CPD IN THE NEWS

Minneapolis City Pages - March 6, 2015, by Ben Johnson - A new study reaffirms a refrain equality advocates have become quite fond of in this state: Minnesota is a great place to live -- for white people.

The Center for Popular Democracy and the Economic Policy Institute released a study yesterday showing the statewide unemployment rate for black people is 11.7 percent, compared to 3.2 percent for white people.

Black Minnesotans' unemployment rate is 3.7 times higher than white Minnesotans'. The study analyzed all 50 states and the District of Columbia, and the only places with a larger gap were Wisconsin (4.6 times higher) and D.C. (5.6 times higher).

Minneapolis unemployment rates are lower than statewide, but the racial gap (3.9x) is even higher.

When these figures came out yesterday protesters from across the country lobbied the Federal Reserve to keep its interest rates low.

When interest rates are low it's easier for businesses to borrow money, and in theory, easier access to money means businesses can hire -- and pay -- more people. On the flip side, if interest rates are kept too low for too long inflation becomes a concern.

"Unemployment is slowly, slowly heading in the right direction, but raising interest rates at this point would really set minorities back," said Becky Dernbach with Neighborhoods Organizing for Change, which held a rally yesterday at its headquarters. "We think the Fed needs to pay special consideration to how the recovery has not hit certain communities at all."

NOC and its allies are supportive of Minneapolis Fed President Narayana Kocherlakota, who favors keeping interest rates low, but he's stepping down in a year. Protesters made it clear yesterday they want a say in who takes his place.

"On a fundamental level, we need to have a voice in the process," said Dernbach.

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My path as an activist had been fairly conventional. After law school, I represented low-wage Latino workers in Queens who had been victims of wage theft, and I helped write New York City’s groundbreaking paid sick days law. Later, I created a campaign called Fed Up, urging the Federal Reserve to use its economic tools to focus on raising wages and creating jobs, not just minimizing inflation. I didn’t think of myself as a direct beneficiary of these policies: I was an upper-middle class white man with elite degrees, a bright future and financial security. I could focus on empowering others.

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A sex assault survivor who confronted Sen. Jeff Flake inside an elevator Friday — after announcing he would vote in favor of Supreme Court nominee Brett Kavanaugh — said that the likely pivotal moment “was all kind of a blur.”

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US News & World Report - November 13, 2014, by Katherine Peralta - Building on momentum from earlier this year, a group of policy advocates, economists and community organizations is calling for more transparency at the Federal Reserve, imploring that the Fed consider the plight of many who haven’t enjoyed the kind of recovery that recent positive economic data suggest.

The push for more access to the Fed is gaining momentum among the public and in Congress, though revamping a decades-old central banking system that’s helped stabilize the economy through multiple crises is not without controversy.

As two of the Fed’s most vocal critics of its current monetary policy near their retirement at the beginning of next year, a coalition called “Fed Up” is asking that the public have more say in the process of appointing their replacements and future Fed leaders. Members sent letters outlining their concerns to the Fed and will meet Friday with Fed Chair Janet Yellen in the District of Columbia.

As it progresses toward its dual objective of price stability and full employment, the Fed has said it will eventually raise short-term interest rates, which have been kept near zero since 2008 to stimulate growth. The coalition says since the economy isn’t yet strong enough to stand on its own, the Fed should maintain its easy-money policies, which make lending cheap for borrowers and businesses but don’t do much to boost those on fixed incomes like retirees.

“We're going to talk about our request that the Fed create more transparency in a democratic process for appointments and that it adopt more pro-jobs, pro-wages policies, more expansionary policies, so as to get us to full employment,” says Ady Barkan, staff attorney at the left-leaning Center for Popular Democracy, which is part of the coalition. “They need to target higher wage growth instead of stepping on the brakes the moment that wages start to rise, which is what the hawks want to do."

The term "hawk" refers to those who see the labor market as strong enough to merit a faster interest rate hike to keep inflation in check and pertains to outgoing regional Fed bank presidents Richard Fisher of Dallas and Charles Plosser of Philadelphia. Doves, like Yellen, believe that there is still enough slack in the labor market to warrant maintaining as low interest rates as possible.

Each of the 12 regional Federal Reserve banks selects its own president through a process that’s criticized as rather opaque. Those presidents rotate on five of the 12 seats on the Federal Open Market Committee, the group at the Fed that sets interest rates. The remaining seven members of the committee, including Yellen, are appointed by the president and confirmed by the Senate.

The 12 regional presidents report back to the rest of the Fed about economic trends from their respective districts on a regular basis – a compilation of data amalgamated in a “Beige Book” published eight times a year and used to assess the economy’s health.

A spokeswoman for the Philadelphia Fed said it has retained the services of executive search firm Korn Ferry to replace Plosser and “will consider a diverse group of candidates from inside and outside the Federal Reserve system.” A Dallas Fed representative said the bank’s board of directors is meeting today to discuss the presidential search process to replace Fisher.

Stronger economic data this year have prompted many to wonder whether the Fed should start raising interest rates sooner rather than later. The U.S. economy’s reached the lowest jobless rate in six years and has enjoyed the strongest stretch of job gains since 1999.

But the coalition argues that despite what the national numbers may say about the recovery, they don’t necessarily speak to the experience of a lot of people who still feel the recession in their communities.

Even though the Dallas metropolitan area had one of the strongest monthly job gains in the country in September and has a jobless rate of 5 percent, well below the national rate of 5.8 percent, Connie Paredes, a volunteer with the Texas Organizing Project who will meet with Yellen Friday, says the economy in Dallas still feels “not that great.”

“There are a lot of statistics out there about the unemployment rate and how things have gotten better. It doesn't really reflect the fact that there is a lot of underemployment,” Paredes says. “There are a lot of college graduates who aren't able to find jobs. There are a lot of professionals who have to take on extra jobs in order to make ends meet.”

But attempting to change the appointment system might not be the solution to get more “everyday” voices before the Fed. Guy Lebas, chief fixed income strategist at Janney Capital Markets, says it’s a “solution in search of a problem.”

“There’s very little wrong from an economic perspective with how the Fed selection process works now, and a majority of the members who have input into monetary policy are democratically selected,” Lebas says.

Yellen herself has said it’s important to maintain a diverse group of viewpoints within the Fed.

“I believe decisions by the Federal Reserve Board and the Federal Open Market Committee are better because of the range of views and perspectives brought to the table by my fellow policymakers, and I have encouraged this approach to decision-making at all levels and throughout the Fed System,” she said in an Oct. 30 speech in Washington.

There’s also a push in Congress for changes at the Fed. The new GOP leadership could introduce a new version of former congressman and presidential candidate Ron Paul’s Audit the Fed bill, which, as its name implies, calls for a full audit of the Fed – including internal discussions on monetary policy – by the Government Accountability Office. Critics worry if passed, the bill would allow Congress to interfere with the Fed’s decision-making.

And a level of independence from the public may not be such a bad thing, says Gary Burtless, a senior fellow at the Brookings Institution, citing the Fed’s handling of the economic crisis – which included bailing out large financial institutions and beginning unprecedented and controversial economic stimulus programs.

“I realize many things the Fed did, although most economists think were entirely justified, are still immensely unpopular among the public, but so what?” Burtless says. “We do have this layer of insulation that I think we should protect. The events of 2007 through 2009 confirm the absolute importance of having that level of insulation so that members of the Federal Reserve Board don’t worry that their deliberations, their decisions about monetary policy, are going to be immediately undone by populist and perhaps poorly understood objections from the general public.”

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