No matter what we look like, where we live, or what we do for a living, most of us believe that the people who make decisions about our economic lives should be acting in our best interests.
But I’ve spent a lot of my life watching a few elites get richer while my neighbors and I got poorer.
I’ve seen the economy collapse again and again, and when the companies where my neighbors and husband worked laid them off, those good jobs were replaced by service jobs that don’t offer security or a living wage.
I’ve also seen how long-term unemployment hurts everyone. After my husband got laid off in 2008, there were no other jobs available that would pay anything close to a living wage.
For him, long-term unemployment led to serious depression, which has made him unable to work. He’s not alone: People who have been looking for work for six months or more are more than three times as likely to have depression as those with jobs.
The job situation is even worse for some. The Black unemployment rate is about twice the white unemployment rate, and has been since the government started collecting unemployment data by race, even when the United States. was at “full employment,” when everyone who can work and wants to work is supposed to be able to find a job.
Why are things this way? One big reason is the Federal Reserve (“the Fed”). The Fed has a couple of jobs: It works to keep prices stable to avoid crazy inflation like we saw in the ’70s, and to try to get the economy to full employment.
It does this with interest rates: Lower interest rates encourage everyone to borrow and spend money, and companies to hire more people to meet the increase in demand. This tends to push wages up because workers have more power to negotiate.
To “slow down” the economy, the Fed raises interest rates. So, more new jobs and wages stay low.
If the Fed let the economy keep expanding, we’d all benefit – and low-income, Black and Latino people could start to make some serious gains.
But instead, the Fed puts the brakes on the economy at the first sign of rising inflation.
Last year, Fed leaders in D.C. admitted that when they raised rates too quickly after the 2007 collapse, they caused the recession to continue for too many working class people.
This is important, but the Fed’s not likely to succeed in making big changes, without big changes in its leadership. That’s because most decision makers at the Fed (who are also mostly white men) come from the banking or finance sectors – even the ones that are specifically supposed to come from other areas of the economy, like manufacturing or organized labor.
And guess who makes money when interest rates are higher? The banking and finance sectors. It’s not surprising that they would favor price stability (and their sector’s profits) over creating a situation where workers have more power and wages would rise.
The good news in all of this is that right now, we have a chance to make a difference.
Recently, the president of the Boston Fed – which represents all of New England, including Maine – resigned in a stock-trading ethics scandal. This creates an opportunity to fill that position with someone who understands and cares about creating conditions where ordinary people can thrive.
Let’s remember this: The Federal Reserve System was designed by law to represent the economic interests of the broad public, not just the banking and corporate elite.
In admitting that it needs to change the way it does business, the Fed has said the right thing. But talk is cheap, as my dad used to say, so it can’t stop there. And we need to be there to make sure it doesn’t.
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