In our last piece for Visible we talked about why the Federal Reserve should refrain from raising rates until we get closer to maximum employment for everyone, including Black workers. On March 16, the Fed decided to go ahead with a quarter of a percent raise and pencil in more rate increases for the coming months. Immediately after, big U.S. banks including Citigroup, Wells Fargo, JP Morgan Chase and Wells Fargo, followed suit.
While the latest jobs report shows good news for Black workers still trying to recover, the Fed’s recent moves could jeopardize that progress. The unemployment rate for Black workers over the age of 20 continues to fall and is getting closer to their pre-pandemic levels. Now is the time government should be doing all they can to get all workers over the recovery finish line, especially as the Black-white employment gap remains large.
Sarah Anderson, who directs the Global Economy project and co-edits Inequality.org at the Institute for Policy Studies, explains that the CEOs of major banks benefit from the Fed’s decision to forego full employment as a priority because it keeps them in a sweet spot to maximize their bonuses while keeping the leverage away from workers who would have more power in a tighter labor market.
Anderson just released her annual report on Wall Street bonuses, which she found soared by 20 percent even as workers lost earnings power because of rising costs or having to cut back on hours due to covid-related illness or needing to care for their families.
The senior executives and top managers of some of those same banks who raised their rates following the Fed’s decision are largely male and white. At the same time, Wells Fargo has been refusing Black people mortgage loans that could help them build generational wealth. Anderson dives into some of her findings that demonstrate how our economic system is rigged to concentrate wealth in the hands of white men, to the detriment of the rest of us. One of the starkest comparisons was with the earnings of workers in the care sector, which is largely led by Black women workers.
Community Change Director of Policy and Ideas, Chirag Mehta, jumps in to reflect on how this is another case study in how policymaking fails to take into account racial disparities. Anderson offers some ideas about how the federal government can better balance the need to provide the working poor with more resources and curb inflation. The highlight: Taxing the rich (including a new proposal by President Biden).
Anderson also reminds us of the power of the purse that the administration has to help us reach maximum Black employment by changing the terms for how we award federal contracts to help build worker power, offer apprenticeship programs that employ young Black people, and offer paid leave.
Anderson and Mehta talk about ways we can have a more equitable approach to dealing with rising costs that doesn’t throw Black workers under the bus. One huge financial burden the federal government could help with is student debt. Anderson cites that canceling up to $50,000 in student debt could increase Black wealth by 40 percent.
In addition to this racial justice approach to creating well-paying jobs with benefits, Anderson notes that we need to address our supply chain issues that have emerged in part thanks to a global race to the bottom. She explains how decades of exploiting poor workers globally has come back to bite us.
But, Anderson says, she’s encouraged by the brave workers rising up to demand the right to unionize around the country and the world. With election results pending today, Amazon workers could have their first unionized warehouse, in New York. Unions are spreading in Starbucks stores across the country. And REI workers won unionization decisively in a SoHo location. Anderson urges us to do everything we can to support this recent wave of unionization as they face corporate challengers.