The resistance is making one last all-out push to kill the GOP health bill
The resistance is making one last all-out push to kill the GOP health bill
More than 300 health care activists, disability rights advocates, and organizers gathered on second floor of the...
More than 300 health care activists, disability rights advocates, and organizers gathered on second floor of the Dirksen Senate Office Building on Monday morning to oppose Senate Republicans’ Graham-Cassidy health care bill.
The bill would sharply reduce spending for Medicaid by billions of dollars by tying it to medical inflation, blow up Obamacare’s marketplaces, and open the door for states to curtail protections for patients with preexisting conditions.
Read the full article here.
Charter Schools are Cheating Your Kids: New Report Reveals Massive Fraud, Mismanagement, Abuse
Salon - May 7, 2014, by Paul Rosenberg - Just in time for National Charter School Week, there’s a...
Salon - May 7, 2014, by Paul Rosenberg - Just in time for National Charter School Week, there’s a new report highlighting the predictable perils of turning education into a poorly regulated business. Titled “Charter School Vulnerabilities to Waste, Fraud and Abuse,” the report focused on 15 states representing large charter markets, out of the 42 states that have charter schools. Drawing on news reports, criminal complaints, regulatory findings, audits and other sources, it “found fraud, waste and abuse cases totaling over $100 million in losses to taxpayers,” but warned that due to inadequate oversight, “the fraud and mismanagement that has been uncovered thus far might be just the tip of the iceberg.”
While there are plenty of other troubling issues surrounding charter schools — from high rates of racial segregation, to their lackluster overall performance records, to questionable admission and expulsion practices — this report sets all those admittedly important issues aside to focus squarely on activity that appears it could be criminal, and arguably totally out of control. It does not even mention questions raised by sky-high salaries paid to some charter CEOs, such as 16 New York City charter school CEOs who earned more than the head of the city’s public school system in 2011-12. Crime, not greed, is the focus here.
In short, the report is about as apolitical as can be imagined: It is narrowly focused on a white-collar crime wave of staggering proportions, and what can be done about it within the existing framework of widespread charter schools.
The report, co-authored by the Center for Popular Democracy and Integrity in Education, makes the point that the problem of charter school waste, fraud and abuse, which it focuses on, is just one symptom of the underlying problem: inadequate regulation of charter schools. But it’s a massive symptom, which has so far received only fragmentary coverage.The report takes its title from a section of a report to Congress by the Department of Education’s Office of the Inspector General, a report that took note of “a steady increase in the number of charter school complaints” and warned that state level agencies were failing “to provide adequate oversight needed to ensure that Federal funds [were] properly used and accounted for.”
But, the report noted, it’s not just the federal government that should be concerned. Reform efforts are underway in several states; Hawaii even repealed its existing charter school law in 2013, and put strict new oversight measures in place, and “Even the Walton Family Foundation, an avid charter advocate, launched a $5 million campaign in 2012 to make oversight of charters schools more stringent.”
“We expected to find a fair amount of fraud when we began this project, but we did not expect to find over $100 million in taxpayer dollars lost,” said Kyle Serrette, the director of education justice at the Center for Popular Democracy. “That’s just in 15 states. And that figure fails to capture the real harm to children. Clearly, we should hit the pause button on charter expansion until there is a better oversight system in place to protect our children and our communities.”
The report explained that the problem has its roots in a historical disconnect between the original intentions that launched the charter school movement and the commercial forces that have overtaken it since. At first, the report noted:
Lawmakers created charter schools to allow educators to explore new methods and models of teaching. To allow this to happen, they exempted the schools from the vast majority of regulations governing the traditional public school system. The goal was to incubate innovations that could then be used to improve public schools. i The ability to take calculated risks with small populations of willing teachers, parents, and students was the original design. With so few people and schools involved, the risk to participants and the public was relatively low.
But the character of the movement has changed dramatically since then. As charter school growth has skyrocketed (doubling three times since 2000), “the risks are high and growing, while the benefits are less clear,” the report continued, adding:
This is not an uncommon occurrence in our nation’s history. In the past—in some cases, our very recent past—industries such as banking and lending have outgrown their respective regulatory safety nets. Without sufficient regulations to ensure true public accountability, incompetent and/or unethical individuals and firms can (and have) inflict great harm on communities.
