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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.

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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Milestone Academy is the latest New Orleans–area charter school where theft has gone unpunished for months after it was discovered. No one has filed charges against former chief executive D'Juan Hernandez for putting $13,000 of personal expenses on a school credit card, according to an audit released Monday (April 18).

Hernandez quit in June 2014. The audit covers only the rest of that calendar year, but new Milestone chief executive LaKeisha Robichaux said Monday nothing had changed. In addition, Jefferson Parish clerk records showed no case against Hernandez.

This is hardly the first time that it's taken months for local charter school employees to face criminal charges for alleged financial crimes. Typically, lax oversight lets a member of the finance team profit from wrongdoing until someone notices odd gaps in the reports.

Ten months after someone stole almost $70,000 from the KIPP charter network, a criminal investigation was still underway.

Someone stole almost $26,000 from Lake Area New Tech High in 2014; more than a year later, police had not found a culprit.

New Orleans Military/Maritime Academy employee Darral Sims took $31,000 during the 2011-12 school year but had not been charged as of early 2013.

Lusher accountant Lauren Hightower had not been charged with a crime more than a year after she paid herself $25,000.

The Center for Popular Democracy issued a report in 2015 blaming Louisiana state education officials for cutting corners on oversight.

At Milestone, the theft followed a tumultuous year. The governing board dropped its for-profit management company only a couple of months before school was to start. Hernandez, the board attorney, stepped in to run the school. The school also struggled to improve long-languishing academic results and faced losing its Old Jefferson campus. It has since moved to Gentilly.

Hernandez quit in June, saying he was sick of a power struggle that also resulted in the departure of the principal. A month later, the financial wrongdoing emerged.

The board withheld $13,000 from Hernandez' $135,081 pay to cover the loss. It also "contacted the applicable law enforcement agencies regarding the unauthorized credit card usage," auditors from Hienz and Macaluso wrote. "However, as of the date of the audit report the school is not aware of any charges being filed in this matter. This was due to the lack of proper policies and procedures governing the acquisition and use of credit cards by the school."

Auditors said the school has since restricted credit card use to key employees. Under the new policies, no one may obtain a school credit card without written approval from the board's finance committee. All purchases "must have the same level of support as any other disbursement," auditors wrote. And school credit cards may not be used for personal purchases, cash advances or alcohol.

However, further conversations Monday showed the wheels of justice often did turn eventually:

The KIPP employee was prosecuted, spokesman Jonathan Bertsch said Monday. He added that although criminal charges took time, the charter group detected the crime within weeks.

Simms was convicted and paid restitution, Military/Maritime Academy Principal Cecilia Garcia said. The case went to court in late 2014 and early 2015. However, Simms has since had his record at least partially expunged, according to Garcia and Orleans Parish sheriff's records.

Hightower was prosecuted and convicted, Lusher spokeswoman Heather Harper Cazayoux said. Hightower's LinkedIn account indicates that she now works as a florist at a Harvey Winn-Dixie. 

Former Arise Schools employee Quinton Barrow pleaded guilty on May 7, 2015, to stealing $9,000. He was ordered to pay restitution but then failed to appear to pay in June, according to Orleans Parish sheriff's records. 

And the biggest local charter school crime resulted in serious jail time: Langston Hughes Academy's financial manager was sentenced to five years in federal prison for stealing about $660,000.

An employee stole about $2,000 from Lake Forest Charter in 2013. As of early 2015, the school's board president would not identify the employee or say whether anyone had been charged. School leaders did not immediately respond to a request for an update.

By Danielle Dreilinger

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AlterNet - December 7, 2013, by Kevin Zeese & Margaret Flowers - The above photograph from the NYC Light Brigade came at the end of an incredible day of action on December 5 when fast food workers in 100 cities walked off their jobs and joined with supporters in their communities to protest poverty wages. The photo proclaims “ALL OF US” with people holding signs that identify different members of the community; and proclaims “THIS IS OUR MOMENT.”

The solidarity at the fast food worker protests on December 5 echoed the solidarity seen on December 3 when people throughout the United States and around the globe protested toxic trade agreements especially the World Trade Organization (WTO) and Trans-Pacific Partnership (TPP). And, that “ALL OF US” solidarity was seen last Friday, November 29 when workers walked out at 1,500 Walmarts with widespread community support at their rallies.

We are moving toward becoming a movement of movements that cannot be ignored because more people are coming to the realization that our individual struggles are all connected to a larger struggle and that we have more strength when we act together rather than alone. As the unity shown in that photograph becomes a reality, we will succeed in creating the kind of solidarity that will make this era “OUR MOMENT.”

