Atlanta Fed president Raphael Bostic spoke during a webinar sponsored by the Center on Budget and Policy Priorities and Groundwork Collaborative on "Racial Equity and the Federal Reserve: Centering Black Workers for a Stronger Labor Market." Following his remarks, he took questions from Washington Post reporter Heather Long. Watch the video (registration required) or read the transcript.


Racial Equity and the Federal Reserve: Centering Black Workers for a Stronger Labor Market
Center on Budget and Policy Priorities and Groundwork Collaborative, July 16, 2020

Janelle Jones: During a time with plenty happening in the world, we're grateful to have you all participating in this conversation with us today. Groundwork is so excited to be partnering with our friends at the Center on Budget and Policy Priorities to talk about the Federal Reserve, racial equity, and how centering Black workers can create a stronger labor market for all of us. Groundwork Collaborative's mission is to advance a progressive, coherent worldview about the economy that centers real people, a worldview that judges the success of the economy by how typical folks are doing. Now is an even more important time to do that work.

While COVID-19 sparked the crisis, the underlying structural flaws of our economy have made this much, much worse. Chief among those structural flaws is deep and systemic racism. For most of the time we have measured Black unemployment, it has been roughly twice the overall rate. We have probably all heard the saying that when America catches a cold, Black folks get the flu. And our current economic and health crises are no different.

The recent Jobs Day data show the Black unemployment above 15 percent. That is more than one in seven Black workers unemployed. We have recent experience of an economy that recovered while Black workers were still in a crisis, and we don't have to make that choice. Jared Bernstein and I have been talking for weeks about a policy proposal that mandates the Federal Reserve to target Black unemployment as opposed to the overall unemployment rate. While I, obviously, think this is a terrific idea and a great place to start as we consider big, bold policy solutions to meet the current moment, what else can we be doing to ensure Black workers are not resigned to permanently slack labor markets?

We will hear today from Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, for his thoughts. He will then be joined in conversation with Heather Long from the Washington Post. After that, Jared Bernstein from the Center on Budget and Policy Priorities, Valerie Wilson of Economic Policy Institute, and I will dive into prioritizing an impactful agenda for Black workers, how this leads to a more inclusive economy for everyone, and why this particular moment, as a public health crisis rages on, is time for this conversation.

Folks should feel free to drop questions in the Q&A box. We will have time for Q&A at the end. This will definitely be recorded for later viewing. We're going to put bios and Twitter handles in the chat box. We have as much time as possible for this phenomenal discussion. And now, I will turn it over to Jared Bernstein.

Jared Bernstein: Thank you so much, Janelle. It is my great honor to introduce Dr. Raphael Bostic, who became the 15th president of the Federal Reserve Bank of Atlanta on June 5, 2017. Now, those who knew President Bostic, like myself, before that appointment were very excited to see it occur. At this point, I can say that those who did not know him now are beginning to understand what we were so excited about. I mostly got to know President Bostic, or Raphael as he was then known, when we were both on the housing taskforce back in the President Obama years.

Now, if you've ever been in a meeting with a bunch of experts on housing finance, you will know that things get incredibly confusing incredibly quickly, but what I remember most vividly was that, whenever we found ourselves down this well known, housing finance deep rabbit hole, we would turn to Raphael, who would, in a sentence or two, clarify what we were actually talking about, and get us solidly back on track, which is just to say that I've long appreciated President Bostic's clarity, his insights, his ethical and his racial insights as well. And I thank him for sharing his precious time with us today. Please join me in welcoming President Raphael Bostic.

Raphael Bostic: Well, thank you, Jared. It's really good to be here. Thank you for the kind introduction. Those days, back in the 2009, 2010 period, there was some stress there. There was tension. I was really glad to be able to work with you, and I'm hopeful that we can continue to work together, to try to make things better for all Americans. I also wanted to just start by saying thank you for the introduction. It's really an important topic that we're wrestling with today, and I've been struck by how much energy there's been around this issue in the last couple weeks, more than I've ever seen in my career. I wanted to just emphasize that I'm really grateful that we're having this conversation, that we're having more conversations like this around the country.

One thing I'll say is that I've really been struck by how so many people are willing to really engage in this in a way that I've not seen. And are really interested in trying to make real progress moving forward. I wanted to just, before I go too far in this, just to say that what I'm going to say today, they're my opinions only. That I don't reflect the views of anybody at the Fed, not the FOMC, not my colleagues across the Federal Reserve System. This is really just my view.

That said, I will say that my colleagues and I have had lots of conversations about issues like this one, and it is something that is of paramount concern to all of us. We are really interested and engaging to make progress.

So, what I thought I would do, because I know we only have an hour, so I want to get to this pretty quickly, is just to say five points. I'll try to make five points to start, and then I'll look forward to the conversation with Heather, going more deeply into some of these issues.

So, the first point, and it's one that I try to make pretty clearly in the essay that I wrote, is that systemic racism is clearly costly, and it's costly from a moral perspective, certainly, but it's also quite costly from an economic perspective. When I think about this, I really think about taking advantage of all the potential that every American has, and if we don't do that, then we are less than we could be in terms of economic innovation and economic performance.

And systemic racism is really, it institutionalizes the idea that we're not going to capitalize maximally on every worker, and we're not going to use their talents and leverage them to be better. And that's something that is a problem. In thinking about this, one thing that I've been wrestling with is how do you get everyone to really, deeply understand the costs that structural racism has imposed on us, and I got to thinking that, much like, again, the area of homelessness, there are these numbers that get put out, as to how much it costs for every person that's homeless for society. It would be useful to have a number that says, "This is the quantification of structural or systemic racism." I haven't done that, but I do think that there may be value in trying to tee that up. Because when we see that real tangible cost of exclusion and inequality, I think it becomes a focal point for all conversation, and I think it may actually create a greater impetus to change moving forward.

The second point I would say is that, for me, I really think this issue is front and center because of the Fed's maximum employment mandate. I actually think this issue is directly relevant for all the things that we do, in the sense that we don't have a formal measure of maximum employment, and that's one number that you look for.

