As Atlanta Fed President Retires, Some Call For Diversity
As Atlanta Fed President Retires, Some Call For Diversity
The Federal Reserve has received a lot of criticism recently for its lack of diversity. The leaders of the central...
The Federal Reserve has received a lot of criticism recently for its lack of diversity. The leaders of the central banking system are almost all white men.
But now that the president of one of the Fed’s 12 regional banks in Atlanta is stepping down, some see an opportunity for change.
Several congressional lawmakers and the activist group Fed Up are calling on the agency to appoint the system’s first black president at the Federal Reserve Bank of Atlanta.
“The fed is the nerve center of our entire economic system, and nobody is suffering from an economic depression as the African-American community,” Congressman David Scott said.
The Georgia Democrat co-wrote a letter, along with Reps. John Lewis, Maxine Waters and John Conyers, to Federal Reserve Chair Janet Yellen on the issue.
Black workers still struggle, Scott said, even as the overall economy has recovered. The jobless rate for African Americans, for example, is more than double their white neighbors.
Outside an unemployment office on the west side of Atlanta, Formosa Williams is at her wit’s end.
“At this point, I don’t know what to do,” Williams said.
For years, Williams said she has struggled to find stable work.
“The only jobs that really seem to be hiring are like fast food,” Williams said. “And it’s no way I’m going to go back to that.”
Scott and the activists hope stories of minority workers, like Williams, will take a more prominent place in the central banking system’s discussions once it has a black regional president.
“Unless you have a voice at that table that has gone through the experience of being an African American, you’re missing so much,” said Scott.
The congressman and activists argue the appointment also makes sense, given the region the bank covers -- the South -- and that region’s history with civil rights.
But while many economists might agree that diversity is good, they aren’t all sure how it translates into policy.
“I think you have to start out with the recognition that our Federal Reserve officials have really one tool, and that’s interest rates,” said Tim Duy, an economics professor at the University of Oregon. “That tool is a very blunt instrument.”
That tool affects the broader economy at a macro-level, said Duy, who also authors a blog called Fed Watch. Meanwhile, he said, many of the problems facing African-American workers are at the micro-economic level.
“The Federal Reserve is not going to be a silver bullet to these issues,” Duy said.
The search for the next Atlanta Fed president is being led by a committee of business leaders from around the South.
The chair, Thomas Fanning, who is president of Southern Company, said they’re looking for the best person most of all.
And if he or she happens to make history, as the first African American?
“That would be a great thing,” Fanning said.
By STEPHANNIE STOKES
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Charter School Oversight Lacking, Report Says
Epoch Times - May 18, 2014, by Petr Svab - Due to poor oversight charter schools lost over $100 million to waste, fraud...
Epoch Times - May 18, 2014, by Petr Svab - Due to poor oversight charter schools lost over $100 million to waste, fraud, and abuse over the past 20 years, according to a report by two anti-charter non-profits.
The $100 million cited by the report is an aggregation of audit and prosecution results on local, state, and federal levels.
The Center for Popular Democracy, and Integrity in Education, are both relatively new organizations, formed in 2012 and 2014 respectively. Both have a track record of opposing charter schools.
Charter schools are publicly funded but privately run. They operate under “charters” issued for five years that require them to measure up to goals the schools set, including academic goals.
The federal Department of Education’s Office of the Inspector General (OIG) stated in 2010 that local agencies issuing the charters “often fail to provide adequate oversight needed to ensure that Federal funds are properly used and accounted for.”
There are three such agencies in New York State: State University of New York, Board of Regents, and the New York City Department of Education. None of them responded to an immediate request for comment.
Between January 2005 and September 2013 the OIG opened 62 charter school investigations, resulting in 40 indictments and 26 convictions of charter school officials.
New York did relatively well. The report cites only two cases of fraud or mismanagement. One dealt with the East New York Preparatory Charter School in Brooklyn. It was ordered to close in 2010 after revelations that the school’s founder named herself a superintendent and gave herself a $60,000 raise.
Another school mentioned was the Niagara Charter School in Buffalo, where the State Education Department found “pervasive appearance of financial mismanagement and less-than ethical behavior,” including spending on plane tickets, restaurant meals, and alcohol, and over $100,000 spent on no-bid consulting contracts.
