One Word Could Be Worth a Million Jobs
One Word Could Be Worth a Million Jobs
Supporting a strong job market is a big part of the U.S. Federal Reserve's mandate. Fed officials, though, interpret...
Supporting a strong job market is a big part of the U.S. Federal Reserve's mandate. Fed officials, though, interpret that goal differently than most observers do. For the economy's sake, Congress should step in to resolve the discrepancy.
Specifically, the Federal Reserve Act instructs the central bank to promote "maximum employment" and "stable prices." Most people understand these instructions as meaning the Fed should seek to generate as much demand for workers as possible without causing an unduly large increase in prices.
The website of the Fed's Board of Governors, however, makes a slight modification to the jobs mandate: "maximum sustainable employment." Innocuous as it may seem, that one word can make a big difference.
How? Well, suppose inflation is running below the Fed's 2 percent target and the unemployment rate is at 5 percent, which officials consider to be its long-run level (pretty much the current situation). They can choose between two monetary policies, which are expected to result in the following paths for the unemployment rate:
Most observers would opt for the second policy. It's more aggressive, so it will get inflation back to target sooner. Even better, the unemployment rate is the same or lower every year, and by a significant amount: One percentage point is worth more than a million jobs.
The word "sustainable," however, means that the Fed views any deviation from the long-run unemployment rate -- up or down -- as undesirable. When officials speak of the economy “overheating” or “running hot” in the absence of inflationary pressures, this is what I think they have in mind. So they would see unemployment as running too low under policy 2.
Some Fed officials worry that “overheating” could trigger a recession. (I don’t understand the precise economic mechanism, but let’s leave that aside.) They think policy 2 might generate the following path for the unemployment rate:
Policy 2: Possible Recession Outcome
In 2019 and 2020, the economy falls into recession. From the Fed’s perspective, this unemployment path is terrible, because the rate is either too low or too high for the next four years.
It's easy to imagine, though, that many people would be willing to trade the risk of recessionary pain in 2019 and 2020 for the near-term gain of 2017 and 2018. They might even believe there's some chance that policy 2 will generate an outstanding outcome -- if, for example, the long-run unemployment rate is actually lower than the Fed thinks it is. Here's how that would look:
This interpretational divide was on full display last month, when Fed officials met with representatives of the pro-employment activist group Fed Up. The activists largely assumed that the central bank was contemplating near-term interest-rate increases to keep inflation in check. But most of the officials downplayed inflation, invoking instead the need to keep the economy from running too hot (which some said could lead to a recession).
I find it hard to believe that the Fed's approach is consistent with Congress's intent as expressed in the Federal Reserve Act. That said, it's really up to legislators to provide an unequivocal answer, which could matter a lot for the economy over the next few years.
By Narayana Kocherlakota
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The Tragedy of Janet Yellen
In December 2012, a new Federal Reserve governor and unseasoned monetary policymaker, Jerome Powell, told his...
In December 2012, a new Federal Reserve governor and unseasoned monetary policymaker, Jerome Powell, told his colleagues that the risks of continued stimulus likely outweighed the benefits. Vice Chair Janet Yellen, even then one of the most experienced policymakers in the Fed’s 104-year history, acknowledged the concerns but pushed back forcefully. She argued that “slow progress in moving the economy back toward full employment will not only impose immense costs on American families and the economy at large, but may also do permanent damage to the labor market.” In other words, if we don’t take risks now to get more Americans employed, the country might lose the opportunity to ever fully recover from the Great Recession. She reminded her colleagues of the promise they had made: “We communicated that we will at least keep refilling the punch bowl until the guests have all arrived, and will not remove it prematurely before the party is well under way.”
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Five Long Island nonprofits to share $70,000 in grants
Five Long Island nonprofits to share $70,000 in grants
Five Long Island nonprofits concerned with progressive social change were awarded funding by the Long Island Unitarian...
Five Long Island nonprofits concerned with progressive social change were awarded funding by the Long Island Unitarian Universalist Fund, which doled out $70,000 in its first round of grants for 2017. Three organizations received $15,000 apiece. These are the Center for Popular Democracy, which will use its award to organize elected officials on Long Island around progressive public policy solutions. The Child Care Council of Suffolk’s award has been earmarked for a graduate coalition for parents who have completed parent leadership initiative training, while the Pulse Center for Patient Safety and Advocacy will use its $15,000 award to train and empower African-Americans to advocate for better medical care.