And so I really think about this as trying to maximize the number of people that are employed. And just as I was talking about with the first point, structural racism does not lead to that kind of maximization, and so we wind up being worse off. I actually have to say, I've been doing my own soul searching around what a statistic or sufficient statistic might look like. I've been actually thinking about this long before I got into this job.

If you think about how economics is reported, on the nightly news or on the business channels or even on the radio, the numbers that they point are the stock market numbers. How does the Dow do, how does the S&P do, and that's a measure that doesn't actually touch every American. Far from that, I think fewer than half of all Americans even have a position in the stock market.

And so, our projection of what matters and how the economy is operating is really quite more narrow than what is real. As I've gone around the country, one thing that's been clear is that there's a whole lot that's going on in terms of people's experiences, both in terms of business creation and consumption, that doesn't have a lot to do with the stock market.

And so, really, the question is what should we be thinking about. I think it's a really fair conversation to have about what metrics should there be. I know from a Federal Reserve perspective, one concern is really that we may not be able to have such direct control on a targeted impact. Our monetary policy tools are really broad, blunt instruments. It takes a broad brush on the economy, trying to target a particular population and have accountability for that is something that I haven't really gotten my head around, like how should we think about that. But I think it's something I'm grappling with and will continue to grapple with to find a good landing place on this. So, I'm really happy to be here. I'm looking forward to the panel after my remarks to try to learn some things on that as well.

Third, I think the Federal Reserve can have impacts, and those impacts can really operate through at least four channels. First, obviously, there's monetary policy and how we implement that. It has the broadest impact on the economy. But as I was saying, it's the least targeted, and the idea here is really to use monetary policy to create a foundation of an economic environment where we can have as many employers as possible growing and growing robustly, but also where we allow for innovation and capital to flow in ways that allow everyone to be fully included in the economy.

So, we want long growth, we want sustainable growth, and we want growth that gives all people opportunities to invest, and the best way to do that is to make sure that our economy grows long and stably and sustainably. And that actually touches African Americans in an important way. We know through our history with business cycles that African Americans are often the last to enjoy the benefits of growth, and so we need to make sure that we don't have a lot of ups and downs, and try to grow in as sustainable a way as possible.

A second channel that is relevant for the Fed is to leverage [inaudible]. Not just the work itself and the things that we do in terms of learning about what works in terms of effective community and economic development, but really emphasizing outreach and outreach to practitioners, so that knowledge then gets deployed on the ground.

And we have, at my bank, actually been involved in many, many efforts in this space. We have a Center on Workforce and Economic Opportunity that's focusing on job training and skills building, so that we make sure that all workers, including African Americans, have good jobs that pay real, solid wages. We have been doing work historically on the mismatch, the spatial mismatch between workers and the location of jobs, and we've been a leader in that.

We've taken out a lead role in terms of affordable housing and the difficulties and pain that's caused by the way that we evict renters from many properties across the country. We've issued reports just recently about the challenges of childcare and how that becomes a major barrier to African American workers and others who are trying to find ways to work sustainably and consistently in today's labor force.

And then we're even doing things on heirs property, which is the problem of when an African American landowner dies, often the heirs aren't as coordinated or are able to be exploited, so that land gets sold. We're trying to facilitate and promote as much as we can the retention of assets that provide wealth, that then can provide a foundation for growth. So, that's the second avenue.

A third avenue, which I think of in terms of the essay that I did, is when we're at the Federal Reserve, one thing I'd often say in my talks is when we invite people to come, they usually show up. That gives us an opportunity to have a platform to talk about these issues, and to focus the attention of policy makers, of business leaders, of researchers, and of community members about the importance of this issue. And not just that it's important, but that there are actions that need to be taken at all levels to move forward.

And then the fourth area is really to promote practices to advance racial equity in government and business and in commerce. We're doing this internally to the Federal Reserve Bank of Atlanta. We're reviewing all of our policies to make sure that we are doing things in ways that promote the racial equity and are not creating barriers to that equity. And we are really pledged and are committed, as much as we can, to learn the lessons that are important, and then project that learning out, so that as many businesses, as many community members and policy makers can be doing those things as well. When we think about a structural challenge, it's going to require actions at an institutional level and support from a wide range of participants in the world.

All right, so the fourth and fifth points are points I just wanted to put forward, just to sort of level set us to make sure that we're realistic in terms of where we are. The fourth point is that I think it's really important to keep in mind that the Fed can't do everything. The Fed is not an institution that has the authority to solve every problem. We don't have jurisdiction in a lot of areas.

I have to say, I've been struck as we've gone through the various time that I've been at the bank as to how many times people look to the Fed and talk about us as if we have the authority and ability to solve every problem by ourselves. That's not true. I think it's important that we be mindful of the authorities that we have, the tools that we have, and the ability to deploy them in very particular ways.

Those are important. I do think, here, in this case, this is a big issue. It's been an issue for a long time. It's an all-hands situation. And we're going to need every hand, every one of those hands, to participate if we want to make progress in creating better conditions for Black workers and all workers who haven't been attached to the labor force, in a way. And the fiscal side is going to be critical. We're definitely going to need support from those in fiscal positions across the country.

And then the fifth and final point I'll make, and then, I guess I'm going to call on Heather to have the conversation, is that the current disparities that we see today, they did not emerge in just the last year, or the past 10 years. These are things that have emerged over an extended period of time, in many instances generations, and what we have is a situation where the things that happened many generations ago have locked in trajectories that we are facing now, and those trajectories are the drivers of those disparities. And so, while I understand that there are many things that we're going to do today, I think an exclusive focus on just the short run is not going to likely create as much change as we'd all like to see.

I do want to try to place our solutions, not just in short-run things, but also targeting some of the institutions and thinking more creatively about how those changes and those institutions might evolve so that African American workers and workers from all walks of life can participate in the economy and be fully centered, so that they become a focal point of prosperity.