With the charter school sector growing, the report argues that charter-issuing organizations often lack the resources to do proper oversight. Just last year, over 600 charter schools opened across the nation. There are an estimated 6,400 charter schools enrolling over 2.5 million students, according to the report.
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"Give Them Hell": Exposing the Corporate Backers of Anti-Immigrant Hate
"Give Them Hell": Exposing the Corporate Backers of Anti-Immigrant Hate
Since election night 2016, the streets of the US have rung with resistance. People all over the country have woken up...
Since election night 2016, the streets of the US have rung with resistance. People all over the country have woken up with the conviction that they must do something to fight inequality in all its forms. But many are wondering what it is they can do. In this ongoing "Interviews for Resistance" series, experienced organizers, troublemakers and thinkers share their insights on what works, what doesn't, what has changed and what is still the same. Today's interview is the 61st in the series.
Today we bring you a conversation with José Lopez, one of the co-organizing directors at Make the Road New York, and Daniel Altschuler, the director of civic engagement and research at Make the Road New York.
Read the full article here.
Fed Officials to Meet With Activists Ahead of Jackson Hole Conference
Fed Officials to Meet With Activists Ahead of Jackson Hole Conference
When Federal Reserve officials gather for the Kansas City Fed’s high-profile policy conference in Jackson Hole, Wyo....
When Federal Reserve officials gather for the Kansas City Fed’s high-profile policy conference in Jackson Hole, Wyo. this week, some of them will start with an unprecedented event.
On Thursday, eight central bankers, among them Fed governor Lael Brainard and New York Fed President William Dudley, will meet with and answer questions from about 120 activists from the Campaign for Popular Democracy’s Fed Up Campaign, a left-leaning group working to change the way the powerful central bank works.
The meeting marks a turn for the invitation-only Jackson Hole symposium, which draws top central bankers and economists from around the world to discuss monetary policy issues behind closed doors. Though journalists cover the proceedings and Fed officials give press interviews on the sidelines, this is the first time the Kansas City Fed, which hosts the event, has organized a public forum for policy makers to meet with their critics beforehand.
“My sense is that we are starting to see real changes, ”said Ady Barkan, leader of the Fed Up campaign. He said he was prompted to launch the effort after realizing how little public attention was focused on the U.S. central bank, which directly affects the lives of U.S. workers, consumers, home buyers, business owners and investors.
Formally launched in 2014, the coalition of policy activists, labor and community groups has lobbied the Fed to keep interest rates very low to ensure the economic recovery benefits all Americans and not just the well off. The group has called for more diversity among the central bank’s predominantly white, male leadership; more openness about how regional Fed bank presidents are chosen and changes in the Fed’s century-old structure to reduce the influence of the banking industry.
Mr. Barkan, a 32-year-old lawyer, recalled wondering how to get the public to care about “the absurdly opaque issue” of Fed policy. He found more interest that he expected. Speaking with community groups, he found “everybody is fascinated, everybody gets the importance of it.”
The group has gained a notable amount of high-level access. Its members met in November 2014 with Fed Chairwoman Janet Yellen and several Fed governors, and later with Fed staff. Fed Up members have met with all 12 regional Fed bank presidents, even conducting public events with some, as it did with the Minneapolis Fed’s Neel Kashkari in early August.
The regional Fed bank leaders have largely welcomed their meetings with Fed Up. “I’ve been at the Fed 22 years. When you’ve been at an institution that long it is hard to know how other people view you” and how your policies play out in the real world, San Francisco Fed President John Williams told reporters in July.
“Understanding the perspectives of people outside of financial markets, outside of our own circles—that’s healthy,” Mr. Williams said. “Hearing what I think is supposed to be constructive criticism is healthy.”
Over the past year, Fed Up also has met regularly with lawmakers and their staff on Capitol Hill, held press briefings in front of the central bank’s Washington, D.C., offices and stacked congressional hearings with activists wearing their trademark green shirts.
Among the results: A large number of congressional Democrats and the campaign of Democratic presidential nominee Hillary Clinton have echoed Fed Up’s call for barring bankers from the boards that oversee the regional Fed banks and urged the central bank to focus more on promoting job growth. The Democratic legislators have recently expressed concerns over a lack of diversity among Fed leaders.
