Influence, the power to change
Clad in a “Stand With Black Women” shirt, Mercedes Fulbright, the Texas State Coordinator at Local Progress, commanded...
Clad in a “Stand With Black Women” shirt, Mercedes Fulbright, the Texas State Coordinator at Local Progress, commanded attention during her engagement entitled, Deserving and Entitled; Engaging in Public Policy to Empower People, as part of the annual Speaking Truth To Power community activism seminar at Friendship West Baptist Church, June 29.
Read the full article here.
Group calls on Charlie Dent to pass immigration reform
WFMZ-TV – August 20, 2013, by Will Lewis - ALLENTOWN, Pa. – A group rallying for immigration reform is taking its...
WFMZ-TV – August 20, 2013, by Will Lewis -
ALLENTOWN, Pa. – A group rallying for immigration reform is taking its message to Lehigh Valley Congressman Charlie Dent and other Republicans. They want action now but no action will be taken until Congressional leaders return to Washington in September.
“I am one of millions of children that had to be separated from their parents because of a broken immigration system,” said Tatiana Tooley, a community activist speaking to the group.
This group hopes Senate Bill 744, immigration reform, is the first topic Congress discusses.
“If the GOP supports this, the GOP is making a statement that they truly value family unity,” added Tooley.
Lehigh Valley Congressman Charlie Dent says he does support immigration reform. He also knows the issue is a complicated one.
“Immigration reform will be dealt with,” said Dent. “It will be dealt with a bit differently than the Senate which chose to take up one massive bill. The House will deal with this in pieces.”
Senate Bill 744 has already passed and some wish congressional leaders would look at that piece of legislation first before coming up with a new set of rules.
“If they have another bill it will take more time,” said organizer, Fernando Vazquez.
“We’ve gotten away from a dialogue and we’ve polarized on not only this issue but a lot of issues,” said Allentown Mayor Ed Pawlowski. “We’ve polarized on one side or the other. that’s not how good government works.”
The people say waiting means more children separated from their families, and more people waiting to live the American dream.
“We have to deal with this thing responsibly,” said Dent. “I think we can and I think we can get there. But it’s going to be a lot of work.”
“The new leader could be Charlie Dent and one way to show leadership is passing this bill,” added Vazquez. “Because many people will vote for a Republicans, they need to remember that.
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How Maryland Governor Larry Hogan Has Failed West Baltimore
With the thousands of soldiers, countless police, and CNN trucks, West Baltimore in April looked very different than it...
With the thousands of soldiers, countless police, and CNN trucks, West Baltimore in April looked very different than it had just a few months before. When Governor Larry Hogan strolled in—mic and camera in tow—he claimed he was looking out for the best interests of residents. He boasted of being the only politician who would come to rough neighborhoods and talk to locals. Hogan even moved his base of operations to Baltimore, stating in a press conference that he was“taking over the situation.”
But when it came time to take real action, Hogan cowered. Recently, a bill crossed Hogan’s desk that, in one fell swoop, would restore the right to vote to 40,000 Maryland residents—disproportionately black residents, many of whom are from poor Baltimore neighborhoods, the vast majority of whom are victims of our discriminatory mass incarceration system. The state legislature overwhelmingly supported the bill, which would give Baltimore the chance to regain their constitutional voice.
Hogan vetoed it.
In other words, when given the opportunity to show that he is serious about ensuring a voice for black and poor Maryland residents, Hogan decided he’d rather keep them quiet. The bill would have granted felons the opportunity to vote “as soon as they leave prison rather than waiting to finish parole or probation.”
When Hogan said he was “taking over the situation,” the situation he referenced was not Freddie Gray’s murder at the hands of callous police. In fact, Hogan barely commented on Gray’s death at all, completely failing to rebuke the officers who killed him. What concerned him—what brought him to Baltimore—were the protests that followed Gray’s death.
He did not see courage on the faces of the people calling for justice. He did not understand that they were calling for a voice, calling for change to the broken system they live in. These protests were a response to much more than violent policing. They were calling for leaders and lawmakers to act on the needs of low-income communities of color.
Freddie Gray’s crime was simply existing. He was killed in West Baltimore, where being poor and black means being shut out of opportunity. Like so many other low-income communities of color, people in Gray’s neighborhood commonly suffer from not only police violence but economic and institutional violence, as well.
