Fed’s Powell: Inflation is a major threat to jobs
Chair Jerome Powell acknowledged Tuesday that high inflation has emerged as a serious threat to the Federal Reserve’s goal of helping put more Americans back to work and that the Fed will raise rates more than it now plans if needed. (Jan. 11)
Economist Lisa Cook, a professor at Michigan State University, has built a deep fan base among young Black women and others in economics.
She’s tackled troubling issues such as how systemic racism contributes to wealth inequality and has done essential research on how lynchings and hate-related violence in America’s history held back African-American invention and innovation.
Now, she could end up being the first Black woman to serve on the Federal Reserve’s Board of Governors if her nomination is confirmed by the U.S. Senate.
President Joe Biden has nominated three people for the Federal Reserve’s Board of Governors: Cook; Sarah Bloom Raskin, a former Fed and Treasury official, for the top regulatory slot; and and Phillip Jefferson, an economist, dean of faculty at Davidson College in North Carolina and a former Fed researcher.
More: Michigan State professor nominated as first Black woman on Federal Reserve board
The three nominees, who will have to be confirmed by the Senate, would fill out the Fed’s seven-member board. Federal Reserve’s dual goals are maximum sustainable employment and price stability.
Cook’s research on how racial inequality has hurt the economy and her deep understanding of racial and gender gaps could serve an important role for the central bank’s efforts relating to diversity, equity and inclusion.
More: Economist Lisa Cook: Pandemic’s pain deepens wealth gap
More: COVID-19 widens racial wealth gap, hitting Black businesses especially hard
Cook, who has consulted in the past with a number of Federal Reserve Regional Banks, has shown that she’s forward-thinking and able to discuss serious issues that won’t always make everyone in the room comfortable.
In 2019, she co-authored an opinion piece in the New York Times with Anna Gifty Opoku-Agyeman, a cofounder of The Sadie Collective, that bluntly outlined how Black women experienced discrimination in the economics field, how some white students have difficulty seeing a Black woman as an expert and how economics is “neither a welcoming nor a supportive profession” for women and particularly Black women.
The Sadie Collective is a nonprofit addressing the “pipeline and pathway problem for Black women in economics, finance and policy.”
The Sadie Collective is named for the first Black woman to receive a doctorate in economics in the United States: Sadie Tanner Mossell Alexander who was awarded her doctorate in June 1921 from the University of Pennsylvania.
In the Fed’s 108-year history, nominees Cook and Jefferson would be the fourth and fifth Fed governors. And experts note that it would be the first time that a majority of the Fed board would consist of female appointees.
The Federal Reserve stepped in early during the pandemic and took aggressive action to keep credit flowing and get the economy back on track.
While we had a short-lived recession and the jobs picture has improved dramatically, the COVID-19 pandemic has made financial matters worse for many families, small business owners and others who faced economic hurdles long before early 2020.
“Everything that we’ve seen laid bare by the pandemic has had a long history, whether it’s health inequality, wealth inequality, income inequality, policing inequality,” Cook told me in a phone interview in the summer of 2020.
Many families, of course, had an extremely difficult time recovering from the financial meltdown more than 10 years ago, particularly if they lost wealth buying a home when targeted by predatory lending practices.
Much of family wealth for African Americans and Hispanics was wiped out during the Great Recession when many people lost jobs, homes and money, Cook told me in 2020.
Predatory lending practices targeted Black and Hispanic families, contributing to foreclosures.
During the pandemic, she said in 2020, the threat has been that many Black households don’t have enough savings or wealth to weather the fast-moving COVID-19 storm.
The safety nets aren’t as strong because of a long history of racism and inequality.
I talked later in 2020 to Cook after news broke a bit more than a year ago that she would serve on then President-elect Biden’s transition team. (I was surprised to see that even then her role on the transition team was celebrated in an article in Teen Vogue, written by a woman she mentored.)
In an interview with the Free Press in December 2020, Cook addressed how the stress of the pandemic will take its toll on our mental health. Ultimately, human capital, the country’s labor force, can suffer in reduced productivity.
“As a macro economist, I typically don’t talk about mental illness and about the impact (the pandemic) is going to have on people,” Cook told me in December 2020.
“We have to admit that this was a shock that wouldn’t allow for us to have the same kind of productivity, the same kind of life, the same kind of outlets we had before,” Cook said then.
Women also have been harder hit economically than men because women often are working at companies that faced deeper layoffs or cuts in hours, including restaurants, tourism and entertainment. And many young women are raising children.
Many women are being forced to make tough decisions about work when they’re unable to cover the cost of child care or find child care now when children learn remotely or schools are closed. Children are staying home to avoid the virus but someone has to stay home with them. Typically, women are the ones taking on that job, too.
“This is a she-cession,” Cook said in December 2020.
“They are paying an additional premium during this pandemic. They’re having to organize more affairs at home. They’re dropping out of the labor force.”
Economic setbacks during the pandemic threw years of progress for women in the workforce in reverse.
“This is going to have a deep impact not only on the women but also society,” Cook told me in late 2020. “We’re losing a certain part of the labor force and that’s an immediate loss.”
As for children, especially those in lower-income urban or rural communities, she said many will face setbacks in their education after being on chaotic schedules, not getting the type of learning they deserve. The aftermath could be felt “five years, 10 years, a generation,” Cook said.
“This might be like the Flint water crisis for small kids,” she said in 2020. “In Flint, if you had the money to move, you moved.”
The most vulnerable people are being hurt more when they hold jobs that require in-person work and can be expected to take longer to recover after pandemic.
The stress of the ongoing pandemic can be witnessed everywhere you go. This week, I was taken aback, but only slightly, to see a cashier leave her register at a major retailer to walk into the checkout lane and take a can of Lysol to spray disinfectant in the air seconds before a customer could enter her line.
Since December 2020, of course, we’ve seen only sporadic relief as more people were vaccinated. Now the tension keeps building.
Even in 2022, we’re still afraid of what’s next. We lost loved ones, feared for family and friends who tested positive for COVID-19, and dealt with the economic hit, including reduced hours, job loses, unexpected shortages on store shelves and significantly higher prices at the gas pump, supermarket and car dealership.
The Fed’s facing many challenges ahead — such as how to raise interest rates to make sure that inflation doesn’t spiral out of control in the years ahead but avoid driving up the jobless rate and shutting down the economic recovery.
Cook’s voice is one that needs to be heard in the room.
Contact Susan Tompor via email@example.com. Follow her on Twitter @tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.
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