In congressional hearings in February, House and Senate Democrats peppered Ms. Yellen with more questions than in the past on issues such as inequality, stagnant wages and jobless rates for low-income Americans.
“For black Americans, we’re still in the midst of a very serious depression or recession,” Rep. Keith Ellison (D., Minn.), a member of the Congressional Black Caucus who had met with Fed Up, told Ms. Yellen in February.
When she returned to Capitol Hill in June, Ms. Yellen came armed with data and talking points addressing the diverging economic circumstances between white and black and Hispanic households.
“It’s important for us to be aware of those differences and to focus on them as we think about monetary policy and work that the Federal Reserve does in the area of community development,” she said.
That contrasted with Ms. Yellen’s previous comments that the Fed’s options for addressing the economic troubles of minority groups were limited. Some Fed watchers said her shift in tone suggests policy makers are paying closer attention to such concerns.
The gestures may not seem like much to outsiders, but to people familiar with the Fed—an institution that is slow to change and resistant to criticism—they are viewed as a significant shift.
“It’s kind of monumental to get the Fed to change,” said Sarah Binder, a senior fellow at the Brookings Institution, noting the creation last year of an advisory council at the Fed focused on the concerns of low-income communities.
That said, a number of the Fed bank presidents have argued against the structural reforms Fed Up is advocating. In May, Mr. Dudley said “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.”
Atlanta Fed President Dennis Lockhart expressed skepticism about the call for more openness about the selection of regional reserve bank chiefs.
“When it comes to picking new bank presidents, are you going to get that with a completely open process much like an election? I don’t think these are roles that should be filled by public election,” he said.
Fed Up’s funding comes primarily from the Open Philanthropy Project, which provides grants and funds to projects on justice reform, immigration and economics. Open Philanthropy committed $1 million toward Fed Up’s 2016 budget. In 2015 Open Philanthropy donated $750,000 toward Fed Up’s $1.1 million annual budget. Dustin Moskovitz, a Facebook co-founder who left that firm in 2008, is one of the primary sources of Open Philanthropy’s funds.
Some former central bankers worry Fed Up has unreasonable expectations in a world in which central bank policy can’t change economic fundamentals such as long-run growth in productivity, output or wages. They also fret it was the Fed itself, via its response to the financial crisis, that created the perception it has the tools to affect more than short-term fluctuations in inflation and hiring.
Charles Plosser, former president of the Philadelphia Fed, said the Fed officials, through word and deed, “continually raised expectations about what they can do.” And having made the public believe it was more powerful that it actually is, officials “are setting themselves up for exactly this sort of attack” by those who want more out of the Fed.
Former Dallas Fed leader Richard Fisher said he had long warned that ultra-aggressive Fed stimulus policies that he said primarily benefited the rich would end up “stoking the fires of populism.”
The Fed has faced populist critics before. What is different about Fed Up, Ms. Binder said, is it seems to be well-funded and well-organized and have a constructive agenda, as opposed to some groups who have called for abolishing the Fed or limiting its powers.
“They’re kind of working through the system in a way, which is to say, ‘Look, [Congress has told the Fed] to care equally about inflation and jobs—it’s not time to give up on jobs,’” she said.
Corrections & Amplifications:
Rep. Keith Ellison is a Democratic congressman from Minnesota. An earlier version of this article incorrectly said he is a Republican. (Aug. 25)
By Michael S. Derby and Kate Davidson
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Movement for paid sick leave gains ground
The New Crossroads - May 13, 2013, By Gregory N. Heires - Grassroots campaigns for local and state laws requiring...
The New Crossroads - May 13, 2013, By Gregory N. Heires - Grassroots campaigns for local and state laws requiring employers to provide their workers with paid sick days are gaining steam.
In the latest sign of the growing movement, the New York City Council approved legislation that would make 1 million workers eligible for paid sick days.
The passage of the bill capped a three-year fight for the legislation by unions and health-care advocates.
But the legislation faces a possible veto by billionaire Mayor Michael Bloomberg, who has said he would not sign the bill into law. However, the City Council approved the legislation by a veto-proof margin.
