We should not mince words: Raising interest rates is meant to intentionally slow down the economy. With low-wage earners still underemployed, wages stagnant, and black families still mired in a Great Recession of our own, the economy is simply not ready for the Federal Reserve to slow it down by raising rates. So why the hurry?

By all accounts, supporters of higher interest rates are not following the data. While the unemployment levels are generally inching down, there is pain in other key economic indicators: Wages remain low, and there are pockets of high unemployment and racial inequality. Underemployment is still very high, and there are many more job seekers than job openings. In short, the labor market is still slack, with no risk that rising wages will drive up inflation.

As Nobel laureate Joseph Stiglitz recently wrote, the evidence “indicates that the predictable costs of premature tightening — slower job and wage growth — far outweigh the risk of accelerating inflation.”

Roughly one in five African-American workers and one in six Hispanic workers are unemployed or underemployed. Similarly, about one in six workers with only a high school degree are unemployed or underemployed. These workers have little chance of seeing wage gains if the Fed slows the pace of job creation.

According to the Federal Reserve’s preferred measure, inflation is running under 1.1%, significantly below the Fed’s already-low target of 2%. Inflation has been below 2% for most of the past six years. And Fed staff — as well as financial markets — expect inflation to remain below 2% over the next few years.

The data simply do not add up to a legitimate case for raising rates. The Fed is under enormous pressure to raise rates from Wall Street banks and conservative voices within the institution. But yielding to that pressure would damage the lives and livelihoods of the vast majority of America’s working families. In the absence of any real threat of harmful inflation, there is simply no reason to slow down the economy and submit those families to more hardship.

Connie M. Razza is the director of strategic research at the Center for Popular Democracy.

Source: USA Today