The report found that “charter operator fraud and mismanagement is endemic to the vast majority of states that have passed a charter school law.” It organized the abuse into six basic categories, each of which is treated in its own section:
• Charter operators using public funds illegally for personal gain; • School revenue used to illegally support other charter operator businesses; • Mismanagement that puts children in actual or potential danger; • Charters illegally requesting public dollars for services not provided; • Charter operators illegally inflating enrollment to boost revenues; and, • Charter operators mismanaging public funds and schools.
Perhaps most disturbingly, under the first category, crooked charter school officials displayed a wide range of lavish, compulsive or tawdry tastes. Examples include:
• Joel Pourier, former CEO of Oh Day Aki Heart Charter School in Minnesota, who embezzled $1.38 million from 2003 to 2008. He used the money on houses, cars, and trips to strip clubs. Meanwhile, according to an article in the Star Tribune, the school “lacked funds for field trips, supplies, computers and textbooks.”
• Nicholas Trombetta, founder of the Pennsylvania Cyber Charter School is accused of diverting funds from it for his private purchases. He allegedly bought houses, a Florida Condominium and a $300,000 plane, hid income from the IRS, formed businesses that billed even though they had done no work, and took $550,000 in kickbacks for a laptop computer contract.
• A regular financial audit in 2009 of the Langston Hughes Academy in New Orleans uncovered theft of $660,000 by Kelly Thompson, the school’s business manager. Thompson admitted that from shortly after she assumed the position until she was fired 15 months later, she diverted funds to herself in order to support her gambling in local casinos.
Others spent their stolen money on everything from a pair of jet skis for $18,000 to combined receipts of $228 for cigarettes and beer, to over $30,000 on personal items from Lord & Taylor, Saks Fifth Avenue, Louis Vuitton, Coach and Tommy Hilfiger. But the real damage came from the theft of resources for children’s future.
“Our school system exists to serve students and enrich communities,” said Sabrina Stevens, executive director of Integrity in Education. “School funding is too scarce as it is; we can hardly afford to waste the resources we do have on people who would prioritize exotic vacations over school supplies or food for children. We also can’t continue to rely on the media or isolated whistle-blowers to identify these problems. We need to have rules in place that can systematically weed out incompetent or unscrupulous charter operators before they pose a risk to students and taxpayers.”
Stevens was not just expressing a nebulous hope. The report also offered a set of proposals on how to go about reining in the abuses. Initial suggestions on how to respond to each kind of abuse are presented in each of the six areas mentioned above, but there is also a comprehensive framework integrating them into a coherent whole.
The report’s first proposal is that all states should establish an oversight “Office of Charter Schools.” It “should have the statutory responsibility, authority, and resources to investigate fraud, waste, mismanagement and misconduct,” including the authority to refer findings for prosecution. It should have “an appropriate level of staffing” so that “The ratio of charter schools to full-time investigators employed by the Office should not exceed ten to one.” It should have the power to place distribution of charter school funds on hold. And it should have the authority to intervene in funding or other decisions made by charter authorizing entities if they are violating state or federal law.
A second proposal is that states amend their charter laws to “explicitly declare that charter schools are public schools, and are subject to the same non-discrimination and transparency requirements as are other publicly funded schools.”
A third proposal is to require public online availability of each charter school’s original application and charter agreement.
Not surprisingly, a number of proposals target those running charter schools. Specifically, regarding charter school governing board members, the report proposes: 1) Require them to live in close proximity to the school/s physical location. 2) Require boards to be elected “with representation of parents (elected by parents), teachers (elected by teachers) and in the case of high schools, students (elected by students).” Other board members should be “residents of the school district in which the school/s operate.” 3) Require board members to file full financial disclosure and conflict-of-interest reports, similar to those required of traditional school district board members — and post them online on the school’s website. 4) Hold board members legally liable for fraud or malfeasance occurring at the school or schools that they oversee.
