Powell Emphasizes Inequality in Pandemic-Fueled Job Losses
(Bloomberg) -- Federal Reserve Chair Jerome Powell expressed concern about the disproportionate loss of jobs among women, black and Latino workers as a result of the coronavirus, saying that the central bank wants to return these groups to pre-crisis levels of low unemployment.
Powell was asked about economic inequality several times during his video press conference Wednesday after protests over racial inequality swept the nation. Black and Latino workers and women of all races have seen outsize job losses as closures from the pandemic hit sectors with high percentages of those workers -- such as restaurants and health care -- particularly hard.
“A lot of the lost jobs were from people who work in the service economy dealing with the public, for example, and relatively, compared to other jobs, relatively low wages,” Powell said. “Unemployment has gone up more for Hispanics, more for African-Americans, and women have borne a notable share of the burden beyond their percentage in the workforce. That’s really, really, really unfortunate.”
Powell said the last expansion, which saw the gap between white and black unemployment reach a record low of two percentage points, taught the Fed that the jobless rate can be very low without a negative impact to inflation and overall financial stability. He also emphasized that benefits for marginal workers were seen late in the last business cycle, while at the same time saying that it could take years for the labor market to recover from current shocks.
The black unemployment rate climbed to 16.8% in May even as the white jobless rate fell to 12.4%, according to a Bureau of Labor Statistics report released Friday. The Latino rate dropped to 17.6% from a record high of 18.9% in April. A majority of the black population and of all women in the U.S. are now not employed.
The Fed also released projections for the economy on Wednesday after the Federal Open Market Committee’s June meeting, forecasting that the U.S. unemployment rate would fall to 9.3% in the final three months of the year from 13.3% in May, according to median estimates.
In prepared remarks, Powell expressed zero tolerance for racism at the U.S. central bank.
“There is no place at the Federal Reserve for racism, and there should be no place for it in our society,” Powell said. “Everyone deserves the opportunity to participate fully in our society and our economy.”
Although Powell noted that inequality has been growing in the U.S. over the past decades, he stopped short of offering specific examples of ways in which monetary policy could help ameliorate it beyond fostering a strong labor market.
“We call it out as an important factor in the economy and we will use our tools to support maximum employment and take that definition to heart, but obviously that’s something that’s going to require an all-of-society, all-of-government response,” he said.
Inequality in the U.S. is deep-seated along racial lines. A black family’s net worth, a measure of wealth, was $17,150 in 2016, one-tenth that of a white family, according to Fed data. The share of savings held by the poorest 90 percent of the population fell to 23% in 2016, from 33% in 1989, the same data show.
The coronavirus has been no exception. The virus has killed black Americans at a rate more than double that of whites.
©2020 Bloomberg L.P.