7 million.16 Auditors identified eight other schools with troubling, but less significant variances. In June 2014, a grand jury indicted the superintendent and 2 board members of Arise! Academy in Dayton of soliciting and accepting bribes in exchange for awarding a “lucrative” consulting contract to a North Carolina-based company. The contract was worth $420,919 and the charter personnel received kickbacks in the form of cash, travel, and payments to a separate business.
California In July 2014, the Los Angeles Unified School District performed a forensic audit of Magnolia Public Schools. They found that the charter-school chain used education dollars to pay for six nonemployees’ immigration costs and could not justify $3 million in expenses over four years to outsource curriculum development, professional training, and human resources services that the school itself reported doing.
Parents, Community Leaders Want Dade Middle, Others To Become Community Schools
Parents, Community Leaders Want Dade Middle, Others To Become Community Schools
Dade Middle School in Dallas has had a history of problems. Some community leaders want the Dallas school district to...
Dade Middle School in Dallas has had a history of problems. Some community leaders want the Dallas school district to boost neighborhood involvement and turn Dade into what’s called a community school. Some folks believe more community and parental involvement would make a difference there.
One weekend afternoon last fall, parents and children streamed into the auditorium at Dade Middle School. Music in English and Spanish blared from the speakers.
People from around the country showed up to speak at the school and they talked about getting parents and more of the Dade community involved in improving the school.
Yesenia Rosales was at the school with her two daughters ages 12 and 16. They moved to Texas from Maryland and she said things at Dade seem pretty good so far.
"Teachers seem very interested in helping students," she said.
Not long ago, though, things were pretty rough at Dade. Fights broke out regularly, principals were being replaced frequently and parent involvement was dismal.
Community leaders like Monica Lindsey told parents at that meeting last fall that it was time for a change. Together, she said, they could convince the district to adopt a new model at Dade and other troubled schools.
“And we’re pushing to have 20 schools turned into community schools by 2020. Can you repeat after me? 20 by 2020. 20 by 2020 …, ” Lindsey told the crowd.
So, what is a community school? According to the Coalition for Community Schools, it’s one that’s built on partnerships between the school and community groups.
A district’s best teachers work there and the school offers extra social services, like mental health counseling. There’s also more parent involvement and the school doesn’t automatically suspend students who act up.
The Dallas school district has worked to stabilize Dade by adding higher-paid and more experienced teachers. Texas Organizing Project and others involved in community school reform, however, envision a broader effort.
“At a community school, you would have 100 or 200 folks participate in some way or another in that planning process,” said Allison Brim, organizing director for the Texas Organizing Project. “You get real buy-in and also input from a larger group of parents and teachers at the school and students as well to make sure that we’re really addressing all of the needs of the entire school community.”
For the past school year, Brim and other members have been meeting with parents, Dade’s principal and district staff to talk about turning the school around. They’ve hosted several community dinners in South Dallas. And, Brim has sent school board president Eric Cowan a letter asking him to consider the issue at a future board meeting.
Brim says she sees some progress at Dade.
“I would say while it’s still not officially our standard that we’re working toward in terms of a community school, a lot of the foundation has been laid," Brim said. "And there’s been huge improvement in terms of the academics and a lot of the key indicators at the school as a result," Brim said.
Advocates point to progress with community schools in places like Cincinnati and Los Angeles.
Last month, The Center for Popular Democracy released a report citing two schools in Austin that went from facing closure to becoming two of the district’s highest-performing schools.
At one of the Austin schools – Webb Middle School – enrollment, attendance and the graduation rate went up. The school now has a full-time community school coordinator and a family resource center that offers parenting classes.
Dallas school trustee Miguel Solis said he’d like the board to consider adopting the community school model or some variation of it.
“That’s not to say that the model will be 100 percent effective if it is implemented the exact same way in Dallas as it is in these other school districts,” he said. “But the principles and tenets of the model are, I think, perfect for our community and particularly the areas that are the most underserved and need the most support.”
Even if the Dallas school board takes up the issue sometime soon, Solis said turning Dade or other schools into community schools wouldn’t happen overnight.
“What the board is likely to do is at some point just have a better understanding of exactly what a community school is, what the goals of community schools are … ” Solis said.