In West Baltimore, the unemployment rate is 24 percent and the median income is about $24,000. Children born there are bound to be victims of systematic inequality at virtually every juncture, and receive significantly fewer resources than kids in other neighborhoods. Public schools in the area are dilapidated and under-resourced, and the city has closed 14 recreation centers since 2010.
The economic distress, educational deprivation, and out-of-control policing tactics that plague places like West Baltimore increase the likelihood that those in the community will be funneled through the criminal justice system. Black teenagers are almost as likely to be arrested as they are to graduate from high school, and more people in Maryland prisons come from Gray’s West Baltimore neighborhood than any other neighborhood in the state.
This is why Maryland’s felon disenfranchisement laws—which currently bar anyone in prison, on parole, or on probation from voting—are so problematic. Hogan’s description of this law as simply a just punishment further underscores his willingness to turn a blind eye to reality.
The truth is that felon disenfranchisement is a mechanism to reduce the political voice of entire neighborhoods of color. The loss of a vote not only hurts the potential voter, it hurts their whole community. Entire populations of low-income minorities are slowly shut out of our democracy. They are forced to watch their power steadily deteriorate.
It is not surprising, then, that lawmakers like Hogan have done little to address the West Baltimore community’s perpetual poverty and marginalization for so long. The rampant disenfranchisement in these communities makes voters unable to hold their elected leaders accountable. Since places like West Baltimore have less and less electoral power, lawmakers are free to ignore the issues that confront these constituents.
Gray’s tragic death put a spotlight on West Baltimore. But now the news cameras have left, the protests have waned, and the Governor has packed up and gone home. Residents find themselves, once again, abandoned and voiceless.
Last month’s protests prove that Baltimore residents need to be heard. Families are crying out, demanding that this broken system be repaired. The state legislature supported giving residents a voice. But Hogan decided he preferred their silence. Baltimore deserves better.
Josie Duffy is a policy advocate for The Center for Popular Democracy.
Source: Gawker
Meet the Activists Who Want to Make the Fed Listen to Workers for a Change
Vox - August 22, 2014, by Dylan Matthews - The Jackson Hole conference, an ...
Vox - August 22, 2014, by Dylan Matthews - The Jackson Hole conference, an annual retreat in Wyoming organized by the Kansas City Fed, is usually frequented by central bankers, private sector economists, and academics. It's not usually frequented by everyday workers.
This year was differrent. A group of community activists traveled to the conference to urge policymakers to not do what an increasing number of voices in the Fed system and in the financial sector have been urging them to do: raise interest rates.
"They need to stimulate the economy," says Kendra Brooks, a former bank manager from Philadelphia who's been unemployed for about a year. "Increasing the interest rate here isn't going to help the people without jobs. It's going to put us further into debt."
"I want to at least get our voices heard before they make their decisions,"Tyrone Raino, who recently took a job requiring a 40 mile commute from his home in Minneapolis, says.
Brooks and Raino are both members of local community organizing groups — Minnesota Neighborhoods Organizing for Change and Action United in Philadelphia, respectively — which have, with the Center for Popular Democracy, come together to try to do something that hasn't really been done before: grassroots lobbying of the Fed. And they're being heard.
According to the Center's senior attorney, Ady Barkan, the group met with Kansas Fed chief Esther George for two hours, and spoke to Fed chair Janet Yellen, Chicago Fed chief Charles Evans, and Minneapolis Fed chief Narayana Kocherlakota. The last three are sympathetic to Brooks and Raino's perspective — Raino called Kocherlakota "one of the voices in the Federal Reserve system who understands the economy is far from recovery for most of us" in an article for MinnPost — George has expressed support for raising interest rates. For people trying to lobby a generally unlobbied institution, that's an impressive start.
To some extent, the Fed is designed to be impervious to outside pressure like this. Many economists believe that central bank independence — that is, having a central bank that is not directly controlled by legislatures or other democratically elected officials — is crucial to effective monetary policy. In 1993, future Treasury Secretary Larry Summers and his Harvard colleague Alberto Alesina authored a hugely influential paper arguing that countries with more independent banks have less variable prices and lower inflation overall. While that finding was controversial, the view that month-to-month policy decisions by the Fed should not be influenced by politicians — what Fed vice chair Stanley Fischer has called"instrument independence" — is widely accepted.
