Organizers demand Federal Reserve work for workers

Fed policy exacerbates long-term unemployment that hits Black and Latino communities especially hard, activists say

By: - October 25, 2021 6:57 am

Federal Reserve Board Chairman Jerome Powell is greeted by U.S. Sen. Jon Tester (D-MT) as he arrives to testify before the Senate Banking, Housing and Urban Affairs Committee in 2019 in Washington, D.C. (Photo by Win McNamee / Getty Images)

Rhiannon Chavez-Ross sees stories of workers struggling to find jobs every day. Some messages and calls, she says, are from New Mexicans losing their homes and vehicles because they haven’t been able to find a job as a result of the pandemic.

She started a group on Facebook in May 2020 hoping to help a few people, and now it has nearly 3,000 members, with new requests to join every day. Many people seeking help in the group have college degrees, are business owners, and have paid into their unemployment insurance for most of their life.

“I’ve watched my community struggle with the way the news portrays unemployed people labeling them as lazy or not wanting to work,” Chavez-Ross said. “It’s been challenging for them emotionally and mentally. They’re worried about how they will support their families from week to week. Unemployment benefits are not stable. They have outdated systems that can produce errors and cause long delays in payments.”

Chavez-Ross highlighted these stories during a press conference on Thursday, Oct. 22, as part of the Full Employment Defenders National Week of Action with events in Richmond, Kansas City, Chicago and Boston.

Leila Salim, a member of Organizers in the Land of Enchantment (OLÉ) in Albuquerque, said the campaign is trying to hold the Federal Reserve Bank of Kansas City accountable to the public. 

What is the Fed?

The Federal Reserve is the central bank of the United States, and it’s part of the federal government. The Fed should try for strong employment numbers across the country, and it manages inflation. To that end, it controls interest rates. 

What does it do?

Sometimes people call the Fed “the bank for banks,” because it loans banks money, decides what the interest rate will be, and that comes out in every person’s interest and mortgage rate around the U.S.

When the economy here is struggling, the people who call the shots at the Fed cut interest rates down to try and give the economy a jump-start. If they think the economy is expanding too fast, they’ll jack them up again. 

Where are the banks?

There are 12 across the country, in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, San Francisco. 

The Federal Reserve bank in Dallas, Texas, serves Southern New Mexico. The one in Kansas City handles the northern half of the state.

So how does all this affect workers?

Decisions by the people who run the Fed often impact whether companies are hiring or not, offering raises, freezing salaries or cutting pay — or laying off workers and discarding positions entirely.

Editor Marisa Demarco

Organizers are advocating for full employment, rising wages and a Federal Reserve that works for workers, Salim said.

Full employment is the idea that every person able to work in a given economy has a job. Chavez-Ross pointed out that there are still 5 million fewer jobs than there were before the pandemic began.

“This is just one of the ways that the Fed policy choices have directly impacted and hurt working families,” she said.

Albuquerque and 14 counties in the northern half of New Mexico fall under the Fed’s 10th District, headquartered in Kansas City.

Not long ago, the Fed’s policies were based on a rule about inflation risk and the level of unemployment, and as a result, long-term unemployment for Hispanic and Black people has risen sharply, Chavez-Ross said.

Every six weeks, Salim said, 12 Fed leaders meet to set the direction of the economy, including how many people should be unemployed, whether wages should be rising, whether inflation is a threat to the economy, and whether the unemployment gap for Black and Latino people matters to policymakers.

Chavez-Ross said she conducts polls with the Facebook group, and found that for the average member who applies for 15 positions, about one-third get a response from only a single prospective employer, and only half of those actually get an interview.

Those few that do get a job usually take a pay cut compared with pre-pandemic wages, she said, and many who agree to work full-time find out that their hours are significantly reduced.

“So even after they return to work, it does not lessen the burden of paying bills and feeding their families because they simply don’t earn enough money to even survive,” Chavez-Ross said. 

Salim said the Fed also needs to be more transparent and engage with the public. It’s important, she said, because two high-ranking officials at Federal Reserve banks in Dallas and Boston resigned last month after it was revealed that they could have profited from actively trading corporate stocks while the Fed was setting economic policy in response to the pandemic.

“The public has a right to believe that the Fed is setting economic policies solely for the interest of the public, so if a Fed bank president is trading corporate stocks, that’s an insurmountable conflict of interest,” said OLÉ member Justin Rogers. “It is also, and possibly an even greater, conflict of interest that the Fed’s directors, the people who will be naming the next bank president, are dominated by corporate interests.”

The 10th District is better than some others in terms of diversity, Rogers said, but it’s not where it needs to be. Only one person on the board represents labor, according to the Fed’s website.

According to an analysis of diversity in Federal Reserve leadership, 83% of regional Fed bank presidents are white, 75% represent the banking or business sectors, and out of those business representatives, 76% are from a big business.

Salim said the data raise questions about how they are chosen.

“These Fed leaders are the most powerful economic policy institution in the country, and the choices that they make determine the economic future of our communities,” Salim said. “Often these choices involve a trade off between the interests of working people and the interests of the corporate sector. The choice of regional Fed bank board members often flies under the radar, but it shouldn’t, because those board members name the president.”

The Fed has all the tools at their disposal to keep people out of unemployment. Working people need the Fed to make up for the damage that they’ve done. They can do so with sustained long-term commitment to the goal of maximum employment.

– Rhiannon Chavez-Ross, OLÉ

A voicemail message seeking comment from the Board of Governors’ spokesperson was not returned as of Friday afternoon.

Jay Wilson, of Albuquerque, said things like joblessness, violence and health outcomes are often clustered together and are the products of investments or lack of investments in communities.

He said millions of U.S. workers are burdened by a job market “marred by turbulence, insecurity and prejudices of a market that has far too little opportunity for growth and sparse offers for protection.”

“We cannot allow the Federal Reserve to continue to operate under a veil of ambiguity and disconnect from the everyday American public,” Wilson said. He added that the Fed’s policies uphold the racial wealth gap in the U.S.

He said the campaign is demanding a more transparent and democratic process of filling seats on the Fed board of directors, including a requirement to publish the selection criteria. They also want more opportunities for public input including more public forums where people can meet the candidates, and a mechanism for the public to submit questions to the candidates.

“We want the Fed’s leadership to not only look like us, but also have the understanding of the economic experiences that define not the wealthy communities, not the segregated communities, but all American communities,” Wilson said. “We also want to be sure that they can be trusted with the understanding of everyday people to make policy that furthers the interests of everyday people.”

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Austin Fisher
Austin Fisher

Austin Fisher is a journalist based in Santa Fe. He has worked for newspapers in New Mexico and his home state of Kansas, including the Topeka Capital-Journal, the Garden City Telegram, the Rio Grande SUN and the Santa Fe Reporter. Since starting a full-time career in reporting in 2015, he’s aimed to use journalism to lift up voices that typically go unheard in public debates around economic inequality, policing and environmental racism.