More broadly, charter schools — and the oversight entities that authorize them — should be publicly transparent in the following ways: 1) A full list of each charter school’s governing board members, officers and administrators with affiliation and contact information should be available on the school’s website. 2) Minutes from governing board meetings, the school’s policies, and information about staff should be available on the school’s website. 3) Charter schools should be fully compliant with state open meetings/open records laws. 4) Charter school financial documents should be publicly disclosed annually, on the authorizer’s website, including detailed information about the use of both public and private funds by the school and its management entities. 5) Charter schools should be independently audited annually, with audits published on the school’s websites. 6) All vendor or service contracts over $25,000 should be fully disclosed. No such contracts should be allowed with any entity in which the school operator, or any board member, has any personal interest.
If most of these sound like simple common sense, that’s pretty much just the point. There are plenty of issues around education that are controversial. Protecting ourselves, our children and their future against a massive white-collar crime wave should not be one of them.
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Immigrant advocates attack banks for financing private prisons
Immigrant advocates attack banks for financing private prisons
“Private prison companies and their Wall Street financiers stand to benefit from policies that increase detentions,...
“Private prison companies and their Wall Street financiers stand to benefit from policies that increase detentions, separate families, and cause irreparable harm to immigrant children," said Ana María Archila, Co-Executive Director of the Center for Popular Democracy, in a statement.
Read the full article here.
Claims of Racism at Zara Portray the Retail Industry at Its Worst
The retail industry is one the largest sources of new jobs in the US economy, employing 15 million Americans and...
The retail industry is one the largest sources of new jobs in the US economy, employing 15 million Americans and accounting for 1 out of every 6 private sector jobs added to the economy last year. Yet as my colleague Catherine Ruetschlin and NAACP’s Dedrick Asante-Muhammad found in a study published earlier this month, common retail practices perpetuate racial inequality, fostering occupational segregation, low pay, unstable schedules, and involuntary part-time work that disproportionately harm people of color in the retail workforce.
This week a new report casts a spotlight on employment discrimination at a particular retailer: Zara, a fairly new clothing chain in the United States which nevertheless is part of the world’s largest fashion retail company. Based on interviews of 251 Zara employees in New York City, researchers at the Center for Popular Democracy uncovered troubling pattern of concerns about racial discrimination. They find that Black employees are far more likely than other workers to be assigned work hours they find unsatisfactory and that darker skinned employees report they are least likely to be promoted. The report documents a widespread perception of managerial favoritism, with employees of color being treated more harshly and offered less leeway when requesting a sick day or coming in to work late. Darker skinned workers are disproportionately employed in lower-prestige positions in the back of the store. The company rejects the findings, asserting that it does “not tolerate discrimination of any form.”
Yet accusations of racism on the sales floor are a counterpoint to a recent lawsuit alleging discrimination within Zara’s corporate structure, including claims that senior executives at Zara regularly used racial slurs and exchanged racist emails while discriminating against a corporate attorney who was Jewish and gay. The company has also faced scrutiny forselling racially and ethnically offensive clothing and accessories.
According the new report, Zara employees have also witnessed racial profiling of customers, with Black shoppers far more likely to be targeted as potential thieves than white customers. Here too, the allegations fit into a deplorable pattern within the retail industry: last year, major New York retailers Macy’s and Barney’s entered into settlementswith the office of New York Attorney General Eric Schneiderman, paying hundreds of thousands of dollars to settle allegations of racial profiling and false detentions and agreeing to take concrete steps to prevent discrimination against shoppers of color.
But while lawsuits and enforcement actions can make a difference, Zara and other retailers must not wait for legal action to remedy conditions that disadvantage workers and shoppers of color. The NAACP/Demos report highlights how offering livable wages and improving employee schedules would reduce racial disparities even as low-paid employees of all races and ethnicities see benefits. And the Center for Popular Democracy report suggests that Zara allow its New York workers “to choose to represent themselves in grievances through real bargaining agents, such as labor unions, without interference.” By directly empowering employees to push for fair treatment, a union could make the most enduring change of all.
Source: Demos
Progressive Candidates Are Pulling the Democratic Party Left, Whether the Establishment Likes It or Not
Progressive Candidates Are Pulling the Democratic Party Left, Whether the Establishment Likes It or Not
One of the candidates taking on the establishment is Kerri Harris, who is running to unseat Sen. Tom Carper, a Democrat...