Let me stop there. Heather, good to have you with me. Good to see you again.

Heather Long: You, too. I'm Heather Long, economics correspondent at the Washington Post, where I help to cover the Fed. President Bostic just talked a lot about soul searching that the nation's doing, the Fed is doing, and he, himself, is doing, and looking forward to going a little deeper here in the next few minutes.

So, let's kick it off. There is a real serious proposal by Jared Bernstein and Janelle Jones and other economists to have the Fed target the Black unemployment rate. Meaning, as you noted in your remarks, the Black unemployment rate is often one of the last to come down after a recession. Black workers are often hit hardest, lose more jobs, and then it takes them a longer time to recover. And so, the idea is if the Fed is truly targeting full employment, or maximum employment, as you're supposed to, why shouldn't you be looking explicitly at that Black unemployment rate?

Bostic: So, yeah, as I said in my remarks, I'm open to a multitude of measures that characterize the experience of Americans in our economy. When I think about the Sixth District [region covered by the Atlanta Fed], it's an incredibly diverse district. We have large cities, but we have wide swaths of rural towns and communities, and they're experiencing very different Americas.

And so, I think it's fully legitimate to be thinking about, well, how do we characterize people's experience in this country, and in this economy, to really understand whether the economy is really working, and have those varied experiences contribute to our understanding of what working really means. So, I'm actually very open to having that conversation.

I think targeting specific rates or gaps or reductions in gaps, that becomes trickier business, namely because we often don't have the policy tools to drive that kind of targeted change. While I think we should definitely be considering it, I'd like to have more discussion and thought—and we're going to do it—about how we incorporate these varied experiences. Because we have a Black unemployment rate, which has historically been twice the white rate, and it's much, much worse if you think about youth. We have a Latino rate that is elevated. We have lots of diversity. Think about rural America as well.

So, I'm really open to the discussion, and this will be a lot of deliberation that we all do. But calling out a specific number is something that I'd like to think about more before landing exclusively on that.

Long: Yeah, and let me follow up and push you a little more on that. You talked in your remarks about doing this soul searching. It seems like many people at the Fed are doing some soul searching about how to think about and define full employment and maximum employment. Can you tell us where you are today? Have you actually made any decisions or made any shifts in the last few months about how you're thinking about what maximum employment means, and how you could put some numbers on that?

Bostic: You know, it's very interesting. I was in one place about four months ago, and then the virus hit and I'm in a totally different place about what I'm focusing on. What I would say is I was actually really thinking hard about, given the tremendous improvement we're seeing in African American unemployment rates leading up to the virus, about what is the trigger, or what should be the trigger, for moving and trying to normalize our policy positions?

And how should we think about accelerated employment in an environment where inflation is not a problem? And how much should we queue to longstanding economic models, or do we take the local context into consideration, and really understand what's happening today, and use that as our guide? I was really leaning much more into using our current experience as our guide.

I think right now, what has become clear is that, that rate in and of itself, is not sufficient, because of the experience through this COVID crisis has made it clear that even though people have been and got employed, they were the least securely employed. And so we need to be thinking not just about the number, but also the nature of that employment and how that plays out. And that gets to questions about the job skills, the distribution of skills in the population, the way that employers position themselves to be more resilient.

I think one of the lessons we were learning has been put in a big spot right now, is that business models of resilience have not contemplated the types of disruptions that we might be seeing. We saw that through the banking sector in the Great Recession, and we're seeing this now everywhere today. And so we need to think about that.

I also think that we should be thoughtful about where we think about insurance, and providing extra support. The small business sector, which is a sector that is much more heavily important for minority communities, those are some of the least resilient sectors because of the nature of their businesses, their scale. And so, there's a lot that we're trying to unpack, and I'm trying to unpack, in terms of how do we think about participation as opposed to resilience, and how do they connect to each other, and what things might we do to really promote both at the same time. There needs to be sort of a dual track discussion.

Long: Yeah, that's really interesting. I know there's never one statistic or one metric, but are there certain data points you're looking at more now that you weren't looking at before for those questions of resilience?

Bostic: Well, there is a lot that's going on. I wouldn't say there are a couple of things or one or two things. What I would say is I'm really interested in the levels or the types of support that businesses have to stay alive when they're stressed. And to what extent do they have banking relationships. To what extent do they have communities that they can fall back on, who are willing to offer their extra support, sort of a buy local strategy. To what extent do they have relationships with their local government, so they can tap into some of the CARES Act money that might be engaged?

And what we're seeing is tremendous variation in that. Another measure is to what extent do businesses have connections to chambers of commerce, which we know have been important channels by which businesses have gotten connections to support and relief. So, there's a whole infrastructure around employment and around running businesses that has been kind of under the radar screen, and our outreach and engagement has really revealed a lot of the differential strengths of those things. And that has a direct connection back to the ability to keep people employed. Those businesses and those places that are less connected are those that are going to have to let their people go sooner. That's going to have a very adverse effect on Black communities across the country.

Long: Yeah. You wrote this really powerful essay. It's been widely praised, basically, a month ago, partly driving this conversation today. I guess, in your mind, what's the most important action the Fed can take to try to create a more equal playing field for Black Americans and minority Americans going forward?

Bostic: You know, I always hate those, "What's the one best..." questions. Because this is such a multidimensional issue. I'm going to cheat and I'm going to say two. One, is really just to keep talking about this and make sure that people don't have an opportunity to forget that this is an important issue that is holding back our country, and that this is an imperative that we all need to engage with and move forward.

In the essay, one of the reasons why I, in the very beginning, talked about the long history of our structural challenges in terms of Jim Crow and the Three-Fifths Compromise, and sanctioned intimidation, was because I don't think that people really have fully appreciated that the conditions we have today are a function of our past, and that if we don't acknowledge that past, it's hard for us to think realistically and honestly about what a reasonable solution might look like. And that's important, and I think that's something we need to continue to talk about.

