Federal Reserve Board Governor Lael Brainard speaking at the John F. Kennedy School of Government at Harvard University in Cambridge, Massachusetts, USA on March 1, 2017.
Brian Snyder | Reuters
Unemployment for the lowest-paid workers in the US is above 20%, a figure that underscores the importance of policy aid to the economy, according to Federal Reserve Governor Lael Brainard.
The figure shows how uneven the recovery has been since efforts to control the Covid-19 pandemic resulted in the largest quarterly GDP decline since the Great Depression.
“The damage from COVID-19 is concentrated among already challenged groups,” Brainard said in a speech on Wednesday. “The K-shaped recovery remains very uneven, with certain sectors and groups
experienced significant hardship. “
At a time when the national unemployment rate has fallen from its pandemic peak of 14.7% to its current 6.7%, Fed economists estimate that the unemployment rate for the lowest quartile of earners is “likely above 20 percent,” said Brainard.
That’s because the black unemployment rate is 9.9% and the Hispanic rate is 9.3%, while the rate for whites is 6%.
Fed officials have made “inclusive” employment a priority and have adapted policies to make it possible. A new approach could allow inflation to exceed the Fed’s 2% target and the unemployment rate to fall below what was traditionally an indicator of higher inflation before the Fed hiked interest rates.
In recent days, central bank speakers have expressed slightly different views on the future of the policy, with some worrying about inflation rising faster than expected.
Brainard did not commit to a timetable for policy adjustments, but noted that “the economy remains far from our goals.”
“We are strongly committed to achieving our maximum employment and average inflation targets,” she said. “It is too early to say how long it will take. The committee has clearly stated that significant further progress must be made towards our goals before the purchases are adjusted.”
The current Fed buys at least $ 120 billion in bonds every month and has anchored its benchmark near zero in the short term. Fed officials have continued to call on Congress for more tax aid.