In other words, when it comes to making a commitment about community schools, Dallas school trustees will want to do their homework first.
This story is part of KERA’s American Graduate initiative.
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Hurricane Maria vigil on track in Hartford
Despite confusion over permits, police and city officials say they’re working with two local community groups to help...
Despite confusion over permits, police and city officials say they’re working with two local community groups to help them hold a march and vigil Thursday to commemorate the one-year anniversary of Hurricane Maria.
Read the full article here.
New York City considers ban of on-call scheduling in retail
Dive Brief: The New York City Council on Tuesday introduced a package of bills that would ban on-call scheduling and...
Dive Brief:
The New York City Council on Tuesday introduced a package of bills that would ban on-call scheduling and other inflexible, unpredictable scheduling practices deemed unfair by retail workers and many policymakers, according to the council's website.
The bills in some cases go further than what has been proposed by Mayor Bill de Blasio, who said in September he would push for legislation to give fast food and retail workers advance notice of schedules and penalty pay for last-minute changes.
The state of New York has also pushed against on-call scheduling practices, with New York Attorney General Eric Schneiderman’s office warning several retailers that aspects of such practices are already against state law, which prompted Urban Outfitters, Gap Inc., L. Brands, J. Crew, Pier 1 and Abercrombie & Fitch to end on-call scheduling.
With the heightened expectations of shoppers for convenience and service, retailers have to be able to provide a seamless omni-channel experience. Learn ways to truly optimize your fulfillment network in this new playbook.
Dive Insight:
Algorithms in scheduling software have helped retailers cut costs through efficient staffing, but have also made life difficult for workers who are trying to manage households, attend school or work additional jobs. New York isn’t the only place to find growing antipathy toward the practice of on-call scheduling. Seattle, San Francisco and Bay Area city Emeryville have also passed laws limiting and penalizing the practice.
In New York, the proposed bills would ensure that when hours become available, they’re offered first to existing employees, before new workers are hired. Many part-time workers remain willing to work full-time but can’t find the positions, according to the U.S. Department of Labor. This will offer a pathway to full-time work. The bills also provide remedies and protections to retail workers when on-call scheduling does occur and establish a process for employees to seek flexible work arrangements, among other provisions.
"People working in fast food and retail have made clear that higher wages are not enough without hours they can count on," Elianne Farhat, Deputy Campaign Director of the Fair Workweek Initiative at the Center for Popular Democracy, said in a statement emailed to Retail Dive. "Now more than ever, parents and students need more input into their work hours so they can balance working hard with caring for their families, attending college classes and participating in our community.”
Indeed, retailers should be prepared to see more such concerns, warnings and even legislation from more states and jurisdictions across the country as on call scheduling gets more scrutiny, Gail Gottehrer, a labor and employment litigator at Axinn Veltrop & Harkrider in New York, told Retail Dive last year. “This can be especially difficult for multi-state employers,” Gottehrer said. “If you’re in a lot of jurisdictions it can be complicated to get things right.”
By Daphne Howland
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Seeking Better Legal Help for Immigrants
New York Times - January 28, 2013, by Kirk Semple - In the next several days, the deans of the nation’s top law schools...
New York Times - January 28, 2013, by Kirk Semple - In the next several days, the deans of the nation’s top law schools will be notified of a new job opportunity for their graduating students. Applicants must be high achievers who want to be part of a groundbreaking start-up, live in New York City, train with veteran lawyers and help create a new paradigm in immigration representation.
The call comes from the Immigrant Justice Corps, a new group that received a life-giving injection on Tuesday when the board of the Robin Hood Foundation, a poverty-fighting philanthropy, approved more than $1.3 million in funding.
The initiative is the long-nurtured idea of Robert A. Katzmann, the chief judge of the United States Court of Appeals for the Second Circuit, who has for years campaigned to redress a grave problem: the shortage of competent legal representation for immigrants, particularly those of modest means facing deportation.
The group’s plan is to recruit 25 graduating law students or recent graduates, immerse them in immigration law and then farm them out to community-based organizations. The young lawyers would commit to at least two years of service and as many as three.
“It’s a very simple concept, but it’s one that will not only ensure fairness for immigrants but will infuse our legal system with a generation of lawyers committed to serving those in need,” said Judge Katzmann, whose father was a refugee from Nazi Germany and whose maternal grandparents were immigrants from Russia.