A second thing I would say is really to try as much as possible to lift up things that work. Because there is a lot of innovation that's being tried, there are a lot of ideas that I think are creative and interesting, and we need to get those things deployed, and if they are working, get them to scale. That's something we as an institution can do very much.

Long: Yeah, as you've spoken today, I've been surprised you haven't talked more about bank regulation. There's so much focus on the Fed's monetary actions and research, but there's this huge component of supervising banks, and as you know very well from your work over the years, redlining that you've spoken about, and we've seen reports in the last few weeks of Black Americans going into banks where they have a bank account, and being treated very differently than white customers. Do you think there's more the Fed should be doing around bank regulation to create a more equal playing field?

Bostic: Well, as long as we have the problem, there's still more to do. So, I actually think we're not at a place where we can just put our hands across our chest and go down on the back deck and have a beer. There's still real work to be done here. And one of the things that I think has been useful in this crisis is that it's caused a lot of people to have a different understanding about what it means to be a minority in this country, and what signals are actually slights, and what things that they might think are benign, are actually more threats or fears that are imposed.

And I know in our bank, we've had lots of conversations about this, and I'm talking to bankers, and I was just on a call yesterday where I said, "Look, one of the things you need to do is go talk to your customers and find out how they experience your business, and learn from that. Just listen. Because it's those things that make a difference."

I talk often about issues of check-cashing stores, which are extremely expensive, but they do things and they run their business in a very different way than banks do. They're more transparent. All the prices are on the wall. They don't require the same sorts of scrutiny that banking institutions often do. And so, I'm talking to banks about these things every day, and I think this is an important thing for all of us to think about, because that capital is really important as a source of business creation but also a source of wealth generation. And we need to make sure that African Americans have the same access as everyone else.

One other thing I would say, the types of research and the analyses that are being done are critical. I remember back in the Boston Fed days, in the early '90s, the banks didn't believe they had a problem. They honestly thought that there weren't challenges, and that a lot of the complaints were just trumped up. The reality is that the problems were real, and I think today, we still have the same sorts of issues. They're not exactly the same in character, but they're still there in terms of how people are experiencing them, and this is something that's really important for us to continue to hammer on, and to get as much policy and practice change as possible.

Long: Yeah. Yeah. Another issue that comes up a lot with the Fed is the lack of diversity, the lack of diversity in the leadership, and the lack of diversity in the thousands of employees across the Federal Reserve System and the various regional banks. It's always a tough question to answer, but I'm wondering, do you think, given how little progress has been made, that it's time for a quota or a concrete target, so that we have a more diverse Fed staff in the future?

Bostic: So, I would tell you, I started my career out of graduate school at the Fed, at the Board in DC. That was in the '90s. I probably shouldn't call out that year, because that allows people to do math and figure out age and all that kind of stuff. But in those days, I spent a lot of time going around to colleges and universities, trying to work to increase the diversity of our staff. So, this is not a new issue, and it's not one that the Fed has really ignored. I think it's multidimensional.

For me, I think we are continuing to work on that. We work on this at every level. In my bank, we do a whole host of analyses to make sure we understand where there are disparities, and where we might make improvements. I've been contemplating making those sorts of efforts more publicly known, to try to set some best practices about how we think about that.

But I would also say that I think one of the big problems we have in this is pipeline, and the pipeline starts early, particularly when we think about economists and people who are more on the finance side. So, our bank has started an initiative to build math and finance curricula for fifth graders and eighth graders. Because by the time they meet this topic in their required courses in high school, many of them have had so many negative reinforcement experiences that they've written us off. And that's a real loss to us collectively, and I think we are going to redouble our efforts to do that.

We're working with a couple of other reserve banks to get that curriculum in place, and we're going to do all we can to make that a standard for the entire country. But we're going to continue to work on this stuff. It's really important. I do think that the more diversity that you have, the stronger your institutions are. Again, this is another thing. It's not a moral issue. I think it makes our odds better, it makes our ideas stronger, and it makes us all more resilient. So, this is an imperative for us, to make sure that we succeed here. And I've committed to do this, and I know my colleagues feel the same way.

Long: I guess, since you wrote that essay, there's just been so much momentum in the field of economics. People really want to do things right now. People want to see this action right away. I know it's long term as you've beautifully outlined. But just thinking, even beyond the Fed, as a country, what's the best short-term policy we could possibly do to try to begin to bridge some of these Black/white earnings gaps and employment gaps? Is there something that just seems kind of low hanging fruit or more obvious that we should be doing as we seize this moment?

Bostic: So, again, this isn't a one-thing question. I actually think that one of the most important things we can do is really, as business leaders, examine our policies around recruitment and hiring, and how do we think about what required qualifications are. Because that's another area where, another way to approach it. If you need 10, 15 years of experience in an environment where African Americans have never been included, you're guaranteeing you're never going to have an African American.

And so I think we all need to do some deep reflection about what's really required, and then also, I think there's value in rethinking who we solicit and who we reach out to. I've been very sensitive to the reality that networks matter, and in Atlanta, where our building is maybe two miles from heavily African American communities, I'm guessing a ton of those people have never been in our building, let alone talked about a job in our building.

And so we are revisiting all of those sorts of things. How do we relate to our community to make sure that we become and inject ourselves in their networks, so that they become more aware of what the possibilities are? Again, we have very different experiences of what America is, and we need to take efforts to make them not so disparate, and start to have them really overlap as much as possible.

Let me say one other thing on this. I was on a call with a number of executives in the Atlanta region, and the issue of do you really know your Black employees came up. There was an assertion that most people, even when they have Black employees, they don't really know them. They don't invite them to lunch, they don't play golf with them, they've never been to their homes, and so, without that knowledge, that deep knowledge, you're going to wind up with a different way of thinking about them than you might the people who you do play golf with.