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Philadelphia Hopes to Become Next Major City to Pass Fair Workweek Legislation
Philadelphia Hopes to Become Next Major City to Pass Fair Workweek Legislation
It is part of a larger, nationwide effort that has already been introduced in San Francisco, Seattle and New York....
It is part of a larger, nationwide effort that has already been introduced in San Francisco, Seattle and New York. Those cities passed similar legislation after increasing their minimum wage. Adding fair workweek standards was the logical next step, according to Rachel Deutsch, senior staff attorney for worker justice at the Center for Popular Democracy. “Some companies are stuck in this philosophy that labor is the most malleable cost,” she said. “But there has been a ton of data that shows there are hidden costs to this business model that treat workers as disposable.”
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CORRUPT CONGRESSMEN DEMAND DIVERSITY FROM FEDERAL RESERVE
CORRUPT CONGRESSMEN DEMAND DIVERSITY FROM FEDERAL RESERVE
Do you know what our divided and divisive political system needs? More tribalism. And who would know that better than...
Do you know what our divided and divisive political system needs? More tribalism.
And who would know that better than Cherokee Senator Elizabeth Warren who has a letter out complaining that there are too many white men on the board of the Federal Reserve. The letter is co-signed by the usual clown show of the Congressional Black Caucus and the Progressive Caucus.
The first signature belongs to John Conyers whose wife pleaded guilty to a conspiracy to commit bribery. Also present are the likes of Maxine Waters and Frederica Wilson, Gwen Moore, former Nation of Islam supporter Keith Ellison, Bernie Sanders, Al Franken, Bernice Johnson and Alcee Hastings, who was impeached for bribery.
Bernice Johnson had her own ethical issues.
Longtime Dallas congresswoman Eddie Bernice Johnson has awarded thousands of dollars in college scholarships to four relatives and a top aide's two children since 2005, using foundation funds set aside for black lawmakers' causes. Eddie Bernice Johnson
The recipients were ineligible under anti-nepotism rules of the Congressional Black Caucus Foundation, which provided the money. And all of the awards violated a foundation requirement that scholarship winners live or study in a caucus member's district.
What's This?
And Maxine Waters? She's got a record.
The influential congresswoman has helped family members make more than $1 million through business ventures with companies and causes that she has helped, according to her hometown newspaper.
A few years ago Waters was investigated by the House Ethics Committee for steering $12 million in federal bailout funds to a failing Massachusetts bank (that subsequently got shut down by the government) in which she and her board member husband held shares.
Waters has also come under fire for skirting federal elections rules with a shady fundraising gimmick that allows her to receive unlimited amounts of donations from certain contributors. For years the veteran Los Angeles lawmaker has raked in hundreds of thousands of dollars in short periods of time by selling her endorsement to other politicians and political causes for as much as $45,000 a pop instead of raising most of her campaign funds from individuals and political action committees.
Then there's Alan Grayson who has his own hedge fund.
Rep. Alan Grayson manages hedge funds that use his name in their title, a practice prohibited by congressional ethics rules designed to prevent members from using their elected post for financial gain.
The specific ethics provisions tied to the funds Grayson manages, two of which are based in the Cayman Islands, sit in a sort of gray area and have never been examined by the House Ethics Committee.
Sure. Let's let these people dictate diversity at the Fed.
By Daniel Greenfield
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Thanks to York School Board for Rejecting Charter Takeover
York Daily Record - November 4, 2014, by Rev. Aaron Willford, Sandra Thompson and Clovis Gallon - Over the past few...
York Daily Record - November 4, 2014, by Rev. Aaron Willford, Sandra Thompson and Clovis Gallon - Over the past few months, something remarkable happened in York. Parents, teachers, students, neighbors and faith leaders united to send a clear message that the education of York's children is more important than the profit margin of an out-of-state charter operator.
On behalf of that community, we would like to thank the York City School Board for standing up for our students, making sure their education comes first, and rejecting a charter takeover of our schools.
When the school board met on Oct. 15, Chief Recovery Officer David Meckley pressured board members to vote on an incomplete, poorly researched charter plan that was rolled out less than a week before. With so little time to review the plan and so many unanswered questions about it, the community urged the board to cast a no vote.
Rejecting the charter plan was not an easy decision for the school board, but it was the right decision — and we applaud their courage. If the plan had been enacted, money that should support students in the classroom would have flowed to a for-profit management company instead. City school children would have been treated like guinea pigs in a radical experiment, and their parents would have lost any say in how their neighborhood schools are run.