On the day of the vote, Kristin Rowe-Finkbeiner, executive director of MomsRising.org, an online and on-the-ground grassroots organization of more than a million people who are working to achieve economic security for all families in the United States, said, “It’s been a long fight, but today the New York City Council heeded the call of New York families and passed a bill that would allow more than a million New Yorkers to earn paid time off to use when they are sick or to take care of a sick child, spouse or parent.”
Rowe-Finkbeiner called upon Bloomberg to “stand up to corporate lobbyists, listen to the people who elected him and sign this important bill.”
The new paid sick leave bill, which the Council passed by a 45-3 vote, would go into effect in April 2014. Initially, the law would require businesses with 20 or more workers to provide five paid sick days to its employees.
In October 2015, it would be expanded to cover firms with 15 or more workers. Furthermore, the law would protect workers who are not entitled to paid sick leave from being fired if they take time off.
“This is a sweet victory,” Bill Lipton, state director of the Working Families Party, told The New York Times. “It provides economic security for New Yorkers, and a shot in the arm for the paid sick days movement across the country.”
The Working Families Party and MomsRising.org were part of a coalition that included the New York City Central Labor Council, the Center for Popular Democracy, the New York City Council’s Progressive Caucus, 32 BJ SEIU, Make the Road New York, A Better Balance and NY Paid Sick Leave Coalition.
New York City joins an increasing number of municipalities and states that are supporting sick pay legislation. San Francisco, Washington, D.C., and Milwaukee have adopted paid sick day laws. Pushes for similar legislation are underway in nearly 20 cities and states, including Denver, Miami, Seattle, Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Vermont, Washington and Wisconsin.
In March, Sen. Tom Harkin (D-Iowa) and Rep. Rosa DeLauro (D-Conn.) introduced the Health Families Act. The legislation would allow workers to earn paid sick leave that they could use for personal illnesses, caring for a sick family member, preventive care or treatment for domestic violence.
In the United States, 40 million people work in jobs that don’t offer paid sick leave. One million workers in New York City, primarily low-wage workers, don’t have paid sick days.
In addition to arguing that workers have the right to paid sick leave, supporters of the New York City bill argued that the policy simply makes common sense. Faced with the prospect of losing pay, workers without the right to paid time off often decide to go to work when they have contagious illnesses. Furthermore, workers are less productive when they are ill.
“It’s an incredible feeling to know that I won’t ever again have to choose between my child’s health and my job,” said Juana Sanchez, who has three children and is a member of Make the Road New York, a Brooklyn-based community organization that represents Latino and other low-income workers.
“I believe this law enshrines the principle that American exceptionalism is not just about large profits and small elites, but a workplace that is safe, fair and respectful of the lives of workers,” said City Council member Gale Brewer, who first introduced the bill in 2009.
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'Substantial risk' that Fed is about to make a serious mistake, Pimco advisor says
'Substantial risk' that Fed is about to make a serious mistake, Pimco advisor says
For years, the Fed faced criticism that it wasn't being aggressive enough in raising rates. Now that it has started to...
For years, the Fed faced criticism that it wasn't being aggressive enough in raising rates. Now that it has started to hike, the central bank is under increasing fire for moving too soon.
The latest scrutiny comes from Joachim Fels, global economic advisor at Fed bond giant Pimco, who said the Fed shouldn't be tightening policy with the evidence so clear that it is falling well short of its inflation mandate.
Read the full article here.
High Road Workweek Partnership Invites Employers to Adopt a Fair Workweek
High Road Workweek Partnership Invites Employers to Adopt a Fair Workweek
As more retailers declare nationwide reforms to their scheduling practices – from ending on-call scheduling to...
As more retailers declare nationwide reforms to their scheduling practices – from ending on-call scheduling to providing greater advance notice – there is increased industry interest in understanding the impact of difficult work schedules on employees. Leading-edge employers are also starting to quantify the down-stream effects of ever-changing work schedules and excessive reliance on part-time staff, including higher turnover, chronic absenteeism, lower productivity, and unsatisfactory customer service. Many industry leaders now recognize that predictable, stable and flexible work schedules are not just good for employees, but are essential to meeting operational, sales and growth objectives.