The corps intends to hire a cadre of 25 lawyers every year, each earning a salary of $47,000 plus benefits. They will be assisted by recent college graduates with multilingual skills who will handle less complex cases, such as naturalization applications. The team will be supervised by a group of staff lawyers and advised by veteran lawyers.
Organizers estimate that by the third year, the corps will be handling nearly 15,000 cases a year, about double the number of immigration cases currently overseen by nonprofit organizations in New York City.
Robin Hood’s grants, while enough to get the initiative off the ground, will cover only a fraction of the project’s operating costs, which are expected to total about $4 million in the first year and about $7 million in each successive year.
But foundation officials and corps board members anticipate that they will be able to raise money from other foundations as well as philanthropists and the government.
During an interview this month, with the foundation’s approval nearly certain, Judge Katzmann turned emotional.
“The dream is about to come true, after lots of hopes and some disappointments,” he said, pausing for a moment. “I’m choked up as I’m thinking about it.”
In 2007, deeply concerned about the quality and availability of representation for immigrants, he sounded a clarion call and started a study group that investigated the issue’s impact on immigrant populations. Among its findings: Most detained immigrants in the New York region did not have counsel at the time their cases were completed.
Judge Katzmann and his allies have warned that, absent new programs, the problem would grow worse should Congress pass comprehensive immigration reform providing legal status for undocumented immigrants.
The study group spawned an initiative, the New York Immigrant Family Unity Project, which seeks to provide legal representation for every poor immigrant facing deportation in New York.
But Judge Katzmann pressed for more: a national army of young lawyers in the style of public service programs like AmeriCorps Vista or the Peace Corps.
Robin Hood heard about the idea last spring and agreed to fund a planning process. Organizers decided to limit the project to New York City, at least until it had sufficient funding to expand nationally.
Nisha Agarwal, the executive director of the Immigrant Justice Corps, views the pilot project as something that could be replicated in other cities with large immigrant populations, and as a kind of feeder system for legal talent. “Maybe these fellows will leave these fellowships and go elsewhere in the country,” she said, “and be leaders in immigrant representation.”
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Low-Income Tenants Fight for Affordable Housing, Protest Proposed Trump Cuts
Low-Income Tenants Fight for Affordable Housing, Protest Proposed Trump Cuts
WASHINGTON – More than 700 people from 16 states rallied Wednesday at a Capitol Hill church to oppose the Trump...
WASHINGTON – More than 700 people from 16 states rallied Wednesday at a Capitol Hill church to oppose the Trump administration’s proposed $6.2 billion cut to federal housing programs.
Protesters held signs while shouting, “Housing is our right,” “Stop selling our neighborhoods to Wall Street,” and “No cuts to housing.”
Read the full article here.
Avoiding 'Regressive Mistake,' Fed Holds Off on Rate Hike — For Now
Update 3 PM EDT: In a decision that aligns with progressive demands, the Federal Reserve ...
Update 3 PM EDT:
In a decision that aligns with progressive demands, the Federal Reserve announced on Thursday that it would keep interest rates near zero in light of "recent global economic and financial developments" and in order to "support continued progress toward maximum employment and price stability."
Presidential candidate Bernie Sanders issued the following statement today after the Federal Reserve announced that it would hold off on raising interest rates:
“It is good news that the Federal Reserve did not raise interest rates today. At a time when real unemployment is over 10 percent, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people. It is now time for the Fed to act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago.”
The New York Times reports that the Fed’s decision, "widely expected by investors, showed that officials still lacked confidence in the strength of the domestic economy even as the central bank has entered its eighth year of overwhelming efforts to stimulate growth."
Progressives cheered the news, with Josh Bivens of the Economic Policy Institute saying, "Today’s decision by the Federal Reserve to keep short-term rates unchanged is welcome. [...] We hope they continue their pragmatic, data-based approach and allow unemployment to keep moving lower, and only tighten after there is a significant and durable increase in inflation."
He continued: "Tightening before the economy has reached genuine full-employment is not just a mistake, it’s a regressive mistake that would hurt the most vulnerable workers—low-wage earners and workers from communities of color—the most."