Lessons From Nelson Mandela

South Africa is mourning the death of Nelson Mandela.  His vision for South Africa was of a rainbow – uniting all people, no one race white or black dominating others.  The liberation he sought was not only ending the racist and abusive apartheid system but also ending an economic system which allowed the white minority to profit while the black majority was impoverished.  He believed in human rights and democracy, questioned capitalism and was a socialist.  His vision of a country without poverty, with adequate housing for all and equal opportunity has not yet been realized. But he saw the whole and today the country is united around his legacy.

Mandela said, “The most vital task facing the democratic movement in this country is to unleash such struggles and to develop them on the basis of the concrete and immediate demands of the people from area to area. Only in this way can we build a powerful mass movement which is the only guarantee of ultimate victory in the struggle for democratic reforms.” In other words, Mandela saw the need to build a movement of movements connected in purpose but organized around the immediate needs and demands of various communities.

Such a united movement is growing in the United States and around the world as people organize around the issues that affect them directly but recognize they are working toward a common goal of ending the rule of money and putting the needs of the people and protection of the planet first. In Wisconsin, Occupy Community Organizing has been reaching out to work across issues at the local level and they are now sharing what they’ve learned with people in other communities.

Recent reports expose that a growing number of people are struggling due to a rigged economy and austerity spending which further fuels the movement.  Philadelphia and other cities are hurting from school closures.  Pensions are under attack in Detroit which a court ruled was bankrupt this week; pensions of public workers are also threatened in Illinois.  And while our public institutions are being dismantled, our public dollars are subsidizing CEO profits. A report by the University of California at Berkeley’s Labor Center finds that poverty wages of bank tellers require $900 million in public assistance, while a report from the Institute for Policy Studies found the same for low wage fast food workers. We all pay for this unjust business model.

Extreme methods of energy extraction such as the tar sands, mountaintop removal and fracking have also spurred a larger and more aggressive movement to stop them. This past week, students from the University of Chicago protested fracking at a public hearing. New blockades and occupations have sprung up and the Elsipogtog and Mi’kmaq in New Brunswick continue to try to protect their land from drilling.

According to leaked Stratfor documents, the energy industry’s worst nightmare is coming true because of the actions that environmentalists are willing to take to nonviolently protect the land, air and water. In fact, one oil CEO revealed that the Department of Homeland Security is now placing community members who oppose fracking on the terrorist watch list, revealing their fear of mobilized people.

The Urgent Need For Unity To Stop Transnational Corporate Power

In addition to fighting back in communities, people across movements are connecting their struggles and working together on specific campaigns. This was demonstrated best over this past week in the Global Day of Action against Toxic Trade Agreements on December 3 which coincided with the first day of the World Trade Organization (WTO) meetings in Bali, Indonesia. Hundreds of civil society members gathered in Bali to protest provisions in the WTO package that jeopardize food and climate security as well as including other threats to human rights and wellbeing.

There were colorful actions outside of the meetings in Renon Square and creative surprise actions on the inside such as this flash mob by women leaders from the Philippines for climate justice. Indian farmers, laborers and their allies alsoprotested inside as they monitored whether their representatives would compromise the needs of the people. They reminded WTO members that “aggressively upholding the rights of its citizens is not tantamount to collapsing the ministerial talks. On the contrary, such pressure tactics [of the negotiators] must be exposed as a conspiracy to keep people hungry and poor.”

Civil society groups from around the world held their own Global Peoples Tribunalin which testimonies of those affected by the WTO’s policies were heard. The Tribunal issued its findings which concluded with this statement:  “We recognize that the struggle of resistance goes hand in hand with the construction of alternatives of an economy for the people and the planet, with initiatives such as the indigenous knowledge systems, seed banks, food sovereignty, and a new paradigm for trade and investment, as well as a new juridical system that will deliver justice.”

Likewise, civil society groups in North America joined the Global Day of Action on Dec. 3 with actions in 35 cities focused on stopping the Trans-Pacific Partnership (TPP). And thousands of farmers in Japan protested the TPP during Vice President Joe Biden’s visit to Japan. In Washington, DC, we joined local activists to deliver thousands of petition signatures to US Assistant Trade Representative Stan McCoy at his office to tell him to stop bullying negotiators from other countries into accepting harmful provisions. McCoy who is in charge of intellectual property rights has been pushing policies that would deny lifesaving health care to many around the world in order to prop-up pharmaceutical profits as well as policies to restrict Internet freedom.  He refused to meet with us.  