At the Next:Economy summit, the Center for Popular Democracy’s Fair Workweek Initiative will unveil the High Road Workweek Partnership, a groundbreaking approach to the future of work, which meaningfully incorporates employee voice and scheduling equity values into scheduling technologies and management practices.
Achieving a High Road Workweek involves three key components:
A Partnership of Core Stakeholders: With a 360 degree view from engaging diverse stakeholders, employers can assess the impact of their current scheduling practices and envision a sustainable workweek;
The High Road Workweek Pledge: Translates core business principles into specific scheduling practices that encompass: Predictability and Stability, Adequate Hours, and Employee Input and Flexibility, and Equal Opportunity and Mobility; and
Measurable Implementation and Assessment: Innovative scheduling technologies, guidance for managers, and clear metrics will facilitate implementation of the pledge, while ongoing feedback from employees and a research-based assessment will ensure that new policies deliver the intended outcomes.
The High Road Workweek Partnership delivers lasting scheduling solutions and provides a framework for employers who want to be strongly positioned in the global economy, leveraging the latest technologies and integrating corporate social responsibility into workforce management to create meaningful employment.
“Employers of our country’s hourly workforce are at a crossroads. The worrisome scheduling trends that have come to public attention are persistent and challenging issues that affect both workers and the longevity of a company’s success. Through a meaningful collaboration with employees, a commitment to core scheduling principles, and an innovative use of workforce management metrics, any business is capable of implementing a high road workweek,” says Carrie Gleason, Director of the Fair Workweek Initiative at the Center for Popular Democracy.
Professor Susan Lambert of the University of Chicago, a key architect in developing the framework for scheduling stability, says, “While this year marks tremendous progress in employers recognizing the costs that lean staffing and unpredictable scheduling has for both workers and business, employers will need to implement new metrics for their managers and find ways to incorporate more employee input to ensure these commitments to reform become consistent scheduling improvements. The High Road Workweek Partnership presents an innovative approach to helping employers implement measurable standards for fair work schedules across their operations.”
# # #
www.populardemocracy.org 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.
www.fairworkweek.org The Fair Workweek Initiative, anchored by the Center for Popular Democracy and CPD Action, is driving the growing momentum to restore a workweek that enables working families to thrive. We are committed to elevating the voices of working people to ensure they can shape the solutions that work for their families – whether through improved industry practices or new workplace protections.
This Is What Chicago Can Learn From America's Other Police Accountability Taskforces
This Is What Chicago Can Learn From America's Other Police Accountability Taskforces
Chicago Mayor Rahm Emanuel ...
Chicago Mayor Rahm Emanuel announced the formation of a police accountability task force Tuesday.
In a Monday press release, the mayor said the five-member body — which he will appoint, and which will be advised by former Massachusetts governor Deval Patrick — "will review the system of accountability, oversight and training that is currently in place for Chicago's police officers," according to the Chicago Tribune.
"The shooting of Laquan McDonald requires more than just words," Emanuel said in a statement. "It requires that we act."
The announcement came one week after a Cook County judge compelled the city to release video footage of the Oct. 2014 killing of 17-year-old Laquan McDonald, which was captured on a patrol car dash camera but kept under wraps for 13 months.
McDonald's killer, Officer Jason Van Dyke, shot the teenager 16 times in front of multiple witnesses but was charged with first-degree murder only last week. The sluggish circumstances of the release have since drawn accusations of an administrative cover-up. Van Dyke was released from jail Monday after posting ten percent of his $150,000 bail.
Mayor Emanuel also fired Chicago Police Superintendent Garry McCarthy on Tuesday, in response to calls from the public and some officials to have him removed. Meanwhile, the video's release has set off a week of protests in Chicago, as questions remain regarding next steps.
Jason Van Dyke is the first Chicago police officer to be charged with first-degree murder for an on-duty incident in 35 years, a fact that has elicited doubt Emanuel's task force will yield substantive results.
"Our first thought is that this [task force] can't be a substitute for what's really needed here, which is a full-scale federal investigation of the Chicago Police Department with subpoena power," Ed Yohnka, Director of Communications and Public Policy at the ACLU of Illinois, told Mic. "Whatever this task force does, what we've witnessed in this and other instances is a fundamental breakdown in the ability of police to protect the public, and the public's faith in CPD."