Perhaps the school board was looking into a crystal ball when it cast that vote. Just a week later, a federal judge appointed a receiver for Mosaica Education Inc., one of the two charter companies initially in the running to take over York city's schools. The heavily indebted Mosaica was sued by its primary lender in September after defaulting on its debt.
AdvertisementImagine where York's students would be if a charter operator took over their schools and, right out of the gate, found itself under enormous financial pressure for "a series of bad business decisions," as lender Tatonka Capital Corp. claims in its lawsuit against Mosaica.
The case against Mosaica followed a string of troubling studies questioning charter school oversight and accountability in Pennsylvania. A spring report from Auditor General Eugene DePasquale found that a lack of state oversight of charters was creating problems — with some observers comparing the current charter environment to the "wild, wild west."
A blistering report from the Center for Popular Democracy this fall revealed more than $30 million in proven or alleged fraud, waste, or abuse in Pennsylvania's charter school system over the past 17 years.
Giving Meckley a blank check on charterization in York would have been a big mistake.
Fortunately, the school board recognized how fraught with risk this plan was and chose to maintain local control of all the city's schools.
Now, it is critical for the school board to work in partnership with York's educators to improve the city's schools and give every child a shot at success.
Educators and administrators are already implementing a road map to fiscal recovery that will strengthen educational programs. We are glad that the school board is giving this "internal option," as it is known, an opportunity to work before taking any action that will negatively impact our schools, our students, or our community.
York city schools, like many other districts across the commonwealth, face a funding crisis created by deep cuts in state funding for public schools. All Pennsylvania school children deserve better from Harrisburg. It is high time our elected leaders reverse those cuts and put our schools back on track.
Until that happens, York's children should not be treated any differently than other Pennsylvania students. They shouldn't be guinea pigs in a charter experiment. And they shouldn't be deprived of the opportunity to attend their neighborhood schools.
Our school board agrees, and now it is up to all of us to take responsibility for the future of our city's public schools and the students who learn there.
We have no doubt that the York community is strongly committed to making our schools the best they can be. Working together, we can achieve truly remarkable things.
Rev. Aaron Willford is a member of York Concerned Clergy. Sandra Thompson is president of the York NAACP. Clovis Gallon is a teacher and York Education Association member.
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Yellen to step down from Federal Reserve board
Yellen to step down from Federal Reserve board
Janet Yellen submitted her resignation from the Federal Reserve board to President Donald Trump on Monday, announcing...
Janet Yellen submitted her resignation from the Federal Reserve board to President Donald Trump on Monday, announcing that she will leave when her successor is sworn in as Fed chairman.
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Aiming for new empowerment of black women
Aiming for new empowerment of black women
Three Democratic congresswomen have teamed up in a new effort to help African-American women overcome economic and...
Three Democratic congresswomen have teamed up in a new effort to help African-American women overcome economic and social barriers. Rep. Robin Kelly (D-IL), Rep. Yvette D. Clarke (D-NY), and Rep. Bonnie Watson Coleman (D-NJ) have launched the Congressional Caucus on Black Women and Girls, the first caucus devoted to public policy that eliminates the significant hurdles and disparities faced by black women. The three hope that the new caucus gives the same attention to black women that President Obama’s My Brother's Keeper initiative has given to black men and boys.
The caucus is an outgrowth of a MoveOn.org petition from the #SheWoke Committee, a group of seven women asking congressional leaders to find ways to improve the lives of black women. That committee includes Ifeoma Ike, the co-founder of Black and Brown People Vote; philanthropic strategist Nakisha Lewis; and Sharon Cooper, sister of Sandra Bland, the Illinois woman who died in police custody in Texas after being stopped for a traffic violation.
The formal launch for the caucus is April 28, when the three congresswomen will lead a symposium at the Library of Congress titled “Barriers and Pathways to Success for Black Women and Girls.” The event will featuring academics, advocacy leaders, business executives, and media personalities. Among the speakers on two different panels are Melissa Harris-Perry, the Maya Angelou Presidential Chair at Wake Forest University and now editor-at-large at Elle magazine (now that she’s no longer at MSNBC); Beverly Bond, founder and CEO of Black Girls Rock!, the annual award show that honors women of color; and Monique Morris, co-founder and president of the National Black Women’s Justice Institute and author of Pushout: The Criminalization of Black Girls in Schools.
