Recovery slower among low earners, racial minorities: Powell
The economic recovery from the COVID-19 pandemic has been slower for low earners and racial minorities, exacerbating inequality even as it gains steam, Federal Reserve Chairman Jerome Powell said Monday.
“While the recovery is gathering strength, it has been slower for those in lower-paid jobs,” he said at a National Community Reinvestment Coalition event on the “just economy.”
Among the top quarter of earners, just 6 percent were unemployed in February, he noted, while the figure was 20 percent among the lowest quarter.
College-educated workers were also less likely to be laid off last year as the pandemic took hold by an 8-point margin, while Black and Hispanic prime-age workers were more likely to be laid off by a 6-point margin relative to their white counterparts.
One of the areas that had the most significant level of economic disruption was child care.
While 22 percent of all parents stopped working because of disruptions to in-person school or child care, the percentage rose to 36 percent among Black mothers and 30 percent among Hispanic mothers.
Powell’s comments on Monday come as the recovery from the COVID-19 pandemic has begun to hit its stride. Gross domestic product growth in the first quarter came in at an annualized 6.4 percent, potentially setting up the strongest annual growth since the early 1980s. Although unemployment remains high, weekly jobless claims have dropped from record levels and economists are expecting a strong jobs report Friday.
But the problem of income and racial inequality has been a central theme for President Biden, who has pushed initiatives to reduce child poverty, provide economic aid for low earners and close racial gaps.
Powell noted that the Fed’s central mandate is to ensure a strong economy that would lift everyone, but pointed to fiscal and monetary tools that could ensure a more targeted response, such as strong supervision of racial equality laws and efforts to focus on community financial institutions that serve minority populations.
Allowing deep-rooted inequalities to persist, he said, would have implications for the wider economy.
“The Fed is focused on these long-standing disparities because they weigh on the productive capacity of our economy,” he said.
“We will only reach our full potential when everyone can contribute to, and share in, the benefits of prosperity.”