Others echoed Yohnka's skepticism. "Appointing a committee to look into an issue is a tried-and-true tactic elected officials long have employed to buy time and breathing room when faced with a scandal or crisis," wrotethe Chicago Tribune. "[It] gives Emanuel something else to talk to reporters and the public about other than the ... video."
Indeed, it's unclear how effective police accountability task forces in other cities have been. An Inspectors General was appointed in Los Angeles, New York City and New Orleans have uncovered systemic abuses and identified problems that shoddy or nonexistent data collection had rendered invisible over the past decade. Seattle has a 15-member community police commission, appointed by the mayor, to review oversight and accountability processes.
However, "there is no clear evidence that these oversight bodies alone are effective in obtaining meaningful reforms," according to a Justice in Policing report and toolkit from the Center for Popular Democracy and PolicyLink, both policy advocacy organizations.
Yohnka suggested to Mic that a more tried route to change in Chicago would require a U.S. Department of Justice investigation. "That confidence needs to be restored, that someone in power is actively looking into this," he said. "But it's systemic. This issue pervades multiple superintendents and multiple people in terms of leadership in the department. It requires a systemic approach to accountability, transparency and how law enforcement operates."
One such DOJ examination of the Ferguson, Missouri, Police Department published in March laid bare a hotbed of racist law enforcement practices that yielded reform suggestions amidst a national conversation around racism and policing. This is not a unique phenomenon. According to the Washington Post, the DOJ has launched 67 investigations into police departments across the U.S. over the past decade, 24 of which were closed without reform agreements, and just 26 of which resulted in "binding agreements tracked by monitors."
Results have been mixed. The long-term effect of these agreements are not tracked by the DOJ, making it hard to tell if they actually work.
"We don't tend to evaluate .?.?. after we have left," Vanita Gupta, principal deputy assistant attorney general of the department's civil rights division, told the Post. "There's a limit to how much we can .?.?. remain engaged with a particular jurisdiction given our limited resources."
This leaves little precedent for a positive outcome in Chicago — a city with a staggering recent history of police abuse. Over the past decade, the city has spent $500 million on legal costs and settlements stemming from law enforcement misconduct, including $5 million paid out to Laquan McDonald's family in April.
That same month, Chicago set up a $5.5 million fund to compensate victims of former-CPD Commander John Burge, who tortured and sexually abused more than 100 mostly black arrestees during his tenure with the department. The case of Dante Servin, an off-duty officer who fired into a crowd and killed 22-year-old Rekia Boyd in 2012, was also dismissed in April because state's attorney Anita Alvarez — whose office has a history of questionable conduct — charged him with a crime the judge deemed too severe for what he did.
The McDonald case has also been plagued by scandal, including allegations that police officers tampered with surveillance tape that captured the shooting from a nearby Burger King, resulting in 86 minutes of footage gone missing.
Some have suggested the mere appearance of police accountability can have positive effects, lending legitimacy to law enforcement bodies that had formerly lost the trust of their communities. But in the case of Chicago, it may be too late for that.
"The reality is, we're kind of past the point of cosmetics here," said Ed Yohnka. "There's been this fundamental breakdown in terms of trust. Whether we're talking the Burge incidents or the millions of dollars in payouts to victims, there really needs to be a much broader look at what is going on."
Source: Mic
Democrats amass enough support for filibuster against Gorsuch nomination
Democrats amass enough support for filibuster against Gorsuch nomination
Democrats on April 3 amassed enough support to block a U.S. Senate confirmation vote on President Donald Trump’s...
Democrats on April 3 amassed enough support to block a U.S. Senate confirmation vote on President Donald Trump’s Supreme Court nominee, Neil Gorsuch, but Republicans vowed to change the Senate rules to ensure the conservative judge gets the lifetime job.
As the Judiciary Committee moved to send Gorsuch’s nomination to the full Senate, Sen. Christopher Coons became the 41st Democrat to announce support for a procedural hurdle — a filibuster — requiring a super-majority of 60 votes in the 100-seat Senate to allow a confirmation vote...
Read full article here.