An evening event (both the daytime and evening meetings are open to the public) will give members of Congress “an opportunity to address organizations focused on black women, other civic leaders, and individuals who are committed to advancing the quality of life of black women in America,” according to the congressional office of Rep. Watson Coleman.
“I hope that what we will do is to highlight the issues facing black girls and black women—the issues that are impacting their lives,” Watson Coleman said. The range of issues to be addressed in the April 28 symposium include black women’s experiences with law enforcement; disparities in health care, including clinical trials; inequality in salaries; unemployment; domestic violence; and many other topics.
The April 28 events are only the first in what Watson Coleman hopes will be a series of public hearings, ongoing symposiums, and other avenues of gathering information. “We will coordinate all of this information, and we will be presenting public policy.
“There’s so much to do here,” Watson Coleman said. “We’re not trying to make this a quick fix.” Some answers could come in the form of legislation, some might be sought through presidential executive orders, and some might come from elsewhere. “It can be either and all,” she said. “Public policy has left us out of this area. We’re going to be guided by what we learn from experts. We’re not committed to any one thing.”
Watson Coleman said that while the caucus would be coordinated by the three congresswomen chairs, all of the House’s black congresswomen—20 in all—and several black congressmen are on board, too. “All of them have signaled interest,” she said.
Although there’s no coordination of effort, it’s possible that the caucus’s eventual direction may be getting some monetary support from another source. One day after the caucus was announced on March 22, the NoVo Foundation, run by Warren Buffet’s son Peter and his wife, Jennifer, pledged $90 million to “support and deepen the movement for girls and young women of color” in the U.S. "This work is about dismantling the barriers that prevent them from realizing that potential and leading us toward a truly transformative movement for change," said Jennifer Buffett, co-president of the NoVo Foundation. The monetary pledge is part of the foundation’s initiative, “Advancing Adolescent Girls' Rights,” which works to empower girls all over the world.
Another source for information is Grantmakers for Girls of Color, a website that “captures new knowledge and insights about girls and young women of color, with a focus on the structural barriers that prevent them from achieving their full potential.” The site was initially started by the NoVo Foundation, the Foundation for a Just Society, the Ms. Foundation for Women, and other partners. It serves as a shared resource across the philanthropy community, and it will grow and expand based on suggestions and feedback from those givers.
National unemployment rates for both men and women of color are more than double the jobless rates for whites, according to the most recent figures from the Dept. of Labor. Although the unemployment rate for African-American men was higher in every age group than the rate for black women, rates for young black men and women were especially high, ranging from 10.7 percent for black women from 20 to 25 years old to 13.6 percent for men in the same age group, with even higher figures for those under 20 years old.
Some 2 million African Americans are unemployed and looking for work, as jobs have been slower to return to the black community after the Great Recession. A 2015 report from the Economic Policy Institute and the Center for Popular Democracy painted a bleak employment picture for the black community. Most jobs that came back after the recession have been lower-wage jobs in the service and retail sector. The report stated that on an hourly basis during the past 15 years, average wages for black workers have fallen by 44 cents, while Hispanic and white workers’ wages have risen by 48 cents and 45 cents, respectively. As the report said: “The recovery has not yet reached Martin Luther King Jr. Boulevard.”
In addition, the National Women’s Law Center, in a recent report about lifetime wage gaps between men and women, said that the gap over a 40-year career between white men and African-American women is $877,480.
So good for three African-American congresswomen for shining a spotlight on black women and the myriad problems they face. Let’s hope they can identify some real solutions.
By Sher Watts Spooner
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Which States Have Most to Lose From DACA Elimination
Which States Have Most to Lose From DACA Elimination
Attorney General Jeff Sessions announced Tuesday the end of an Obama-era program that has allowed almost 800,000...
Attorney General Jeff Sessions announced Tuesday the end of an Obama-era program that has allowed almost 800,000 undocumented young people temporary relief from deportation and the ability to work.
“We are people of compassion, and we’re people of law—but there’s nothing compassionate about the failure to enforce immigration law,” Sessions said in a speech that emphasized the argument that the Deferred Action for Childhood Arrivals (DACA) program, which was put in place through executive action in 2012, was an instance of executive overreach. “The nation must set and enforce a limit on how many immigrants we accept each year, and that means all cannot be accepted.”
Read the full article here.
No hike: Fed keeps benchmark rate near zero
WASHINGTON--Not yet. Citing global economic weakness and financial market turmoil, the Federal Reserve agreed Thursday...