One of the candidates taking on the establishment is Kerri Harris, who is running to unseat Sen. Tom Carper, a Democrat from Delaware. Harris, who is a community organizer with the Center for Popular Democracy and an Air Force veteran, has been hammering Senator Carper on his decision to partner with Republicans to dismantle Dodd-Frank -- the law passed in the wake of the financial and housing crisis.
Activists offer ideas to police charter schools
A pair of activist groups, the Alliance for Quality Education and Center for Popular Democracy, is out with a guide —...
A pair of activist groups, the Alliance for Quality Education and Center for Popular Democracy, is out with a guide — or rather suggestions — for better policing and monitoring finances of the state’s charter schools, which serve some 90,000 students, mostly in New York City.
The report states that since charters aren’t subject to all the reporting requirements required of public schools, there has been waste and abuse.
It contends the state could lose $54 million to fraud at charter schools this year, based on an accounting system used by fraud examiners that assumes 5 percent of that kind of mismanagement and tomfoolery.
To be sure, these groups are not exactly charter-friendly: AQE is funded in part by the state teachers union; the Center for Popular Democracy is also aligned with the national teachers union, AFT, among other groups.
They want a moratorium on charter expansion — which could become a high-profile issue during the next legislative session.
Here is their release and report: One note: some of these problems outlined below including the issues at Harriett Tubman Charter School occurred several years ago and under different administrations.
Today, the Center for Popular Democracy and Alliance for Quality Education released a report titled Risking Public Money: New York Charter School Fraud that reveals vulnerabilities in the state’s charter oversight system that could potentially cost New York state taxpayers as much as $54 million in charter fraud this year alone.
“Our governor and other school privatization advocates have pushed relentlessly to expand the charter industry at the expense of public school communities in New York State,” said Billy Easton, Executive Director of the Alliance for Quality Education. “But the proliferation of charters hasn’t been matched by the oversight needed to ensure that public money intended for students doesn’t instead get lost to fraud, waste and abuse.”
The report finds that state agencies have audited just a quarter of New York’s more than 250 charter schools since 2005, largely relying on them to police themselves instead. Yet in a startling 95 percent of the charters examined, auditors found mismanagement and internal control deficiencies that have occasioned $28.2 million in known fraud, waste, or mismanagement. Recognizing that the industry cannot be trusted to monitor itself for problems, the report’s authors have offered common sense interventions to remedy the problem, and have called for a moratorium on charter expansion until meaningful public oversight has been put in place.
“We can’t afford to have a system that fails to cull the fraudulent charter operators from the honest ones.” said Kyle Serrette, Education Director at the Center for Popular Democracy. “Given that New York spends over $1.5 billion on charter schools and more than 90,000 children are enrolled, a lot is at stake. We can’t afford to wait for tens or hundreds of millions more dollars to be lost before policymakers address this glaring issue.”
Here are only a few statewide examples among the dozens in the report:
IN NEW YORK CITY: Harriett Tubman Charter School issued credit cards to its executive director and its director of operation. They charge more than $75,000 in less than two years. The charges were never approved or explained.
IN LONG ISLAND: Roosevelt Children’s Academy Charter School paid four vendor a total of $521,197 for significant public work and purchase contracts without fair competition.
IN ALBANY: Albany Commuity Charter School lost between $207,000 to $2.3 million by purchasing a site for its elementary school rather than leasing it.
IN ROCHESTER: Eugenio Maria de Hostos Charter School failed to enter into a competitive bidding process for several instructional contracts. Instead the school awarded contracts to board members, relatives and other related parties.
IN BUFFALO: Oracle Charter High School entered a 15-year building lease with Oracle Building Corporation, agreeing to pay them more than $5 million at a 20 percent interest rate.
Source: Times Union
US lawmaker welcomes plan to aid Caribbean immigrants
Guardian - July 22, 2013 - Caribbean American Congresswoman Yvette D Clarke has welcomed a plan by New York City (NYC)...
Guardian - July 22, 2013 - Caribbean American Congresswoman Yvette D Clarke has welcomed a plan by New York City (NYC) to aid undocumented Caribbean immigrants. NYC officials say the city will spend US$18 million to help undocumented Caribbean and other immigrants find jobs. City council speaker Christine Quinn, a mayoral candidate, said the money will fund adult education classes and legal services that the US federal government requires immigrants to take to qualify for the Deferred Action for Childhood Arrivals programme.
