Fed Leaders Can Help Improve Health Outcomes Through Job Market

(Bloomberg) -- Federal Reserve leaders can play a part in improving medical outcomes for Americans through their work on strengthening the labor market, Boston Federal Reserve President Eric Rosengren said.  

“There are very concrete ways we can do that,” Rosengren said Thursday at the conclusion of a panel discussion with counterparts Neel Kashkari of Minneapolis and Robert Kaplan of Dallas. They were speaking in the eighth installment of the Fed’s Racism and the Economy virtual series Thursday, this one focused on health. 

Having more higher-quality, better-paying jobs that come with healthcare benefits “is tied to full employment, because you’re much more likely to get a good benefit package when labor markets are tight,” Rosengren said. 

Together with stable prices, employment is one of the Fed’s two mandates handed down by Congress. U.S. hiring slowed abruptly in August with the smallest jobs gain in seven months, complicating a potential decision by the Fed to begin scaling back monetary support by year end, data showed last week. 

Fed officials, including Chair Jerome Powell, have emphasized the importance of the employment reports as a guiding metric for the timing of when to begin reducing the pace of its $120 billion monthly asset-purchase program. 

Last week’s jobs report showed Black Americans saw a sizable drop in unemployment in July, but the decrease came as workers left the labor force, an indication that the jobs recovery remains uneven. Overall, the unemployment gap between Whites and Blacks narrowed, but rates for both Blacks and Hispanics remain above the national rate, which was 5.4% in July.

Among the panelists was William Frist, a former senator from Tennessee who is an adjunct professor of cardiac surgery at Vanderbilt University. He said food and agricultural-subsidy policies as well as accessibility issues made it more difficult for lower-income people to obtain healthy, affordable produce, resulting in poorer-quality diets and worse health outcomes. 

“Poor health is often the result of an aggregation of challenges that are worsened by structural racism,” Rosengren said.

Kaplan called the need to address race issues in the health system “fundamental” for the Fed. 

Gross domestic product “is made up of growth in the workforce and growth in productivity, and you need a healthy workforce that’s able to go to work,” Kaplan said. “We’re living through that every day right now. And we are suffering from decelerating workforce growth in the United States.” 

Just after the event ended, Kaplan and Rosengren issued near-identical statements saying they would sell their individual stock holdings by Sept. 30 and invest the proceeds in diversified index funds or hold them in cash. Their decisions came after their 2021 financial disclosure documents showed investments in a variety of stocks and other financial instruments. 

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