SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
full employment
Sherrod Brown Warns Fed Chair That Rate Hikes Put Working-Class 'Livelihoods at Risk'
"For working Americans who already feel the crush of inflation, job losses will make it much worse."
Oct 25, 2022
U.S. Sen. Sherrod Brown on Tuesday reminded Federal Reserve Chair Jerome Powell of the central bank's legal obligations to all Americans, particularly working-class people, amid a wave of recent interest rate hikes that critics say ignore the root causes of inflation.
"It is your job to combat inflation, but at the same time, you must not lose sight of your responsibility to ensure that we have full employment."
The Ohio Democrat, who chairs the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Powell amid expectations that the Federal Open Market Committee (FOMC) will approve another rate hike at a meeting next week--despite mounting criticism of the approach.
Highlighting that the Fed "is charged with the dual mandate" under U.S. law, Brown wrote to Powell that "it is your job to combat inflation, but at the same time, you must not lose sight of your responsibility to ensure that we have full employment."
"For the first time in decades, we have seen historic job growth, and workers have begun to see wage gains, gains that your prior actions to stabilize the economy helped achieve," he noted. "Yet, many workers and their families are struggling under the weight of inflation."
Citing Powell's remarks last month about inflation impacting middle- and lower-income households, the senator stressed that "the Federal Reserve's tools work to lower inflation by reducing demand for economic activities sensitive to interest rates. However, a family's 'pocketbook' needs have little to do with interest rates, and potential job losses brought about by monetary over-tightening will only worsen these matters for the working class."
\u201cFor working Americans who already feel the crush of inflation, job losses will only make it worse.\n\nThat\u2019s why @SenSherrodBrown is reminding Chair Powell that the @federalreserve must promote stable prices AND max employment.\u201d— Senate Banking and Housing Democrats (@Senate Banking and Housing Democrats) 1666722098
Given that higher-income families "are better able to protect their wealth during economic downturns," Brown explained, "inflation and recessionary job losses increase the gap between upper- and lower-income households and widen the divide between racial groups."
"While, for now, the labor market remains relatively stable, we are starting to see job openings decrease and unemployment claims rise," he continued. "We must stay focused on addressing the root causes of inflation without putting workers' livelihoods at risk."
The senator's letter also emphasizes some key drivers of inflation that aren't impacted by rate hikes, from the effects of the Covid-19 pandemic and Russia's invasion of Ukraine, to the fact that "big corporations in concentrated industries have exploited this inflationary environment, increasing consumer costs and earning higher profit margins than before."
While celebrating efforts by Congress to tackle some root causes of current conditions--including passage of the Inflation Reduction Act and ocean shipping reforms--the letter also flags that other central banks are increasing interest rates, which could ultimately worsen the global economic situation.
"Protecting the world's most vulnerable populations and avoiding disruption that further increases the global wealth gap requires your continued caution," Brown warned Powell. "For working Americans who already feel the crush of inflation, job losses will make it much worse."
"We can't risk the livelihoods of millions of Americans who can't afford it," the letter concludes. "I ask that you don't forget your responsibility to promote maximum employment and that the decisions you make at the next FOMC meeting reflect your commitment to the dual mandate."
\u201cFor months, Groundwork & our allies have been sounding the alarm that the Fed's aggressive rate hikes \u2014 the wrong tool to take on the root causes of today's inflation \u2014 will crush workers and harm families scraping to get by.\n\nWe hope more follow @SenSherrodBrown's lead.\u201d— Groundwork Collaborative (@Groundwork Collaborative) 1666724516
The think tank Groundwork Collaborative welcomed the senator's letter.
"For months, Groundwork and our allies have been sounding the alarm that the Fed's aggressive rate hikes--the wrong tool to take on the root causes of today's inflation--will crush workers and harm families scraping to get by," the group tweeted.
Groundwork on Tuesday also collected some "strong reporting" on recent debates over how to fight inflation and critiques of the Fed's approach from various economists and progressives in Congress.
One of the featured articles, published by Marketplace earlier this month, featured a stark warning from Groundwork executive director Lindsay Owens.
"I think Powell's interest rate bender has us on the precipice of global recession," she said. "He is really going hard on rate hikes. And the consequences could be tremendous for so many."
Keep ReadingShow Less
An Anti-Poverty Agenda That Excludes Access to Reproductive Healthcare is Woefully Incomplete
Mar 01, 2016
In this column, I've written extensively about anti-poverty policy. I've underscored the importance of minimum wages and work support, including child care and wage subsidies, SNAP (food stamps), housing, and health care. I've often stressed the critical role of criminal justice reform. I never shut up about the benefits of full employment.
But I've never said a word about reproductive rights.
I have long supported such rights. I've long recognized the decline in teenage pregnancy, particularly among poor girls, as an essential advance for social policy (see Belle Sawhill's work on access to contraception and its positive impacts on child/parent outcomes). But I've failed to connect the dots between access to comprehensive reproductive health care, including abortion, and economic security.