The New York Immigrant Family Unity Project will provide free legal services to immigrants threatened with deportation who are unable to represent themselves in proceedings. “New York has always been a city of immigrants within a nation of immigrants,” said Clarke, the daughter of Jamaican immigrants, who represents the 9th Congressional District in Brooklyn.
“Under this programme, thousands of immigrants in Brooklyn and other parts of the city will finally have an opportunity to challenge the deportation proceedings that separate families and weaken communities,” she said.
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Activists: Fed Has Power to Spur Recovery in Poor Communities
The Charlotte Post - March 6, 2015, by Herbert White - America’s economy may be in recovery, but Simone McCray can’t...
The Charlotte Post - March 6, 2015, by Herbert White - America’s economy may be in recovery, but Simone McCray can’t see it.
McCray works at a Charlotte warehouse where she earns $8.10 an hour and lives with family to stretch her budget. A 2010 UNC Charlotte graduate with a degree in psychology, she has yet to land a job in that field.
“You don’t think you’re going to make $8.10 when you go to college,” she said. “That is not what they tell you.”More Americans are working than before the Great Recession of 2008, but African Americans are lagging. Figures released by the U.S. Department of Labor Friday showed the national unemployment rate fell to 5.5 percent in February, an improvement over the previous month.“With another strong employment report, we have now seen 12 straight months of private-sector job gains above 200,000 -- the first time that has happened since 1977,” said Jason Furman, chairman of the Council of Economic Advisers. “Moreover, 2014 was the best year for job growth since the late 1990s and 2015 has continued at this pace. But additional steps are needed to continue strengthening wages for the middle class.”But for African Americans, the jobless rate is double that of whites and the wage gap between the ethnic groups is getting wider.The Federal Reserve, which sets national policy on interest rates, is debating whether to boost the rate as a hedge against inflation. Progressive activists, however, are pushing the Fed to hold the line, arguing low rates will spur a jobs rebound, especially for low-income Americans.“Don’t put any brakes on the economic recovery,” said Pat McCoy, director of Action NC, which held a press conference Thursday to press the Fed. “Not only has it not yet been a full recovery, but in community of color, particularly in the African American community, unemployment rates, underemployment rates remain extremely high.”A study authored by the Center For Popular Democracy found that women and people of color are more likely to struggle to find work that pays a living wage. African Americans are especially hard hit with unemployment rates double the nation as a whole and plummeting wages.“Creating a strong American economy must include prioritizing a genuine recovery for the African American community,” the report summarizes.McCray wants to get in on the recovery. Saddled with debt from student loans, she’s looking for work that will allow her to meet financial obligations. Until then, she’s struggling to make ends meet.“My student loans are going to start going back into repayment and you have to have a way to repay them,” she said. “With jobs that are just above minimum wage, it’s kind of hard to stay afloat and pay your student loans, so you have to stay with family longer and not be out on your own and be independent sooner.”The Fed can help, activists insist, by resisting calls to raise interest rates. Corporate America and conservatives are pushing for an increase to prevent inflation, which is the simultaneous increase in consumer prices and devaluation of currency.“We need to continue to stimulate the economy through low-interest rates in order to serve these communities that need recovery,” McCoy said.As the Fed wrestle with the pros and cons of raising rates, Americans struggling to find work with a living wage are yet to be part of the nation’s limited recovery. Without a robust economic program, millions will be left out.“Only by pursuing genuine full employment will the Fed ensure that the recovery reaches Main Street and Martin Luther King Boulevard – and communities of working people throughout the country,” the CPD report’s authors wrote. “As the Fed makes crucial monetary policy decisions in the months and years to come, it must ensure that all communities can share in the prosperity of a functional economy.”
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Another Victory for Workers in Seattle—This Time It’s Their Schedules
Another Victory for Workers in Seattle—This Time It’s Their Schedules
Although she was hired on as a full-time employee at Domino’s Pizza, Crystal Thompson had a schedule that became...
Although she was hired on as a full-time employee at Domino’s Pizza, Crystal Thompson had a schedule that became erratic and unreliable shortly after she began working there in 2009. One day she’d start at 9 a.m. and work until 9 p.m.; and then she’d get a call asking her to work the morning shift the next day.
“It’s so hard trying to plan your life.”