And so, being very purposeful and thoughtful about who is in our personal networks. How do we engage with them and how do we really get to know people, like really know them, as opposed to just hearing them. I think that's something that all of us can do. That's probably the soul searching that I think is going on with the country, like a deeper recognition that I've been standing next to people, sitting in cubicles next to people for a decade, and I really had no idea the things that they were learning about or the burdens that they were carrying. And that's extremely troubling. But despite that being a troubling perspective, I think it's an opportunity, because awareness is the first step in making progress.

Long: Yeah. When we threw this question out on Twitter to get people's feedback on what to ask you, there was one question -

Bostic: I saw you did that.

Long: Always dangerous on Twitter, but you have to love how engaged people are. But there was one question that just comes up over and over again, and I wanted to run it by you. And that's, you know, people look at what the Fed is doing right now, and these extraordinary actions in such an unprecedented time. And they're really worried that what the Fed is doing is increasing wealth inequality, which was already a big divide in this nation. What do you say to people who are incredibly worried about that? Are the Fed's policies increasing wealth inequality right now?

Bostic: So, here's what I would say on that. My top line concern is whether we can do things to keep people in jobs today. And that's been my focus on this from day one. If we did not act and all these businesses collapsed, many small businesses across our communities, we would be in a very, very bad place. And wealth inequality would be probably even a lot greater because many families would not have anything. And that's a big concern.

So, I really try to stay focused on that, as the first line, top line concern. And just to be clear on this, the stock market's going to do what the stock market does, but there are many, many people in this country for whom the stock market is not the top consideration, and we need to make sure we include them in how we think about how the economy's performing, and make sure that our policies are doing things to help them as well. Because what we know is that the strong are going to recover faster, but if we only focus on that recovery and don't use considerations of how people in weaker positions are recovering as well, we're going to create the same sin that we were talking about at the very beginning, which is not paying attention and not counting that, and assessing the appropriateness of our policies.

Long: Yeah. And I guess lastly, we're pretty much out of time. But I just wanted to ask one last question. You've spoken so powerfully in recent interviews, including sharing your own personal examples of some situations that you've faced that were clearly not right, and appeared to be some racial bias. I wondered, just in closing, if there was one example you would like to share to remind people what's really going on in this country, and perhaps, also, one hopeful. Maybe something that's happened in the last few weeks that might give you hope, as well, for the future.

Bostic: Sure. I think about, on the first part, what is true is that, when I walk down the street, nobody sees my title. Nobody knows who I am. That hit home for me very early. I was in high school. I was driving a friend home. We sat outside the car and we were having a conversation, and a police officer came up and questioned me. It was in my own hometown, in front of a friend's house, and to me, that just said it doesn't matter who you are or where you are, something can happen at any time. And that realization of a lack of personal control, that colors everything you do. It changes, fundamentally, how I approach every situation and how African American males across the country do, and that's something that's really important.

On the positive side, we've done a lot of stuff at the bank. No, let me just say, this is so much positive in the last month since that essay went out. People have really appreciated someone stepping up, me stepping up, and just saying some things, that many people, I think, were thinking but had not really figured out how to say or whether or when to say. And that's been extremely gratifying.

And the thing that I really appreciated is that so many people have written me and said, "Your essay, it spurred me to go talk to people who I hadn't talked to before, and have conversations that I wish I'd had a decade ago." And if we can keep that going, I'm really optimistic about the change that we can drive to create an America that everyone experiences the way we want it to be, in terms of its values and its principles. So, I'm going to stay hopeful, I'm going to keep pushing on that, and I look forward to working with everyone here and across the country to do that.

Long: Thank you so much, President Bostic.

Bostic: It's a pleasure. And Heather, next time, you can just call me Raphael. It'll be good.

Long: All right.

Jones: Thank you both so much, President Bostic and Heather, for those great remarks and discussion. To continue this conversation, I'll be joined now by Jared Bernstein and Valerie Wilson. Again, we will be putting bios in the chat, since I do not want to take time away from our discussion. It would take the rest of our time together to highlight the accomplishments of these two amazing economists. If they are ready, I'm going to jump right in. Just want to give them a second.

Bernstein: I don't know if you can hear me.

Jones: Yep, we can hear and see you both. Great. Let's get to it. So first, I wanted to ask, what's some been some of the longstanding assumptions in economics and policy making that can be challenged to address racial gaps in unemployment? What can we prioritize to improve conditions for Black workers right now?

Valerie Wilson: I guess I'll start with that. Honestly, I think one of the main assumptions that we need to challenge is this idea of race neutrality. And that's both related to policy and how we design and implement policy in this country, but also in terms of how we understand economic theory, and the role of race.

I think it's clear, and this has already been a part of the discussion today, and thinking about whether or not there should be different targets for the Fed's monetary policy. No policy, regardless of whether race is explicitly a part of it or not, is race neutral, because life in this country is not race neutral. We have these longstanding structural inequities along the lines of race, gender, ethnicity, that continue to persist. So, I think going in, we have to understand that.

I think the other challenge that we often face when talking about unemployment disparities is that the interpretation of the two-to-one unemployment rate gap between Blacks and whites is that it's mainly explained by differences in education or skills. And that those differences are themselves synonymous and are also closely tied to productivity.

But what we know from the data is that, at every level of education, there's often a two-to-one, sometimes a worse than two-to-one disparity in employment outcomes. So, this idea that education skills and solutions to racial inequality in the labor market is something that's been totally proven false by the data. And the way that we prioritize addressing that disparity is to recognize and be aware of those structural inequities by race, ethnicity, and gender, and keep those things in mind, so that they inform the kinds of policies we develop, but also the kinds of data we collect to refine and improve those policies as we observe the actual implementation of them and how they're playing out.

Jones: Yeah. Jared?

Bernstein: I think it's probably useful in answering your question, at least form my perspective, to start with a fundamental flaw in the economic model as practiced by many economists, even myself, before I delved more into the kinds of things I'm about to say.

And simply put, any model of society—economics, sociological, political—that does not include the impact of systemic racism, this history of enslaved people, and the persistence of those outcomes today, is a model that you should, first, put in the garbage disposal, and then throw away, or some combination therein. In other words, it is not only a model that is not useful, it is a model that is harmful. And it is harmful to persons of color in the following way.

