CPD IN THE NEWS

Jared Bernstein Blog - March 3, 2015 - As a tireless (some would say tiresome) advocate for full employment and the benefits it yields for working people, you can imagine how I was thrown by this NYT headline over a piece by economics reporter Bin Appelbaum:

Black jobless rates remain high, but Fed can’t do much to help.

“Shots fired!” as the kids say.

I find this hard to believe in the following sense. Black unemployment has averaged almost twice that of overall unemployment since the monthly data begin in 1972 (avg: 1.9, with standard deviation of 0.15, so not a ton of variation around that mean). Crudely, that implies that if overall unemployment fell from 6% to 5%, the black rate might fall more in percentage point terms, from 12% to 10%.

Next, if the Fed can push down the overall unemployment rate, which is certainly within its purview and, at a time like this, its job description, then the headline seems off.

Now, there are important nuances in play here.

First, these relationships are not always so clean. Over the long, strong recovery of the 1990s, black unemployment fell 4.5 points compared to 2.1 points for whites (and 2.5 points overall). Over the 1980s recovery, black unemployment—which was about 20% at the end of the deep early 1980s recession—fell 8.5 points compared to 4.7 for whites.

Those comparatively big declines show the disproportionate benefits that blacks reap from lower unemployment and, conditional on the Fed’s ability to lower unemployment, they belie the NYT headline. I could make similar claims based on wages and incomes, but I’m bound by secrecy for now (more on that in a moment).

However, more recently, that relationship isn’t generating such impressive results. Over this recovery, black and white unemployment have declined by similar amounts (4.5 points for blacks; 3.8 for whites). And, as Appelbaum points out, real median wages have fallen twice as much for blacks as for whites.

But that’s kinda the point: until recently this has been a uniquely weak recovery, and as such, tells us little yet about the extent to which full employment will lift the relative economic fortunes of black workers.

If we get to and stay at full employment, I’m confident it will work as it has in the past, based both on the history briefly cited above and on some truly exciting results from a new paper we’ve commissioned for our full employment project on the benefits of full employment to black workers, written by the economist Valarie Wilson from the Economic Policy Institute.

Valerie will be highlighting the results at an event we’re holding in DC on March 30th so far be it from me to steal her thunder. But she’s got some panel data regressions (which provide lots more observations and variance than the simple time series comparisons noted above) showing the impact of lower unemployment on black compared to white median wages, and man…all’s I can say is I’m employing great restraint not to just print them right here and now!

Here’s another point worth considering. Various economists on team full employment have been trying to get the Fed to hold off on its interest rate liftoff, but Appelbaum writes: “It’s not obvious, however, that holding down borrowing costs for a little longer would be an effective way to address the underlying problem. Indeed, the problem is a good illustration of the limits of monetary policy.”

That may be true in the following sense: if the Fed raises rates a little bit in 2015q4 instead of 2015q3, I doubt it will matter that much to anyone in the real economy (though financial markets would make a huge deal out of it). Similarly, if they hold to a 5.4% full employment rate and a firm 2% inflation ceiling that mustn’t be breached, or if they shift from being data driven to shooting at the phantom menace of inflation that’s allegedly hiding out of sight from the data just around the corner—well then, yeah, they won’t much help those who depend on lasting full employment to catch a break.

He’s also got a point re underlying problems. Even full employment may not be enough to reach the millions of workers with criminal records who face uniquely high barriers to the job market. I’ve written about fair-hiring policies to reach these workers, and so has Appelbaum.

But check this out: I mentioned our March 30 event. Well, another speaker on the panel that morning will be the guy from whom I learned all I know about fair-hiring, Maurice Emsellem from the National Employment Law Project.

I know what you’re thinking: what about macro, what about Fed policy? How can you call yourself a full employment maven and leave that out? Did I forget to mention our keynote speaker? A fella named Bernanke…Ben Bernanke. Here’s the flyer. Be there and be square.