The single mother of three relied on the job to pay over $1,200 a month in rent, utilities, food, and child care, but during the most volatile weeks, she was lucky if she got even 20 hours in shifts. Moreover, it was difficult to find a babysitter or make doctor’s appointments when she sometimes received her schedule only a day in advance. At a loss, Thompson moved one of her children into the living room and found a roommate to shoulder the part of the rent that she couldn’t afford.
“It’s crazy,” Thompson says about her schedule. “It’s so hard trying to plan your life.”
But thanks to an ordinance passed in Seattle last month, Thompson and other workers in the service and retail industries will finally have the freedom to think more than one day ahead. The new law, known as “secure scheduling,” will take effect in July 2017 and will impact large retail, service, and drinking establishments with a minimum of 500 workers globally, as well as full-service restaurants with more than 500 workers and 40 or more locations.
The measure requires that employers post work schedules at least two weeks in advance, offer additional hours to existing workers before hiring new employees, and provide at least a 10-hour break between closing and opening shifts. Thompson says that anything less than that doesn’t leave enough time to rest, shower, care for her children, and be alert enough to work another shift.
The Seattle measure comes on the heels of similar legislation passed in San Francisco in 2014, which labor activists call a game changer for the labor movement. It provides that hourly workers have the ability to better budget their expenses, take on second jobs, and plan for education and family time.
Workers in the service and retail industries will finally have the freedom to think more than one day ahead.
Working Washington, a Seattle-based labor advocacy organization that led the efforts, attests that, much like legislation for a $15 minimum wage that passed in Seattle in 2014, predictable schedules will likely spread to other cities and states too. New York City Mayor Bill de Blasio recently announced that he and other city officials plan on drafting legislation to ensure secure scheduling for fast-food workers.
Thompson’s plight is common for workers in the service and retail industry nationally, as shown in a report co-authored by associate professor Susan Lambert at the University of Chicago’s School of Social Service Administration. About 3 out of 4 early-career adults in hourly jobs report fluctuations in the number of hours they’ve worked in a month, and nearly half of part-time workers said that their employers gave them a week’s notice or less when their schedules changed.
Photo courtesy of Working Washington.
The problem is especially severe among African Americans and Latinos in Seattle. Another study, this one commissioned by the city itself in July, revealed that the two groups were the most likely to receive their schedules with less than a week’s notice, be required to be on-call, or to be sent home during slow shifts. They also reported higher rates of having difficulty attending classes and working second jobs because of their schedules.
Sejal Parikh, executive director of Working Washington, says that erratic scheduling has proliferated in the past two decades with the advent of scheduling software programs. After her group pushed for a $15 minimum wage and won, a campaign for secure scheduling seemed like a natural next step, she says. “The $15 minimum wage is about money, and the secure scheduling campaign is really about power.”
A stable schedule allows workers to spend time with their families, have hobbies, and further their careers.
But the measure is not immune to opposition. The advocacy group Washington Retail Association issued a press release in August stating that the measure undermines the fluctuating nature of business and would lead to layoffs. But Parikh counters that companies are already staffing leanly and that there’s usually not an excess of workers during one shift. A secure schedule simply allows a barista who lives an hour away from work to get eight hours of sleep at home instead of sleeping inside of the coffee shop, she contends.
It’s important that the more than 75 million people who work hourly jobs nationally have some say in their own schedule, says Carrie Gleason, director of the Fair Workweek initiative at the Center for Popular Democracy. A stable schedule allows workers to spend time with their families, have hobbies, and further their careers. Gleason adds that the legislation “ensures that Seattle workers can have a voice” in determining how many hours they work, which is something she hopes catches on in other cities.
In Seattle, Thompson is already planning out the time she’ll enjoy once she has a more predictable schedule. She is now working part time because she’s caring for her 9-month-old baby, but Thompson says she plans on going back to school to get a degree in Spanish and to become an interpreter. The new ordinance will also allow her to figure out child care and to budget for the rent in her new Section 8 housing, which takes 30 percent of her income.
More than anything, Thompson says she’s looking forward “to more peace of mind.”
By Melissa Hellmann
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Fed Chair Janet Yellen: Slowdown in job market likely ‘transitory’
Fed Chair Janet Yellen: Slowdown in job market likely ‘transitory’
Federal Reserve Board Chair Janet L. Yellen expressed hope Tuesday morning that the slowdown in the U.S. job market...