For Many Americans, the Great Recession Never Ended. Is the Fed About to Make It Worse?
When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid,...
When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid, of Philadelphia, will be paying close attention. Despite holding a bachelor’s degree in computer science, completing a series of related internships, and presenting original research across the country, Reid could not find a job in her field and, instead, pieces together a nine-hour-per-week tutoring job and a 20-hour-per-week cosmetology gig. The 25-year-old knows that an interest-rate hike will hurt her chances of finding the kinds of jobs for which she has trained, and earning the wage increase she so desperately needs.
A Fed decision to raise interest rates, expected sometime this year, amounts to a vote of confidence in the economy—a declaration that we have achieved the robust recovery we need. “We are close to where we want to be, and we now think that the economy cannot only tolerate but needs higher interest rates,” the chairwoman of the Federal Reserve, Janet Yellen, told Congress during a July 15 policy briefing.
But for many millions of Americans, the recovery has yet to arrive, and for them, a rate hike will be disastrous. It will put the brakes on an economy still trudging toward stability; stall progress on unemployment, especially for African-Americans; and slow wage growth even more for the vast majority of American workers.
The general argument for raising interest rates is that it will prevent wage costs from pushing up inflation. However, there is no data suggesting price instability; nor is there any indication that wages have risen enough to spur such inflation. For the overwhelming majority of American workers, wages have stagnated or even dropped over the past 35 years, even as CEOs have seen their compensation grow 937 percent. During the same period, wage gaps between white workers and workers of color have increased, and black unemployment is at the level of white unemployment at the height of the Great Recession. Meanwhile, the labor-force participation rate is less than 63 percent, the lowest in nearly four decades, suggesting that many Americans have simply given up looking for work.
Yellen has herself often urged the Fed to look at the broadest possible employment picture. Yet, during her recent congressional testimony, shedownplayed the Fed’s ability to address racial disparities, saying that the central bank does not “have the tools to be able to address the structure of unemployment across groups” and that “there isn’t anything directly that the Federal Reserve can do” about it. She cited, rightly, a range of other factors, including disparate educational attainment and skill levels, that contribute to economic and social disparities between racial groups. But she also glossed over the importance of the economic environment in shaping workers’ unequal chances.
One defining metric in shaping workers’ chances is the unemployment rate. A high unemployment rate facilitates racial discrimination. When there are too many qualified job candidates for every job, employers can arbitrarily limit their labor pool based on unnecessary educational requirements, irrelevant credit or background checks, or straightforward bias. A tight labor market, by contrast, makes it much harder for employers to succumb to prejudices and overlook qualified workers simply because of bias. When the number of job seekers matches the number of job vacancies, African-Americans, Latinos, women, gays and lesbians, injured veterans, and formerly incarcerated workers finally get their due in the workforce.
The late 1990s, when unemployment was at about 4 percent, bear out this thesis. During that rosier era, black unemployment was 7.6 percent, and the ratio of black family income to white family income rose substantially.
As the guardian of monetary policy, the Federal Reserve has a number of tools for encouraging a tight labor market, and one of those tools is to keep interest rates low. By keeping rates low, the Fed creates a hospitable environment for job growth by lowering the borrowing costs for consumer and business spending—including hiring new workers. By contrast, raising rates deliberately suppresses spending by consumers and businesses. In the process, it slows job growth, holds down wages, and unnecessarily maintains racial disparities.
With so many workers still struggling, there is no need to cut off this recovery prematurely. Inflation remains below the Fed’s already-low 2 percent target, unemployment and underemployment are too high, and wage growth and labor-force participation are too low. In fact, the Fed should be doing everything within its power to keep nudging the recovery forward for the workers still caught in the slipstream of the Great Recession.
The Federal Reserve should not raise interest rates this week, nor when it meets again six weeks after that. It should not raise rates at all in 2015. Doing so would cause tremendous harm to the aspirations and lives of tens of millions of working families, and would disproportionately hurt African-Americans.
MyAsia Reid knows the difference that a full-employment economy can make. She is ready to participate in the economic recovery. And she will be watching as the Fed decides whether to hold to a strategy of strengthening the recovery or pursue a new strategy that jeopardizes her chances and her community.
Source: The Nation
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