But Barkan argues that the independence the Fed currently enjoys is one-sided. "There are 108 board members across the 12 regional banks," he notes. "Under the law, 72 of them are supposed to represent the public interest and 36 are supposed to represent banking and financial interests. But of the 108, 97 are from financial institutions or corporations. Only 9 are from nonprofits, and even those are from major, wealthy nonprofits. Only 2 of the 108 board members represent labor organizations and workers."
"This desire for Fed independence really only goes in one direction," he concludes. "It's a desire for insulation from the needs of regular people."
Barkan, Brooks, and Raino avoid endorsing specific proposals for the Fed to get tougher on unemployment, like setting a nominal GDP target or abolishing paper money or allowing "helicopter drops." The emphasis is more on convincing the Fed that there is still a problem — that the labor market still has slack.
While some in the Fed worry that people are getting too many raises, Barkan argues that wage growth is still too slow — and that the labor market won't be healthy until it's significantly higher. "Real rising wages will represent tightening of the labor markets, and that's what you want to pull the long-term unemployed back into the market, and vulnerable workers back into the market," he says. "It's only once the labor market tightens that you can help vulnerable communities get out of this long recession."
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In $15's Wake, Fair Scheduling Gains Momentum
Worker movements have had tremendous success in blue cities and states in securing higher minimum wages and access to...
Worker movements have had tremendous success in blue cities and states in securing higher minimum wages and access to paid sick leave. Now those wins are blazing a trail for another critical policy for low-wage workers: the right to a fair workweek. After enacting a $15 minimum wage and paid sick leave in recent years, two cities are now leading the way on granting workers the right to a sane and predictable schedule.
Last week, New York City Mayor Bill de Blasio announced his support for legislation currently pending in the city council that would give Gotham’s fast-food workers the right to more predictable work hours. On Monday, the Seattle City Council passed a comprehensive fair workweek law that advocates hope can serve as a model for other cities.
These policy developments come at a time when many workers say that service-sector employers’ scheduling practices make it impossible for them to live their lives. On-call scheduling—in which workers can be told to report to work with little advance notice—make it hard for employees to schedule parenting, school, doctor visits, and much else. Scheduling software aimed solely at efficiency can lengthen or eliminate their shifts at the last minute. On top of that, the prevalent practice of “clopening”—where a worker has a closing shift followed just a few hours later by an opening shift—often leaves workers with little time to rest. Meanwhile, workers are on the hook for the costs of uncertainty, like a last-minute taxi ride to work or unexpected child-care costs.
In one nationwide survey, four out of five early-career adult workers said that their weekly hours fluctuated by an average of 87 percent compared with their usual hours; 45 percent of hourly workers who are parents said they have no input on their schedules.
Fair-scheduling advocates say it's time for employees to have more say in scheduling practices—and for employers to finally pay their workers for the costs that their flexible schedule imposes on employees (like those taxi rides and child care). They are also demanding that companies stop hiring more and more workers to maximize flexibility while cutting hours for existing workers.
In 2014, San Francisco became the first jurisdiction in the country to mandate fair-scheduling practices with its unprecedented “Retail Workers Bill of Rights.”
In 2014, San Francisco became the first jurisdiction in the country to mandate fair-scheduling practices with its unprecedented “Retail Workers Bill of Rights.” The new Seattle law will build on that by requiring that employers give workers two weeks advance notice on shift schedules—any changes made to schedules after that requires additional compensation for the worker, including half-time pay for any hours an employer cuts or cancels. Workers will have the right to request flexible scheduling without fear of retaliation.
Workers will also have protections against “clopening.” The proposed law would be the first in the country to require an employee’s consent for shifts that allow less than ten hours of rest, and to mandate that “clopening” workers get paid time and a half. Additionally, employers would be required to offer available hours to part-time workers before hiring additional workers. Companies that have been found to consistently under-schedule workers and make last-minute shift changes would be subject to fines.
“These are critical steps forward. If you don’t get that many hours, earning $15 only goes so far.”