Source

Mira el video aquí.

The Wall Street Journal - November 14, 2014, by Pedro Nicolaci da Costa - Federal Reserve Chairwoman Janet Yellen met Friday with a coalition of community activists who are urging the central bank to resist pressures to raise interest rates before the labor market has fully recovered and calling for greater public input into the selection of regional Fed bank presidents.

At a press briefing outside the Fed before the meeting, organized by the Center for Popular Democracy and featuring workers, community organizers and liberal economists, the activists said the idea that the economy was close to full recovery was belied by the joblessness and underemployment of millions of Americans.

“We’re here to launch a national campaign for a stronger economy and for a reformed Federal Reserve,” said Ady Barkan, staff attorney at the center, a left-leaning national nonprofit organization. “The economy is not working for the vast majority of people,” he said, citing high unemployment, inequality and large racial disparities.

The Fed declined to comment on the meeting or the activists’ recommendations.

The Fed last month ended its bond-buying program aimed at supporting economic growth, citing “substantial improvement” in the outlook for the labor market. Those present at the briefing said the experience of many communities across the country suggests otherwise.

One of their biggest complaints was the inability of workers to find full-time work, a problem that has worried Fed officials and suggests the job market is still some way from full health.

“My job used to be steady, something you could count on,” said Jean Andre, 48, of New York, who works on logistics in the film industry. “I’m one of the names at the end of the movies that nobody reads. But I’m underemployed, I just can’t get full-time work anymore, not like I used to before the crash.”

With the unemployment rate 5.8% in October, Fed officials are debating when to begin raising interest rates from near zero. Many investors expect the central bank to start raising its benchmark short-term rate sometime in the summer of 2015.

Josh Bivens, an economist at the liberal Economic Policy Institute in Washington, noted that black unemployment is generally double the overall level. Black communities would be among those hit hardest by potentially premature Fed rate increases, he said.

The activist group also called for greater public input into the selection of the presidents of the Fed’s 12 regional banks. This comes ahead of the retirements next year of Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser. The two have been some of the most vocal opponents of aggressive Fed efforts to reduce unemployment—such as holding short-term rates near zero and buying bonds to lower long-term rates–arguing such policies risk fueling excessive inflation and asset bubbles while doing little good for the economy.

Fed presidents are selected by the boards of directors of the regional Feds, with the approval of the Washington-based Fed board of governors. The regional boards are composed of bankers, business executives and community representatives,

Kati Sipp, a director of the Pennsylvania Working Families Party who spoke at the briefing, said many of the regional bank board members designated as community representatives are not truly representative of the communities they are supposed to serve. “Right now in Philadelphia we have Comcast CMCSA +0.10% executives that are representing the public, and we think that it’s important for us that real people are also representing the public in Federal Reserve policy making.”

Michael Angelakis, vice chairman and CFO of Comcast Corp., is deputy director of the Philadelphia Fed’s Board.

“In Philadelphia we’ve had an 8% average unemployment rate for this year and it’s a 14.5% unemployment rate for the black community,” Ms. Sipp said. If Mr. Plosser believes the economy is back to full health, she said, then he hasn’t visited many of his own city’s troubled neighborhoods. “If he had, he would not believe that our economy has really recovered.”

Mr. Plosser has said he believes the job market is close to full employment and the economic recovery is genuine, if unremarkable.

The Philadelphia Fed announced Friday that Korn Ferry KFY -0.15%, the executive search firm hired to conduct the search for a new president, established an email address “to receive inquiries.” Asked if the move was in response to the protests, a spokesperson said it was “one part of our broad search process.”

Source

Radicalized white men are on a reign of terror, and I’m not just talking about the tiki-torch terrorists in Charlottesville. I’m talking about the white men who are threatening our health care, our schools, our communities, our institutions, and our families through their callous and self-serving policies. Hoods have been replaced by pinstripe suits.

Read the full article here.