Embedded in that approach is the notion that the current equilibrium is a fine place to be, and one that should be preserved and maintained by economic policy. Now, let me be very concrete because I know this is kind of abstract. And Heather and Raphael got into this a bit as well.

If you believe that full employment is this theoretical measure of the natural rate, meaning the estimated lowest rate of unemployment consistent with stable prices, first you will set the actual unemployment rate too high because that metric is clearly biased, and I've got lots of empirical evidence of that. And second, and this is the most important part, vis-à-vis our discussion today, you will consign people of color to permanent recession.

I want to repeat that. Accepting equilibrium conditions and targeting your policies to basically keep things where they are when you're at some version of perceived full employment embeds permanent recession for people of color. And that cannot be acceptable. And I think that's behind the kinds of ideas that actually is about spirituality, that Janelle and I have been writing about, that Valerie has also been writing about for as long as I've known her. So, Janelle and I are not the first persons to talk about these ideas.

Jones: Yeah, I think those are obviously two great points. I think I'm just going to agree with everything you say, as we continue. I know that I will. Without predicting the future, I can be pretty sure. So, moving on a little bit, there are two potential roadblocks to implementing this idea about the Federal Reserve targeting Black employment.

One is the concern focusing on Black workers, and Raphael talked a little about this, is maybe exclusionary—to focus on one set of workers, one measure. How does that make an inclusive economy for everyone? And then the other one, which Jared just touched on, is how to make sure this new target does not risk the dual mandate of the Fed, which is to maintain stable prices while focusing on unemployment. You can either both take each parts of those that you like. Why don't we start with you, Valerie?

Wilson: I think, in the beginning of answering this question, is to distinguish between the ideas of something that is exclusionary versus something that is targeted. I think we do have a long history of exclusionary policies in this country, exclusionary, specifically, towards Black workers. If we think about the exclusions of agricultural and domestic workers from the Social Security Act, NRLA in 1935. Similarly, exclusions from FLSA, which mandated the minimum wage in 1938. Those things were exclusionary. They excluded occupations that specifically disproportionately employed Black workers at the time so that they did not have the benefit of those policies.

On the other hand, something that is targeted is about really focusing in the context of our racially stratified, both along social and economic lives, the structures in this country. In that context, targeting is really required. It's necessary to target in order to center the needs of those who face the greatest economic insecurity. And by doing that, you improve the overall effectiveness, I believe, of any policy response, while at the same time, you are narrowing those disparities by race, ethnicity, gender and class.

I think this calls back to one of the comments that President Bostic made about this collective moral, social, and economic cost of structural racism. And I think that, if it's possible to quantify the collective cost of structural racism, then there must also be a collective benefit in addressing that structural inequality.

Bernstein: I want to just address a couple of somewhat technical points, and then I want to kick. It would be a waste of precious resources for Janelle Jones to just be our moderator. You need to answer questions, too. So, the question you just posed, I want you to talk a little about your centering thinking around this issue that Valarie is just relating to. Because I just find it so inspiring when you do so.

But two technical points have to do with things that came up with Heather and Raphael's discussion. When Janelle and I were writing about targeting the Black unemployment rate, we meant that partly and precisely the way that Heather talked about it. It's a real thing, and that two-to-one ratio is a persistent injustice and must be corrected.

But what we were also saying, from the perspective of monetary policy and the dual mandate, is not that the Fed should target any particular rate over any other rate all the time, as much as it should basically keep doing what it was doing before the crisis. Which was to be driven not by estimates of a mythical natural rate, which cannot be estimated within a policy relevant confidence interval. Meaning that we simply can't estimate it accurately enough to drive coherent monetary policy.

So, I'm not saying forget about natural rates. There's a lot of economists probably writing PhDs as we speak about the fiscal models. Go forth and do your thing. But from the perspective of actual monetary policy, what Chair Powell and President Bostic and many others were doing before the crisis was what we, Janelle and I, were arguing for them to keep doing. Do not forget the inflation mandate part of the puzzle. That's critical. We salute the notion that half of the dual mandate is pursuing stable and well-anchored prices.

But push the unemployment rate down, whether it's the Black rate, the Hispanic rate, the overall rate, white rate. Push those unemployment rates down as far as they can go without putting on the breaks because of a phantom menace about either a realized or expected inflation that's not there in the data. You've got to be data driven.

The second part of what we wanted to do, though, is to amend the Federal Reserve Act. So, this is a very concrete ask. I think it's a legislative ask. It's very concrete, which I think is useful. Not to take the whole thing apart and put it back together again, but when the chair of the Federal Reserve goes to Congress twice a year for the semiannual monetary apportion, he or she, in reporting on all the variables that are listed in the Federal Reserve Act—employment, production, interest rates, inflation—must include racial gaps. They must be reported on, elevated to the same status level as those other variables, and the chair must articulate what actions the Fed is taking to try to close those gaps.

So, I just want to be very concrete about our asks, our allegiance to the dual mandate, and kicking it back to you, Janelle, it would just be very helpful, I think, for everybody listening to hear some of your thoughts on centering persons of color, Black women in particular, as I know you've written about.

Jones: I will use just a little of my moderator privilege to talk about an idea I've been thinking about, thank you, Jared, called Black Women best. I've been doing some writing very tied to the work that I learned when I worked very closely with Valerie at EPI. I've been studying Jared's work since I was at [inaudible] a million years ago.

But it's this idea that deliberate strategies of inclusion create a strong economy so that the most marginalized can thrive. Since the beginning of this country, that is most often Black women. So, if we can center Black women in conversations and policy actions, we can ensure that they are centered, that they are thriving, that they are doing well. And in the history of this country, we've never seen Black women thriving while other demographic groups are not doing well. Centering the most marginalized is the most inclusive thing we can do because it makes sure, in a way that some people talk about a rising tide lifting all boats, that's not very true, this is true.