On the opposite coast, the New York City legislation focuses on the 65,000 workers in the city’s fast-food industry. As such, it follows the pattern set by Fight for 15 organizers, who first convinced Governor Andrew Cuomo to convene a wage board for fast food last year, later to be followed by a general increase in the state minimum wage. “We are in a battle to restore dignity and decent living to retail and service workers in industries where that really has been badly eroded in recent years,” New York City Councilmember Brad Lander told the Prospect in an interview. “These are critical steps forward. If you don’t get that many hours, earning $15 only goes so far.”
As in the Seattle legislation, New York fast-food employers would be required to give workers two weeks advance notice on expected shifts, mandate additional compensation for last-minute changes to a worker’s schedule, and provide protections for workers who are “clopening.” However, as of now, the proposed policy gives employers a week of wiggle room after setting the schedule to make changes before locking it in.
The policy initiative is in the beginning stages, Lander stresses, and the city council may push for any number of changes, including broadening the law to include the entire service industry. As of now, the policy is aimed at the same group of fast-food employers that Cuomo’s wage board dealt with—chains with 30 or more locations nationwide. It’s those bigger chains that already utilize sophisticated scheduling software to minimize labor costs. They can use that same software, Lander says, to ensure that workers have a predictable and secure workweek.
To date, fair-scheduling laws have lagged behind wage hikes and paid sick-day ordinances in city halls and statehouses.
To date, fair-scheduling laws have lagged behind wage hikes and paid sick-day ordinances in city halls and statehouses. At the federal level, in 2014, Representative Rosa DeLauro and Senator Elizabeth Warren introduced the Schedules that Work Act, which protects hourly workers from scheduling abuses—though with Republican control of Congress, the bill hasn’t gone anywhere.
But fair workweek policies now appear primed to become the next front in the low-wage worker movement.
But fair workweek policies now appear primed to become the next front in the low-wage worker movement. In response to pressure from SEIU’s Local 32BJ, a powerful force along the Eastern seaboard, policy-makers in Connecticut, Washington, D.C., and Jersey City may soon pass new rules that mandate 30-hour workweeks for service workers, like security guards and janitors, in large commercial and residential buildings. In November, voters in San Jose will decide on a ballot measure that would require companies with 35 or more workers to offer additional hours to part-timers before taking on new employees.
Washington, D.C., and Minneapolis are also considering fair-scheduling measures for retail and fast-food chains, though both efforts have run into heavy resistance from the business lobby. Workers and organizers are also pushing for a fair-scheduling law in Emeryville, a small city between Berkeley and Oakland that is a major retail-shopping destination for the east Bay Area.
“The momentum with the Fight for 15 has opened up this new space where policy-makers are starting to listen to the real needs that the country’s workforce has been talking about for a long time,” says Carrie Gleason, director of the Center for Popular Democracy’s Fair Workweek Initiative, which is assisting with local fair-scheduling efforts. “This isn’t a new issue,” Gleason adds. But “the accelerated pace in which these types of work-hour policies have taken off is a demonstration of the moment we’re in.”
By Justin Miller
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Protest Calls for Fed to Focus on Employment
St. Louis Public Radio - March 5, 2015, by Maria Altman - What recovery? That was the question being asked Thursday by...
St. Louis Public Radio - March 5, 2015, by Maria Altman - What recovery? That was the question being asked Thursday by a small group of activists outside the Federal Reserve Bank of St. Louis.
About a dozen protesters called on the Fed to focus on unemployment, especially among minorities, rather than on keeping inflation rates low. They said if the Federal Open Market Committee raises the interest rate this year, as anticipated, it would likely mean fewer jobs.
"We’re calling on the Fed to do the right thing by most people, because the people they’re helping by changing the policy is a very small minority people and a very influential and affluent group of people," said Derek Laney of Missourians for Reform and Empowerment.
The protest was one of several held at Federal Reserve Banks around the country to highlight a new report by the Center for Popular Democracy and the Economic Policy Institute. The report calls on the Fed to focus on “full unemployment,” and highlights disparities between white and minority unemployment levels.
In Missouri last year the unemployment rate for African-Americans was 14.4 percent, while the rate for whites was just 5.1 percent, according to the Bureau of Labor Statistics. Several of the protesters, who represented a variety of local groups, including MORE, the Organization for Black Struggle, Veterans for Peace, Pro-Vote and Young activists United STL, had personal stories of being out of work and struggling.