Federal Reserve Board Chair Janet L. Yellen expressed hope Tuesday morning that the slowdown in the U.S. job market would prove temporary, but she emphasized that the central bank would be cautious in raising interest rates again.
Yellen, testifying before the Senate Banking, Housing and Urban Affairs Committee, acknowledged that hiring has dropped off sharply in recent months, but she also pointed to early signs that wages are beginning to rise after years of stagnation. She said she is "optimistic" that the progress in employment will continue.
"We believe that will turn around, expect it to turn around, but we are taking a cautious approach … to make sure that expectation is borne out," Yellen told lawmakers.
The Fed is responsible for charting the course for the nation’s economy, with the dual mission to keep prices stable and strengthen employment. It does that by adjusting the influential federal funds rate. A higher rate helps curb inflation by making borrowing money more expensive, which discourages spending and investment and reins in economic growth. A lower rate means that money is cheap, stimulating purchases by households and businesses. That helps boost employment and speeds up the economy.
The Fed chief's assessment comes less than a week after the Fed unanimously voted to leave its benchmark interest rate unchanged. The central bank raised rates in December for the first time since the Great Recession but has not done so again amid persistent concerns about the health of the global economy.
Yellen said Tuesday that there is still "considerable uncertainty" over her outlook, with such risks as slow growth at home, turbulence in China and volatility in financial markets.
The most immediate threat comes from across the Atlantic Ocean, where Britain will vote Thursday on whether to remain in the European Union. A decision to exit — popularly known as Brexit — would upend Britain's four-decade partnership with the continent and throw the future of Europe’s open market into doubt.
Already, the British pound has been on a roller coaster as the probability of departure shifts with each poll. International policymakers have warned that a decision to leave would lower economic growth in the country by more than 5 percent over the next three years and potentially ripple across the rest of the world.
"A U.K. vote to exit the European Union could have significant economic repercussions," Yellen said Tuesday.
In the aftermath of the 2008 financial crisis, the Fed slashed its target rate all the way to zero and pumped trillions of dollars into the economy in a bid to bolster the American recovery. More than seven years later, it is finally in the process of withdrawing that support.
The first move was in December, when the Fed nudged its target rate up to a range of 0.25 to 0.5 percent. At the time, officials anticipated raising rates four times this year, but the uncertainty in the global economy has forced them to downgrade that projection. Most Fed officials now think only two rate hikes are warranted this year, and a growing number think only one will be necessary.
That shift in thinking at the central bank is evident in Yellen’s own statements. Just last month, she had signaled that the central bank could raise rates "probably in the coming months." But Yellen dropped the reference in a speech early this month, after disappointing government data showed employers added just 38,000 jobs in May. And last week, she told reporters that she is "not comfortable to say it's in the next meeting or two."
On Tuesday, Yellen made the case for caution. Because rates are already so low, the Fed has limited room to reduce them further if the economy were to weaken, she said. Moving gradually also gives the central bank time to assess whether its forecast of continued economic improvement will come true.
"Our cautious approach to adjusting monetary policy remains appropriate," she said.
The Fed has faced criticism from both the left and the right recently over its governance. Sen. Richard C. Shelby (R-Ala.), chairman of the Banking Committee, opened the hearing Tuesday by calling on the Fed to follow more stringent rules for setting policy and to explain when it deviates.
"The desire to preserve the Fed’s independence, however, should not preclude consideration of additional measures to increase the transparency of the board’s actions," he said.
Meanwhile, Sen. Sherrod Brown (D-Ohio) focused on diversity within the Fed’s top ranks. Last month, more than 100 lawmakers sent a letter to Yellen arguing for more minority representation among its leadership.
The central bank is led by a board of governors based in Washington and 12 regional bank presidents scattered throughout the country. The governors are appointed by the president and confirmed by the Senate, but regional bank leaders are chosen by local boards of directors.
Those officials tend to be white men. Yellen is the first woman to serve as chair in the central bank’s 101-year history. Only three Fed governors have been African American, and there have been no black regional bank presidents. No one now in the top brass is Hispanic.
By Ylan Q. Mui
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