WASHINGTON--Not yet.
Citing global economic weakness and financial market turmoil, the Federal Reserve agreed Thursday to keep its benchmark interest rate near zero despite the rapidly improving U.S. labor market.
But Fed policymakers' forecast indicates they still expect to bump up the federal funds rate this year for the first time in nearly a decade, with meetings scheduled for October and December. Their projections, however, show they expect to raise it even more gradually over the long-term than they previously signaled.
Richmond Fed chief Jeffrey Lacker was the lone dissenter.
The decision capped the most dramatic run-up to a Fed meeting in recent memory, with economists split on whether the central bank would raise its key rate, which has been near zero since the 2008 financial crisis and affects borrowing costs for consumers and businesses across the economy.
"An argument can be made for a rise in interest rates at this time," Fed Chair Janet Yellen said at a news conference.But she added, "We want to take more time to evaluate the likely impact on the United States" from the overseas slowdown and market gyrations.
She said Fed policymakers also want to see if further improvement in the labor market "will bolster our confidence that inflation will move back" to the Fed's annual 2% target over the medium term..
In a statement after a two-day meeting, the Fed said, "Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term."
Fed policymakers now expect just one rate hike this year that would push the funds rate to 0.375% from the current 0.125%, according to their median forecast. They also expect a slower rise that would leave the rate at 2.625% by the end of 2017 and a longer-run normal rate of 3.5%, down from their previous estimate of 3.75%.
The central bank said "the labor market continued to improve, with solid job gains and declining unemployment." It said consumer spending and business investment have advanced moderately while the housing market "has improved further." But amid the overseas troubles, it said exports have been "soft."
With the U.S. economy rebounding more strongly in the second quarter after a slowdown early in the year, the Fed raised its median forecast for economic growth this year to 2.1% from 1.9% in June. But after the recent global and market troubles, it lowered its projection for 2016 to 2.3% from 2.5% in June.
And with the 5.1% unemployment rate already below the Fed's previous year-end forecast, it now expects the jobless rate to be 4.8% by the end of 2016, below its June forecast of 5.1%.
Yet the central bank also expects a more modest rise in inflation, providing it more leeway to nudge up rates gently. It slightly lowered its inflation forecast to 1.7% in 2016 and 1.9% in 2017, leaving it below its 2% annual target even in two years.
Supporting the case for a Fed move was a 5.1% unemployment rate that's already at the central bank's long-run target, average monthly job gains of 212,000 this year and healthy economic growth of 3.7% at an annual rate in the second quarter. "The economy has been performing well and we expect it to continue to do so," Yellen said.
Waiting too long to act might force the Fed to hoist rates more rapidly when currently meager inflation eventually heats up, a move that could destabilize markets. Yellen said that could be "disruptive to the real economy." "I don't think it's good policy to have to slam on the brakes," she said
Yellen said she continues to expect tepid inflation to pick up as low oil prices and a strong dollar stabilize, but she said it will take "a bit more time" for those effects to dissipate.Some economists say the 5.1% unemployment rate already heralds a coming surge in wages and prices as employers compete for fewer available workers.
But annual pay growth has been stuck near a sluggish 2% pace, possibly reflecting an excess labor supply that includes part-time workers who prefer full-time jobs and discouraged Americans resuming job searches after years on the sidelines. If that's the case, the Fed may want to keep rates low longer to stimulate the economy so more of those workers can find full-time jobs.
Yellen told reporters the unemployment rate likely "understates the degree of slack in the labor market."
Meanwhile, recent news of China's economic slowdown, and the resulting turmoil in global and U.S. stocks, prompted Fed officials to temper expectations for a rate hike this week.
"The outlook abroad appears to have become more uncertain of late and heightened concerns about growth in China and other emerging market economies have led to notable volatility in financial markets," Yellen said.
She added, "We don't want to respond to market turbulence," but the volatility is prompting the Fed to investigate its cause in the global economy.While U.S. exports to China comprise less than 1% of the nation's gross domestic product, Chinese trade with other countries could have stronger ripple effects on the U.S. economy.
Before the release of the Fed's statement to reporters, a coalition of worker advocacy groups called Fed Up gathered outside holding signs such as, "Whose recovery?" and chanting, "Don't raise the interest rates!"
"The Fed should not make a decision to slow down the economy without hearing from the people it will affect," said Ady Barkan, the head of the group.
Source: USA Today
3 days ago
3 days ago