Reginald Rounds with MORE said he had recently gotten a bachelor’s degree but still couldn’t find work.
"There is no recovery in the community in which I live," said Rounds. "I talked to many people in different organizations and churches throughout the city as we worked on the Don’t Shoot Coalition. It’s my personal belief that a lot of things that happened in Ferguson just boiled over from all the tensions of unemployment, job creation, housing and our educational system."
The Federal Reserve Bank of St. Louis said in an emailed statement that officials reached out to protesters on Wednesday and asked them to meet to discuss the report.
"The Fed has a dual mandate to keep inflation low and stable and to foster maximum sustainable employment. It takes these responsibilities very seriously," said Karen Branding, senior vice president of public affairs, in the statement.
Washington University economist Jennifer Dlugosz said the Fed has good reason not to focus too tightly on lowering unemployment levels.
"We know from macroeconomics that if the Fed tries to push the rate of unemployment below the natural rate, which people think is 5.5 percent, that it wouldn’t work and that it would just accelerate inflation," she said.
Dlugosz, who previously worked for the Fed’s Board of Governors in Washington, D.C., said monetary policy is not the right tool to address unemployment disparity. Instead, she said, targeting labor market and education policies to create more equality would likely have better results.
The report also took aim at the Fed’s transparency, especially in choosing the board of directors for each of the 12 Federal Reserve Banks. The protesters argued too many corporate and bank executives take those positions, including in the Federal Reserve Bank of St. Louis’ board of directors.
"It’s basically bankers, and that’s in the charter, and there’s whole bunch of other folks who could be from labor and working people, but are instead from big corporations," said Jeff Ordower of MORE.
The board of directors in each of the Federal Reserve districts is responsible for choosing the president of the Reserve Banks. Those presidents rotate onto the Federal Open Market Committee, which meets eight times a year and decides the nation’s monetary policy. (Learn more about how it all works here on the Federal Reserve Bank of St. Louis' website.)
In her statement, Branding said the Fed was designed by Congress to “represent the voice of Main St."
"At the St. Louis Fed we have significant dialogue with business leaders, community development organizations, educators and the public,” she wrote. “We have a diverse board of directors who are familiar with economic and credit conditions in the district.”
Professor Dlugosz said the make-up of the boards is somewhat limited by statute. Each district’s community bank members choose three bankers to sit on the board and three non-bankers. The other three directors are chosen by the Fed’s Board of Governors in Washington, D.C, and are supposed to represent a mix of labor, agriculture, industry, and consumers.
Dlugosz said the last group, known as “Class C,” is the most likely group to represent the interests of the public, since they’re appointed by the Board of Governors.
"That’s really, I’m guessing, the main place where you’re going to see heads of labor unions or consumer advocates. If they’re getting on there, I imagine it’s the Board that’s electing them," she said. "I don’t know if that’s changed over time, but one would hope that they’re keeping an eye on it."
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A Terminally Ill Progressive Activist Confronted Jeff Flake About The Tax Bill On A Flight
A Terminally Ill Progressive Activist Confronted Jeff Flake About The Tax Bill On A Flight
A leading progressive activist with Lou Gehrig’s disease appealed to Sen. Jeff Flake (R-Ariz.) to reconsider his...
A leading progressive activist with Lou Gehrig’s disease appealed to Sen. Jeff Flake (R-Ariz.) to reconsider his support for the Republican tax bill during a flight to Phoenix on Thursday.
“I need you to make your vote match your principles, senator. And for the rest of your life, you will be proud if you vote this bill down,” said Ady Barkan, founding director of the Fed Up campaign, a group backed by the Center for Popular Democracy that pushes the Federal Reserve to set monetary policy that favors workers.
Read the full article here.
Dallas Fed president will meet with Fed Up Coalition members to hear their concerns
Dallas Fed president will meet with Fed Up Coalition members to hear their concerns
After nearly two months on the job, the new head of the Federal Reserve Bank of Dallas is reaching out to the community...
After nearly two months on the job, the new head of the Federal Reserve Bank of Dallas is reaching out to the community — to bunch of community, labor and consumer organizations that have repeatedly asked to be heard.
