In the financial world, activism usually means buying up a company’s stock to effect change at the board level. For lawyer-turned-activist Ady Barkan, 32, director of Fed Up: The National Campaign for a Strong Economy, the tool of choice is grassroots action, and the board in question is the Federal Open Market Committee.
A coalition of community activist groups and labor unions, Fed Up contends that hiking interest rates is a bad idea because it will depress job growth and wages. The group wants the Federal Reserve Board to adopt policies that favor American workers.
After last month’s meeting of the Fed’s policymaking body, Yale Law School graduate Barkan and his colleagues felt somewhat vindicated. “The benefits of true full employment are too valuable to sacrifice for the sake of ideology,” Fed Up said in a statement following the FOMC’s September 21 announcement that it would hold rates steady at a target range of 0.25 to 0.5 percent. Chair Janet Yellen explained the decision by saying the economy had “more room to run” and could still bring more people back into the workforce, but in a rare move three FOMC members dissented, calling for rate hikes now.
With the jobless rate at 4.9 percent, full employment doesn’t appear that far off for the U.S. population as a whole. For some minority communities, though, it’s as if the 2008–’09 financial crisis never subsided. In July unemployment among blacks and Hispanics stood at 8.1 percent and 5.6 percent, respectively.
What would help to keep labor issues front and center at the Fed? More diversity, says Fed Up, which has enjoyed financial backing from Facebook co-founder Dustin Moskovitz and his wife, Cari Tuna, a former Wall Street Journal reporter, since it launched in 2014. The Fed’s ranks are dominated by white men with a background in economics. A wider range of viewpoints would make it more sensitive to demographic income disparities, the group argues.
Members of Fed Up have pointed out that not once in its 102-year history has the central bank had a black or Hispanic chair. The Fed didn’t appoint a woman to that post until 2014, when Yellen took the helm.
Fed Up has gained access to the FOMC: In August committee members, including vice chair Stanley Fischer and Federal Reserve Bank of New York president William Dudley, accepted the group’s invitation to chat on a webinar hosted from Jackson Hole, Wyoming, during the Federal Reserve Bank of Kansas City’s annual symposium in the Rocky Mountains ski resort town. Members have acknowledged the employment gap among minorities, though some policymakers think keeping rates lower for longer would be counterproductive.
At a September 6 press event in Reno, Nevada, John Williams, president of the Federal Reserve Bank of San Francisco, argued against an economy too untethered by interest rates. “One thing we do know is minorities are harmed a lot in recessions,” Williams said. “Their unemployment rates skyrocket.”
After Federal Reserve Bank of Atlanta president Dennis Lockhart announced last month that he would be stepping down as of February 2017, Fed Up called for the U.S. central bank to be more transparent in its recruiting of top brass, saying that the search committee should publish its short lists.
Not everyone is convinced that’s a good plan. For his part, Lockhart has hesitated to endorse such a selection process, which he’s compared to an election. Others have suggested that getting people to rally behind a given candidate for the Fed presidency would effectively be campaigning to engineer monetary policy, something generally considered unwise.
“Better wages for us comes out of their corporate profits — that’s part of the reason why, when we demand jobs, they cry inflation,” Fed Up says in one of its go-to public presentations. Policymakers might disagree with that view, but the group’s plea for the Fed to act in the collective interest, so to speak, isn’t so easily dismissed.