This is a way to fundamentally center policy on those who are usually left behind, and ensure that everyone else is doing well. That's all I will say, about Black Women Best, we will drop some links in the chat, and include it in the follow-up email.

But one other question that I do want to ask a few audience questions. If people are willing, we will stay a little past three. We would be remiss not to acknowledge the raging public health crisis we're currently facing at the moment. Can each of you talk a little about the false choice of opening up the economy versus protecting our citizens, and why prematurely relaxing public health measures is a bad choice for everyone and the economy, and then specifically for Black workers?

Wilson: I think what's been going on in the news over the last week, week and a half, makes clear that a robust economic recovery is going to be directly tied to our ability to secure health and safety of communities and workplaces across the country. This is important, one, so that we are actually taking steps to slow and prevent the spread of COVID-19, but also so that people feel confident about returning to work and reopening schools.

Until we do that, I think it's important that the $600 a week enhanced UI [unemployment insurance] benefits should not expire at the end of this month. But I think we're also in a unique situation, when we think about the desire to pursue full employment amid a pandemic. I don't know that we've ever been the same sort of... Well, I guess we haven't been in a pandemic before, but the duality of those two things, I think, is unique in our current situation.

And I think now, more than ever and again, Raphael alluded to this as well, it's important that monetary and fiscal policy are complementary. The Fed is doing, and will do, what they can do. But it's important that our fiscal policy, and I mentioned the UI benefits, be complementary to that in light of the situation that we're in.

In terms of what that means for full employment, when we get to the point where people feel safe enough to return to work, there are clear opportunities that have been revealed, that are opportunities for expanding public employment, for example. We know that, in terms of our public health infrastructure, there is a need for investments there, to have a national system of testing and contact tracing, that are going to be absolutely critical to getting people back to work, getting schools reopened, et cetera.

There's been some talk, at least on the Democratic side, about climate change, and all of the kinds of investments that we can make to address that issue, and the jobs that will be created there. And then, also related to this idea of getting back to work, I think, absolutely essential, is the idea of childcare. It's currently in short supply because we're in a pandemic, but I think that's going to be a lot of fallout in the childcare industry in terms of providers being able to stay afloat, and what that will mean when it's time for people to get back to work.

Any of those opportunities are things that can be targeted to underserved communities. Both accomplishing the goal of addressing the disproportionate health impacts of COVID-19 as well as the disproportionate rates of unemployment and joblessness. I think that's the point that I wanted to make there, with regard to that.

But yeah, I don't think we can disentangle those two things right now. They are connected. We're not going to get a strong recovery without addressing the public health crisis, and the public health crisis presents opportunities for actually creating jobs while we address the crisis at the same time.

Bernstein: Just in the interest of time, I really don't have a lot to add to that at all. I'll make two very quick points. One is, just to underscore this idea that it looks, from what I'm hearing from contacts on the Hill, like the $600 UI plus up, pandemic unemployment compensation, is actually probably going to expire by the end of this month before Congress gets its act together, and I am implicating the Senate, and I am implicating Republicans in the Senate, because they are the majority. And while they have dithered, the expiration of this critical fiscal support is just a level of political and economic malpractice that I find unimaginable. I have a piece about it in the Post today, and perhaps we can get a link to it in the chat. This is terrible micro, and it's terrible macro.

On the broader point, I guess what I wanted to say about this is that there's a cyclical problem and a structural problem. The impact of COVID has pulled the curtain back on a set of structural inequalities that persisted before the crisis, and unless we fix them, will persist after the crisis. And in that sense, perhaps it seems Polly Anna given all the suffering out there, to remind everybody of that old saw that crisis is an opportunity.

But it is, but only to the extent if we actually take advantage of it. And that's why I think there's actually a pretty good understanding of the counter-cyclical initiatives that need to be taken even though politics, like the type I just mentioned, get in the way, and not every fiscal dollar is getting the biggest bang for the buck. I think the notion that there is a role for government to temporarily offset a demand contraction of this magnitude is very much understood, and certainly the Fed has been doing, I think, very good work in this space.

But it's the structural part where we really need to make a very big difference. That's on issues on racial equity that, to me, are at the core of this. We can talk more about that in specifics if we'd like, but I do find it useful to separate that cyclical and structural component of what's coming at us.

Jones: I don't think you did this on purpose, but that leads perfectly into an audience question that asks specifically what would be the best way to quantify structural racism.

Bernstein: I'm sorry, what would be the best way to?

Jones: Quantify structural racism.

Bernstein: Quantify. Quantify. Let me make a quick point. I'll kick it to you Valerie. I think it's very interesting that President Bostic started off with this idea of calculating the tangible cost of structural racism. I'd be interested, if the two of you agree, that would be helpful. I thought it was provocative. But the other thing I thought is, "Gee, what institution has hundreds of PhD economists on staff that one could assign that sort of thing to?" And of course, I'm talking about the Federal Reserve. So, I would encourage President Bostic to send that email out forthwith.

I guess my view is that the quantification is kind of what we spend a lot of time on. We've measured the wealth gap, wage gap, income gap, unemployment gap, housing gap, education gap, incarceration gap. I think we probably could do better, but I think we're good. To me, the more compelling question is the kind that Heather was asking of what would be the best policies to close those gaps.

It's one thing to quantify them, it's another one to close them. We have ideas about that, of course, you and I have been moaning about them, Janelle, but let me kick it to Valerie. Happy to come back and talk more about my favorite ideas, but let me get to Valerie.

Wilson: Yeah, I agree that I think the issue of quantifying the costs, we have, I agree, a pretty good understanding of the various economic disparities along racial lines, and I think it could be pretty straightforward to go from those measures of the cost to specific communities and what that means in terms of what we're not producing and generating in the broader economy, to come up with this broader measure of the structural costs.

But yeah, aside from just measuring and quantifying the costs, is the issue of getting to what do we do about it. We've known these disparities have existed for decades, for centuries. I think we probably also know what it takes to close them. I think us taking the effort to actually do those things is what often gets in the way, partially because of the question we were answering before about this idea of focusing on Black Americans as something that's exclusionary, or some kind of a reverse discrimination, and idea that I reject, don't agree with.

