Policymakers need to keep diversity and structural racial inequalities in mind when analyzing the labor market and other measures of the economy, two Federal Reserve officials said on Tuesday.
The standard metric used for evaluating U.S. unemployment is flawed because it does not capture the experiences of different groups, and officials should be open minded about how they evaluate full employment, Minneapolis Federal Reserve Bank President Neel Kashkari said during a virtual forum on race and economic mobility.
“It’s clear that the headline unemployment is deeply flawed as a measure. It does not count so many people who are not in the workforce who may want a job,” said Kashkari.
Fed officials have become more vocal about the ways different groups are faring in the economy and the focus on racial inequities is here to stay, even if the U.S. central bank is not able to target specific groups in its policies, said Atlanta Federal Reserve Bank president Raphael Bostic.
“I think what you’re looking at is a new Fed on some level,” said Bostic. “We’re going to make sure our institutions don’t sort of slink away as things move forward.”
The two Fed officials have been among the most vocal policymakers calling attention to racism and inequality in recent months. Bostic, the Fed’s lone Black bank president, penned a letter earlier this month calling for an end to racism and laying out the ways the Fed could help to reduce racial inequalities. Kashkari leads the Fed district in the city where George Floyd died in police custody, setting off a wave of protests across the country and kicking off a national conversation about racism.
Fed Chair Jerome Powell has also commented frequently about how Black and Hispanic workers were among the last to feel the benefits of the tight labor market, and were then hit disproportionately by the job losses caused by the pandemic.