Due to our persistence, we did meet with Jewel James, the public liaison, and told her of our serious concerns, especially the reality that many will die due to lack of access to necessary health care if the patent protections for medications and other treatments are passed as currently written. We told Ms. James that we wanted Stan McCoy to know he is being watched. She told us “He is well-aware that he is being watched.”  He only knows because the movement has exposed his actions. We hope that the knowledge that the TPP is literally trading away lives for corporate profits will motivate a brave person in the Office of the U.S.  Trade Representative to release the text of the TPP.

Analysis of text that has been leaked to date finds that the language being pushed by the United States on intellectual property rights violates international norms. Last month, more than 80 law professors and academics sent a letter to President Obama and Congress criticizing the secrecy with which the TPP is being negotiated and calling for the text to be released to the public and for a new negotiation process that is more inclusive and democratic.

This weekend, TPP negotiators are meeting in Singapore in an attempt to complete the agreement. And pressure is being put on Congress to give the President Fast Track Trade Promotion Authority to sign the TPP into law himself. This would prevent a transparent and democratic process in Congress and a full review of the potential impacts of the TPP. Members of Congress are pushing back against this executive power grab, including more than three-quarters of Democrats in the House. Labor unions released a statement to let the TPP negotiators know that opposition to the TPP is broad and deep in the United States.

Frustration is building among corporate trade advocates like Senator Max Baucus (D-MT) and Rep. David Camp (R-MI). They know they must pass Fast Track Trade Promotion Authority to serve the transnational corporate interests, without Fast Track these rigged trade agreements will never become law. A few days ago Baucus and Camp leaked to the press that they were almost there, even started rumors they were introducing a Fast Track bill for a quick vote.  But, then the push back from the people and opposition in Congress responded and they pulled back.  They are pushing hard so we need to push back, now is the time to act –we have an opportunity to put a nail in the coffin of Fast Track and the TPP.  Act now, here’s how.

Lessons from the Success of the Battle of Seattle

Since the mass protests in Seattle in 1999, the WTO has not been able to move forward with its agenda and it looks like the current meeting did not accomplish much. The TPP and its European sister, TAFTA which began negotiations in July, are thought to be attempts to advance the WTO agenda through another path. As we go to press, news reports that the WTO reached a scaled down deal have come out. While much will be made of this by corporate trade advocates, it looks like a minimalist deal that still may never come to real fruition. If this is the best they can do since their founding in 1995, it is evident that we are nearing the cusp of a new age of trade as this approach is not working. The opportunity is rising for us to push away from corporate-dominated rigged trade that allows transnational corporations to exploit people and the planet with impunity to an era that is transparent, inclusive and democratic and that puts the needs of people and the planet before profits.

This week was also the 14th anniversary of the Battle of Seattle, David Solnit wrote about the “Lessons for Today” from that success.  He interviewed Paul deArmand, a researcher and activist; and a giant who passed away this year.  This article brought up many important points for a movement of movements to succeed, but first he highlighted one we should not forget “the unexpected political power of ad-hoc, even accidental, coalitions.” Seattle was a success because it brought people together across issues in a focused effort to stop the WTO. Let’s not forget the success of working together. He also points out that “Movements grow by expansion and recruitment” and that after Seattle there was too much looking inward, contracting, not expanding (we agree this was true until recent years).

Another lesson of Seattle was the value of networks, rather than institutions.  Networks confuse the opposition: “Networks operate by ‘swarming’ their opponents, approaching stealthily and from many directions in offense . . . leaving opponents unclear about what is occurring and how to respond.” Networks have multiple centers of power “all moving toward a shared general goal.”  The energy for the network comes from sharing information; the goal is to grow the network, not just one node of it. Further, by spreading our values widely, we make some in the power structure question themselves and their values thereby weakening the pillars that hold the status quo in place.

Making ALL OF US Real

When we make the “ALL OF US” photo on the top of this article a reality, and become an inclusive movement that spreads its values widely, communicating not just with each other but more broadly, we will unite our base and create a foundation to build a mass movement on and grow to a point that cannot be ignored. A mobilized mass movement can erase the artificial political limitations of today and change the political culture of the nation.  When that happens, things that seem impossible to change, like apartheid in South Africa, become remnants of history.

The immediate priority of stopping Fast Track for the TPP, TAFTA and other corporate trade rigging, is an opportunity for us to act in unity. It is an “ALL OF US” moment.  The rigged trade of the TPP is stalling and united we can stop it.Find out what you can do here.

Let’s take advantage of the opportunity to stop this transnational corporate power grab – let’s swarm them, come from many directions and confuse them. Let us move from our multiple centers of power toward the common goal of building the power of the people. We have a common goal, together we can achieve it; and then we can build from that success as we will have shown that this is indeed, OUR MOMENT for transformation.

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