Federal Reserve Chairman Jerome Powell said in a Thursday interview that he is “not at all satisfied” with the diversity of the central bank’s staff, acknowledging that efforts to hire and develop more economists of color have fallen short.
“We're trying hard and not at all happy with where we are on it, but we'll keep at it because it's a very high priority,” Powell said in an interview with NPR’s Steve Inskeep that aired Thursday.
“As an institution, we want to be a leader in diversity. And my own experience, in the different things I've done in life, is that institutions that focus on diversity and do it well are the successful institutions in our society," he added.
Powell, a Republican who has led the Fed since 2018, has called out the lack of racial diversity at the central bank and in economics broadly amid the national reckoning with racism sparked by the police killings of George Floyd and Breonna Taylor last year.
At the same time, there has been growing pressure within the economics profession for leaders to tackle an endemic lack of diversity and rampant racist and sexist conduct within the field.
Since 2020, the Fed has held a series of seminars on racism and the economy and has repeatedly cited the disproportionate toll of the COVID-19 recession on Black and Hispanic Americans. Powell and Fed leaders have also paid closer attention to the unemployment rates for Black and Hispanic workers to gauge how far the economy must go to fully recover from the pandemic.
But while the Fed has driven more attention to racial inequities, it has struggled to improve its own gaps. Only two of the Fed board’s 417 economists in Washington, D.C. — just 0.5 percent — are Black, even though Black people make up 3 to 4 percent of economics Ph.D recipients each year, according to a New York Times analysis. Roughy 13 percent of the U.S. population is Black.
“It's very frustrating because we have had for many years a strong focus on recruiting a more diverse cadre of economists, including racially diverse and diverse along other lines,” Powell said. He added that the Fed has ramped up its recruitment from historically Black colleges and universities (HBCU) and universities with large Hispanic student populations.
“But we're going to keep doing what we're doing, and we're going to do a lot more, too, because we need to get better results," he said.
Proponents of greater diversity in economics say the field, like any industry or field of study, would benefit from a wider range of perspectives, particularly given the centuries of structural racism that have harmed the economic health of people of color.
Years of compounding discrimination with the financial sector left Black and Hispanic Americans with less wealth, fewer assets, a higher likelihood of COVID-19 complications, and a disproportionately smaller presence in jobs that could be adapted to working from home.
The Biden administration, Democratic lawmakers and the Fed have emphasized the need to keep aid flowing long enough and adapt policies to help hard-hit demographic groups recover quickly from the COVID-19 recession, particularly as the economy is poised for a rapid rebound.
Powell said that while the Fed “almost certainly didn’t do everything right” while responding to the pandemic-driven financial panic, the quick and robust response from both the central bank and Congress helped lay the groundwork for a faster recovery.
“I liken it to Dunkirk, you know, when it was time to get in the boats and get the people, not to check the inspection records and things like that, just get in the boats and go,” Powell said, comparing the Fed’s response to the evacuation of more than 300,000 Allied forces from northern France as German forces stormed the the country in 1940.
While the Allies were unable to prevent the Nazi occupation of France, the successful evacuation at Dunkirk helped boost morale in the United Kingdom before the tide of World War II eventually turned with the entrance of the U.S.
“What we did, it served its purpose in staving off what could have been far worse outcomes. And by the way, I'd want Congress to get the bulk of the credit here with the CARES Act, which really was essential to the recovery as well,” Powell said.