Dallas Fed president Rob Kaplan tomorrow will met with a variety of representatives of the national Fed Up Coalition for about 90 minutes, according to the regional bank.
The group was unhappy with the Dallas Fed’s “cryptic” search process to replace replaced former chief Richard Fisher, who retired in March, and with its lack of transparency. I wrote about it. Fed Up members in Texas and nationwide also have called for Federal Reserve to focus on full employment and higher wages for blacks and others in poor neighborhoods who have been left out of the economic recovery.
In August, the Dallas Fed named Kaplan, a former Harvard business professor and investment banker, as president and CEO starting Sept. 8. As one of 12 Fed regional bank presidents around the country, Kaplan helps set the nation’s economic and monetary policy, such as interest rates, that affects people everywhere.
The day after Kaplan’s announcement, the Texas Organizing Project’s Dallas County director Brianna Brown suggested that one of the first things he should do when he got to Dallas was to meet with her group and working families in the area. I wrote about that.
Earlier this year, the Texas Organizing Project and Fed Up asked to meet with Dallas Fed board members to seek more openness and participation in the search process. The Dallas Fed also has faced criticism from other corners for a lack of transparency and the lengthiness (nine months) of its search.
The coalition’s request was denied back then, and instead a meeting was arranged with the bank’s general counsel and senior vice president.
Now, there’s another chance.
“We want to represent the coalition in the same way that the coalition has met with other Fed presidents around the country to encourage them to keep interest rates low to help people in the communities,” Brown said today. “We’re trying to figure out a way that the coalition can be part of the process around Fed policy. How we can collaborate and work together.”
Brown said it’s not a “pie-in-the-sky” idea. She noted that a Fed Up meeting with Chicago Fed president Charles Evans led to him touring a low-income neighborhood in September.
Nearly a dozen people representing Fed Up will attend tomorrow’s meeting at the Dallas Fed. They include: Brown; representatives of the Dallas AFL-CIO, Texas AFL-CIO, Center for Popular Democracy and Economic Policy Institute; Dallas Faith leader Wes Helm; and a Walmart worker. Dallas County Judge Clay Jenkins also will attend as a guest of Fed Up, said Daniel Barrera, a Dallas organizer for the Texas Organizing Project.
Jenkins and John Patrick, president of the Texas AFL-CIO, did not end up attending the meeting. I wrote a follow-up story on Nov. 5 about the results of the meeting.
The Dallas Fed will have four people present: Kaplan, senior vice president Alfreda Norman, community development officer Roy Lopez and spokesman James Hoard .
“We want to obviously listen to what they have to say, provide any information and answer any questions they have,” Hoard said today about the meeting.
Source: The Dallas Morning News
How to Help Residents of Puerto Rico and the U.S. Virgin Islands Recover After Hurricane Maria
How to Help Residents of Puerto Rico and the U.S. Virgin Islands Recover After Hurricane Maria
These organizations are helping with immediate needs—like food—and long-term efforts, including rebuilding......
These organizations are helping with immediate needs—like food—and long-term efforts, including rebuilding...
Read the full article here.
The Federal Reserve Leaves Key Interest Rate Unchanged Amid Slower Job Growth
The Federal Reserve Leaves Key Interest Rate Unchanged Amid Slower Job Growth
The Federal Reserve announced on Wednesday that it will keep its benchmark interest rate at current levels in response...
The Federal Reserve announced on Wednesday that it will keep its benchmark interest rate at current levels in response to lackluster job creation in recent months and other discouraging economic data.
The decision will shield American consumers from higher borrowing costs, but it also reflects the fragility and unpredictability of the current economic recovery, some seven years after the Great Recession officially ended.
The central bank’s Federal Open Market Committee is keeping the influential target federal funds rate — the Fed-set interest rate banks charge one another for overnight lending — at a range of 0.25 to 0.5 percent. Since the rate is a benchmark for lending throughout the economy, leaving it unchanged will likely prevent higher interest rates on mortgages, car loans and other household debts.
The Fed has a dual mandate to craft monetary policy that both maximizes employment and keeps inflation in check. The FOMC lowers the federal funds rate to accelerate job growth by reducing borrowing costs. It raises the rate to limit price inflation by slowing the pace of job growth.
