Rep. Ayanna Pressley On How The Fed Can Fight Racial Inequality

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, one of the really sort of tragic or frustrating aspects of this current crisis that I think about a lot is how good, arguably, the economic situation was for the labor market right on the eve of the crisis.

Multi-decade lows in unemployment rate, wages had just started to pick up. Basically, right before this hit, a lot of things that people had wanted to see for a long time started to seem like they were materializing.

Tracy Alloway (0:50)

Yeah, by a lot of measures, I guess we were at, well, nearly at full employment, but I'm not sure it's tragic, maybe ironic, I guess. You wouldn't have wanted to go into the crisis with the economy already fragile, right?

Joe Weisenthal (1:06)

True, that's well put. But I do think there was just a lot of frustration at how slow it was. So we had the crisis in 2008, 2009, and then it just took years and years and years to get back to something that economists would have called full employment.

Tracy Alloway (1:23)

Yeah, I think that's right. And I think you pointed out before that the danger with sudden increases in mass unemployment is that it does really take a long time to normalize that. It takes a long time to train people for new jobs. And meanwhile, the economy loses that expertise, loses that additional output, and it's just a bad situation.

Joe Weisenthal (1:46)

Right, I think there is this view that if, as we embark on this recovery, if it takes similarly long to return to something resembling normal, that'd be unacceptable. I think that's why there's probably a lot of rethinking about the role of monetary policy and the role of fiscal policy in accelerating this recession because the length of time of recovery last time was pretty unacceptable, not good.

Tracy Alloway (2:11)

Yeah, yeah, it's that. And to me, it's also the nature of the current crisis. This is basically in some ways a government mandated economic crisis.

People need to stay home in order to stop the spread of the coronavirus. You don't really have a choice when it comes to shutting down your business. And so I think people are looking to the government more than they might be otherwise and asking for help with that.

Joe Weisenthal (2:35)

Right.

Another aspect, another sort of disappointing factor is that prior to the crisis, for a long time, there's been this big gap between black and white unemployment rates. You look at the headline unemployment rate. The unemployment rate for whites is below that. The unemployment rate for black Americans has been significantly above that. That was starting to compress prior to the crisis. And then once again, it looks like the status quo is that we just suffered another major setback on that gap.

Tracy Alloway (3:06)

Yeah, I've seen a number of statistics on this, not only for racial inequality, but it's showing up in men versus women as well. The female unemployment rate is a lot higher right now than the male unemployment rate. So it feels like the crisis is accelerating a lot of the inequality trends that we saw in previous years.

Joe Weisenthal (3:25)

Right, so there are a lot of different issues for the Federal Reserve and other policy makers to think about as they embark on accelerating this recovery. I want to bring in our guest. Very excited to talk to her. We're going to be speaking with Congresswoman Ayanna Pressley.

She represents the seventh district in Massachusetts, and she's among other things, the recent co-author of a op-ed at CNBC about the need for the Fed to focus specifically and think more about the black unemployment rate, talking about how monetary policy in the past has contributed to inequality along race. And so we think of monetary policy as being this sort of neutral thing, or we think of monetary policy as just affecting the economy in general and the need for other policies to address race-specific issues. But perhaps there is more that the Fed could do. So without further ado, I want to bring in Congresswoman Pressley. Thank you very much for joining us.

Ayanna Pressley (4:25)

Good to be with you. Thank you for your interest.

Joe Weisenthal (4:27)

Absolutely. So to start off, in your view, racial inequality in this country has numerous causes, but when it comes to monetary policy and the Federal Reserve, how in your view has monetary policy contributed to the gap between the success of whites in the labor market and the success of blacks and other non-white minorities?