However, Reuters reports that "the central bank maintained its bias toward a rate hike sometime this year, while lowering its long-term outlook for the economy."
Which means that pro-worker organizations, which have largely opposed a rate increase that they say would slow the economy and stifle wage growth, will have to keep up the fight.
"We applaud Chair Yellen and the Federal Reserve for resisting the pressure being put on them to intentionally slow down the economy," said Ady Barkan, campaign director for the Fed Up coalition, which rallied outside the Federal Reserve on Thursday.
"Weak wage growth proves that the labor market is still very far from full employment," Barkan continued. "And with inflation still below the Fed’s already low target, there is simply no reason to raise interest rates anytime soon. Across America, working families know that the economy still has not recovered. We hope that the Fed continues to look at the data and refrain from any rate hikes until we reach genuine full employment for all, particularly for the Black and Latino communities who are being left behind in this so-called recovery."
Earlier...
Progressives are cautioning the U.S. Federal Reserve against slowing the economy by raising interest rates "prematurely"—a decision the Fed will announce Thursday.
The U.S. central bank will issue its highly anticipated short-term interest rate decision following a two-day policy meeting, with a 2 pm news conference led by Fed Chair Janet Yellen.
As CBS Moneywatch notes, "[t]he decision affects everything from the returns people get on their bank deposits to how much consumers and employers pay for credit cards, mortgages, small business loans, and student debt." That's because a higher rate makes it more expensive for individuals and businesses to borrow, with rising bank lending rates shrinking the nation's money supply and pushing up rates for mortgages, credit cards, and other loans.
Just before the announcement, the advocates, economists, and workers of the Fed Up coalition will be joined by Rep. John Conyers (D-Mich.) at a rally outside the Fed, calling on the central bank to keep interest rates low to allow for more jobs and higher wages.
"The point of raising rates is to rein in an overheating economy that is threatening to push inflation outside the Fed’s comfort zone," explained Josh Bivens of the Economic Policy Institute in the Wall Street Journal on Wednesday. "But inflation has been running below the Fed’s target for years—and its recent moves have been down, not up."
Furthermore, wrote economist Joseph Stiglitz at the Guardian earlier this month: "If the Fed focuses excessively on inflation, it worsens inequality, which in turn worsens overall economic performance. Wages falter during recessions; if the Fed then raises interest rates every time there is a sign of wage growth, workers’ share will be ratcheted down—never recovering what was lost in the downturn."
Progressive activists opposed to an interest rate hike overwhelmed the Fed's public comment system on Monday in a last-minute effort to sway the central bank. Raising the rate, they said, would be catastrophic for working families, particularly in communities of color that are still struggling. The Fed Up campaign, which includes groups like the Center for Popular Democracy, Economic Policy Institute, and CREDO Action, say the central bank "privileges the voices and needs of corporate elites rather than those of America's working families."
"A higher interest rate means that fewer jobs will be created, and that the wages of workers at the bottom will remain too low to live on," wrote Rod Adams, a member of Neighborhoods Organizing for Change in Minneapolis, in an op-ed published Wednesdayat Common Dreams. "That’s because when the Fed raises rates, they are deliberately trying to slow down the economy. They’re saying that there are too many jobs and wages are too high. They’re saying that the economy is exactly where it should be, that people like me are exactly where we should be."
However, at this point, "many observers believe the Fed will not raise rates this week," analyst Richard Eskow wrote on Wednesday.
"The Fed is really the central bank of the world. If the Fed raise rates a little bit, it will have an impact all over the world, particularly in emerging markets," billionaire private equity professional David Rubenstein told CNBC's "Squawk Box" on Thursday.
"I think the Fed is sensitive to that," Rubenstein said, "and I think therefore the Fed is likely to wait for another month or two to get additional data and probably telegraph a little bit better than it has now that it's about ready to do it at a particular time."
Meanwhile, global markets are fluctuating wildly in anticipation of Yellen's announcement and subsequent news conference.
But as Eskow noted, Thursday's real surprise "is that there’s any question at all what [the Fed] will do. That suggests that our economic debate is not yet grounded in economic reality, at least as most Americans experience it."
While the Guardian is providing live updates on the Fed's decision, others are making comment under hashtags that reflect the unbalanced economic recovery:
Source: CommonDreams
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