Thankfully, those dots are compellingly connected in this report from last year, "Two Sides of the Same Coin, Integrating Economic and Reproductive Justice." If you think the connection should be obvious, I agree. Having a child is much more than an economic event; it's also very much that, invoking significant direct costs and opportunity costs (and benefits, too, of course). Thus, the inability to control such costs due to lack of access to reproductive health care is a potentially poverty-inducing problem for low-income women and their families (and 69 percent of those who seek abortions are low-income). Conversely, increasing use of the birth control pill, for example, has been found to reduce the gender pay gap significantly.
I was particularly struck by the findings from a research project in progress called the Turnaway Study, a longitudinal study that follows women who sought but did not get abortions, comparing their outcomes to economically similar women who were able to access abortion services. This quasi-experimental study design is a good way to get closer to causal impacts versus correlations.
A key finding from the Turnaway Study in the economic security space is that relative to women who were able to get the abortion they sought, women denied an abortion were three times more likely to be poor. A year after they were turned away, these women were 10 percent less likely to be working full-time (58 versus 48 percent), and 76 percent of them received public assistance, compared to 44 percent of women who were able to access abortion.
These findings match up to the facts as to why women seek abortions. It's not often because they don't want to have kids; 60 percent of women who have abortions are raising children; of those turned away, 29 percent cited their need to focus on their other kids as the reason they were seeking an abortion. Once again, it's often economics: "Women typically cite multiple interrelated reasons for seeking an abortion, but the most common theme that arose in the Turnaway Study was not feeling financially prepared (40 percent), meaning that they had general financial concerns, were unemployed or underemployed, were uninsured or could not get welfare, or did not want government assistance."
Another reason why it's so essential for progressives to add reproductive access to our anti-poverty agenda is that public policy is pushing hard in the wrong direction, making abortions more costly and more complicated to find. Along with the publicized attack on Planned Parenthood, many states are making it harder for clinics that serve low-income women to stay open, such that abortion seekers stuck in those areas now face potentially high travel costs. In addition, restrictions on both public (Medicaid) and private insurance translate into significant out-of-pocket expenses. More than half of the women in the Turnaway Study (56 percent) who got abortions spent more than a third of their monthly income on the procedure and for travel.
As I was working on this piece, I happened to read an article about the restrictive Texas abortion case to be heard this week in the Supreme Court. The article told the story of an administrative assistant from Texas who, because of the state's aggressive attack on abortion access, had to take out a payday loan to fly to California to be able to schedule an abortion. She noted, "I took out a payday loan, which put me in debt for a little bit. But I think about women in the Panhandle or the [Rio Grande] Valley. Can they get on a plane, fly 1,500 miles away, and get an abortion? No."
In other words, this is not some hypothetical problem. It's real, and it's happening every day, which is why the "Two Sides" report concludes the following:
Anyone who wishes to advance the economic security of women and their families will not be able to do so effectively without integrating access to reproductive health care into a proactive policy agenda to achieve economic equality for women.
I think that's right. That means pushing back on state and federal laws limiting access and increasing costs, including insurance restrictions, like the Hyde Amendment. It means protecting the advances we've made under health reform regarding contraceptive coverage. It means fully funding and supporting family planning initiatives through Title X, including Planned Parenthood.
For low-income women to be able to take control of their economic lives, they must be able to access affordable, comprehensive reproductive health, including contraception and abortion. An anti-poverty agenda that fails to recognize that reality is woefully incomplete.
Keep ReadingShow Less
Sanders: When I'm President, Wall Street Foxes Won't Guard Fed Henhouse
'Unfortunately, an institution that was created to serve all Americans has been hijacked by the very bankers it regulates.'
Dec 23, 2015
Despite seven years of bank bailouts and alleged financial reform, "Wall Street is still out of control," presidential candidate Bernie Sanders writes in a New York Times op-ed on Wednesday.
Sanders blames the Federal Reserve, the U.S. central banking system. The Fed oversees financial institutions and uses monetary policy to maintain price stability and full employment.
"Unfortunately," the Vermont senator says in the scathing op-ed, "an institution created to serve all Americans has been hijacked by the very bankers it regulates."
Sanders says the Fed's recent decision to raise a key interest rate by 0.25 percent is merely "the latest example of the rigged economic system."
Echoing the arguments of progressive economists, Sanders says the Fed's main reason for raising the interest rate--to keep inflation under control--is grounded in a false premise. "Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner," he wrote. "They have been dead wrong each time."
Sanders states, "[r]aising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages."
But who cares, Sanders points out, when the "chief executives of some of the largest banks in America are allowed to serve on [the Fed's] boards."
Noting that next year, four of the 12 regional Federal Reserve Banks presidents will be former executives from one firm--Goldman Sachs--Sanders declares: "If I were elected president, the foxes would no longer guard the henhouse."
Not only would he "fundamentally restructure the Fed's governance system to eliminate conflicts of interest," Sanders calls for the Fed to:
- "prohibit commercial banks from gambling with the bank deposits of the American people";
- "stop providing incentives for banks to keep money out of the economy"; and
- Force big banks to "commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners."
What's more, he writes, "We also need transparency."
"The sad reality is that the Federal Reserve doesn't regulate Wall Street; Wall Street regulates the Fed," Sanders concludes. "It's time to make banking work for the productive economy and for all Americans, not just a handful of wealthy speculators. And it begins by making the Federal Reserve a more democratic institution that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street."
Keep ReadingShow Less
Most Popular