The FOMC’s decision not to do the latter in June was widely expected. Fed officials signaled earlier this month that disappointing job creation had undermined the case for a rate hike. The economy created just 38,000 jobs in May, and new data show that the preceding two months produced fewer jobs than previously believed, according to the Bureau of Labor Statistics.
The central bank is also responding to tepid inflation. The price of consumer goods, excluding food and energy, rose 1.6 percent in the 12 months ending in April, according to the price index favored by the Fed — well below the Fed’s 2-percent target. And a University of Michigan survey revealed on Friday that U.S. households’ expectations of long-term inflation are lower than they have been at any point since the survey began collecting data in 1979.
In a press conference following the announcement, Federal Reserve Chairwoman Janet Yellen acknowledged the role that those developments played in the central bank’s decision, noting that “recent economic indicators have been mixed.”
Yellen also said that the prospect of a “Brexit,” or British exit from the European Union, was “one of the factors” that led the central bank to hold off on an interest rate hike. The United Kingdom will vote on the country’s membership in the EU on June 23.
If the U.K. chooses to leave the EU, which functions as a single market, it could ultimately have adverse effects on the U.S. economic outlook, Yellen suggested. A higher percentage of British voters supported Brexit than opposed it in a poll released on Monday.
The Fed last raised the federal funds rate by one-quarter of a percentage point in December, the first increase since the financial crisis. The rate had been at or near zero — 0 to 0.25 percent — since December 2008.
With the December interest rate increase, the Fed seemed to express confidence that the economic recovery had entered a new phase, indicating it was time to pivot to the work of preventing inflation. Yellen predicted that the move would be the first in a series of small interest rate hikes that would gradually raise rates to levels that are more historically normal.
Since then, however, disappointing economic data have repeatedly delayed the pace of those increases. Slower global demand reduced the availability of credit, and wage growth remained sluggish, prompting the Fed not to raise the federal funds rate in March.
Fed officials suggested in May that economic conditions would finally permit them to raise the rate again in June. But the May job creation data, released on June 3, rapidly dashed those plans.
The central bank’s next opportunity to announce a rate hike will be July 27, after a meeting of the FOMC.
Wednesday’s announcement will come as welcome news to many progressive economists and activists who have long argued that the job market has much more room to grow before inflation becomes a serious problem.
While the official unemployment rate is 4.7 percent, much of its recent decline is due to people dropping out of the workforce altogether. The labor force participation rate, which measures the percentage of people actively seeking work in addition to those who are working, is significantly lower than it was in 2000.
In fact, when you exclude workers 55 or older who may have retired voluntarily, labor force participation is lower now than it was at its worst point during the past two business cycles, according to an analysis by the Economic Policy Institute.
A job market where people continue to give up on finding work is part of the reason wage growth has failed to meet expectations, since employers still have little reason to compete for workers, progressive economists argue. Average hourly pay rose 2.5 percent in the 12-month period ending in May, not enough for a significant boost in most Americans’ paychecks.
The Fed Up campaign, a coalition of progressive groups that advocates for Fed policy that is favorable to workers and communities of color, cites figures like those when pleading with the Fed to hold off on raising rates. Fed Up has called on the Fed not to raise the benchmark interest rate until “the economic recovery reaches all communities,” said Jordan Haedtler, Fed Up campaign manager.
Progressives were overjoyed when presumptive Democratic presidential nominee Hillary Clinton expressed her sympathy with these concerns last month. The campaign said in a statement that as president, Clinton would appoint Fed officials who take seriously the central bank’s mandate to maximize employment, in addition to its duty to tamp down inflation.
Clinton stands to benefit politically from Wednesday’s announcement, since voters typically judge the candidate of the incumbent party for the economy’s performance. A rate increase would have squeezed economic demand, risking even slower job growth in the months ahead of the general election.
Donald Trump, the presumptive Republican presidential nominee, has expressed a wide variety of views about the Fed. He most recently suggested that he supports low interest rates, but that he plans to replace Yellen as Fed chair.
Yellen said Wednesday that the central bank will act based on economic data in the coming months, even if its actions are perceived as affecting the general election in November. “We are very focused on assessing the economic outlook and making changes that are appropriate without taking politics into account,” she said.
This piece has been updated with Yellen’s comments.
By Daniel Marans
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9 days ago
9 days ago