We've talked some today about the idea of full employment and the role that plays, and lowering the Black unemployment rate, reducing those employment gaps, but also reducing wage disparities, also with potential to reduce income gaps, also has effect on reducing poverty. So, there's a ripple effect there.

I think the other thing that we really need to address is how we make our existing antidiscrimination laws—I'm speaking specifically with regards to Title VII of the Civil Rights Act—how we make those things really function as they are intended to do, so that we have rigorous and consistent enforcement in a way that discourages the kind of discrimination that we measure in unemployment gaps and wage gaps and wealth gaps, and so on and so forth. But also, so that it empowers people to be able to seek a redress for those harms and those damages.

Bernstein: Janelle, if I might, let me just tick off some things that I think are really important in this space. Obviously, it's essential that we target the Black/white wealth gap, because that is very much a legacy of the enslavement of African Americans. And a set of disparities that have flowed from that for hundreds and hundreds of years.

I think too often, there's this disconnect between wealth gaps and income gaps, and I actually think that one of the most important ways to begin to close the wealth gap is to focus on the income gap. That comes through measures, like Valerie just talked about, through the labor market. In many ways, to me, in my work anyway, on full employment and on macroeconomic conditions, that provide disempowered and economically vulnerable, discriminated workers just a greater sense of power than they have when unemployment is 3 percent versus 10 or 11 percent, it makes a huge difference in the opportunities available to persons of color.

But there's also a set of government policies that I think are critically important, and one of them is refundable tax credits. The earned income tax credit, the child tax credit. I don't know that people often always think about these as much in terms of gap closures, but I know at the Center on Budget, we have really great evidence on precisely this point. Significant expansions of these credits would make a disproportionate difference in closing racial income gaps and that feeds into racial wealth gaps.

I mentioned minimum wages. I also want to say a word on job programs. It is no question, as Valerie and I have talked about ever since we've known each other, the power of full employment is something we've obviously been talking about for a long time. Full employment doesn't provide opportunities to everyone. There will be people in communities, particularly of color, particularly people who suffer the discrimination of the criminal justice system, who won't be reached even by very low unemployment. And so, I actually think employment programs that provide subsidized jobs and often need a training component are a complementary aspect of even a tight macro economy.

Jones: I love this policy agenda, and I do not have the power to enact it tomorrow, but I wish that someone would. I'll ask one more quick question, and then do some closing thoughts. So, someone wrote, "Centering Black workers in the labor market through unemployment is one idea. What are some other metrics and measures that we can use that expand beyond the unemployment rate?"

Wilson: So, in terms of measures related to the labor market specifically? Is that what we're talking about? So, yeah, I think that there are other measures that we can consider beyond the unemployment rate when we're thinking about what it means to have a tight labor market. I think wage growth is one of them that we should focus on, which would also keep an eye on the need to keep inflation in check. I think wage growth is an important indicator for both of those.

The prime age employment population ratio. That sort of gets beyond the distortions that can come into the unemployment rate by virtue of the fact that there are people who at different points won't be actively looking for work. The employment population ratios just gives us what percentage of people within the ages of 25 to 54 are employed.

But also, hours worked. Janelle, you and I did some work on this, and this also calls back to some of the comments that Raphael made about the quality of the kinds of jobs, beyond just what the employment rate says about yes or no you have a job. What is the quality of that job? I think work hours gets to the idea of an additional measure of full employment when we look at how many hours per week or per year people are actually able to work. And then all of these measures need to be considered and disaggregated by race, ethnicity, gender, and even geography.

Bernstein: I'll just put in a quick plug for these quantity measures, Valerie mentioned hours worked. I recently wrote a paper with Keith Bentley where we looked at the responsiveness of particularly persons of color, Black men and Black women in particular, their responsiveness to the business cycle in terms of their annual hours worked, not weekly but how many hours they work in a year.

Turns out, this is a really important indicator, because it's very, very cyclical. Persons of color, low income, by the way, folks on low income, low-income persons of color. Please hear me all you policy makers who are running around, freaked out about work disincentives and kicking people off the SNAP rolls because someone looked like they're working. That's all nonsense. What really matters to low-income workers, particularly people of color, at least from our research, but I think income is really a very significant variable here, as is race, of course, is the extent of labor demand.

People can't live on SNAP, Medicaid, even the minimum wage. They just can't live on that. The [inaudible] is tremendously helpful, but they have to work. And so, we found that the responsiveness to labor demand by low-income persons of color was kind of through the roof, and you won't get that if you just look at the unemployment rate. You have to look at not just hours per week but annual hours worked.

And in closing, I just want to say tremendous thank you to Janelle and to the Groundwork Collaborative, to Claire and others who really helped to put this together. To Heather, to President Bostic, to Valerie. I wish we could do this every week. I think that the need is there. I don't know about the interest, but the need is definitely there.

Jones: We're interested. You can count on me and Valerie to do it. Valerie, any closing thoughts from you?

Wilson: No, I also wanted to thank you for the opportunity to participate here. It's been very enlightening, and I hope that some of the ideas and thoughts discussed here continue to move forward.

Jones: Yeah, on behalf of everyone at Groundwork Collaborative and Center on Budget, thanks to President Bostic, to Heather Long, to Valerie Wilson, Jared Bernstein, for this incredible hour. I could talk about this all day with these experts, about how to center Black workers in monetary policy. I am being told explicitly that I cannot do that by my team, so we will have to depart. Thank you all for your time and willingness to participate. Everyone here is permitted to continue in this conversation, so this will not be the last time we bring these folks together for a discussion about how to create an inclusive economy. We'll be sending out links with materials and readings and a recording over the next day or two. I look forward to working with the folks on this call about how to build an economy that addresses racial inequality and makes a stronger labor market for all of us. That's it. Take good care, everybody.