RELEASE: REP. KHANNA INTRODUCES BILL TO STRENGTHEN FEDERAL RESERVE MANDATE TO GROW JOBS AND WAGES
Washington, DC – Today, Rep. Ro Khanna introduced legislation to strengthen the Federal Reserve's mandate to pursue robust job and wage growth, on the 40th anniversary of the signing of the law that enshrined the Fed's "maximum employment" goal.
Named after the renowned leader in the civil rights and full employment movement, the Coretta Scott King Full Employment Federal Reserve Act directs the Federal Reserve to target wages that keep pace worker productivity growth and to shrink discrepancies in unemployment due to race, gender, or geography.
On October 27, 1978, Coretta Scott King was an honored guest as President Jimmy Carter signed the landmark Full Employment and Balanced Growth Act (known as Humphrey-Hawkins), which legally required the Fed to pursue "maximum employment" -- a major step forward for American workers. King founded the National Committee for Full Employment that led the grassroots push for the legislation.
For decades, the Federal Reserve has repeatedly acted prematurely to slow job and wage growth for American working families, instead catering to elite unease over future inflation. This is partially why, since 1973, wages decoupled from the rate of productivity growth and contributed to worsening income inequality. And as African-Americans and other minorities are the last to see jobs growth during an economic recovery, the Fed's moves to slow the economy have contributed to the fact that the African-American unemployment rate remains consistently about twice as high as the white rate.
The legislation requires the Fed to seek a job market where jobseekers can find employment and to minimize involuntary part-time employment. 1.4 million Americans are currently mired in long-term unemployment, while the number of workers who want full-time work but could only find part-time hours increased in September by 263,000, for a total of 4.6 million. The bill also requests that the Fed provide key information in its reports to Congress, including analysis of past failures to achieve full employment, impact of their decisions on job creation and wage growth, and assessing the impact of their policymaking on disadvantaged communities, such as communities of color.
Finally, the legislation promotes diversity in Federal Reserve leadership by removing bankers from regional Fed boards -- as advocated by Hillary Clinton and the Democratic Party platform -- and includes a provision from Senator Kamala Harris's related legislation to require interviewing of diverse candidates for every Federal Reserve leadership vacancy, including candidates from outside of the financial industry. These changes seek to ensure that there are a range of perspectives represented at the Fed, rather than its current overwhelmingly white, male, and financial-sector-dominated leadership.
"The Federal Reserve is an institution with unparalleled influence over American workers' jobs and wages," Rep. Khanna said. "Despite the progress made by Coretta Scott King's campaign four decades ago, the Fed is still not adequately focused on the broad-based job creation and wage growth that our workers need to fully recover from the Great Recession. This legislation will help ensure that our nation's central bankers are putting the livelihoods of American working families ahead of the Wall Street voices that are often in their ears."
"Despite the low unemployment rate, too many Americans still remain jobless or must work multiple low-wage jobs just to make ends meet. Our nation needs a period of strong wage growth to fully recover from the Great Recession," said Rep. Frederica Wilson (FL-24), founder and co-chair of the Congressional Full Employment Caucus. "This legislation will ensure that the Federal Reserve is in tune with working Americans who need it to live up to the economic fairness principles championed by Coretta Scott King."
"For too long the Federal Reserve has underestimated the large and progressive benefits of very low unemployment but overstated the dangers of even the possibility of moderate inflation," explains economist Josh Bivens of the Economic Policy Institute, who has endorsed the legislation. "Correcting this damaging imbalance in how they view economic risks is not a threat to the Fed's independence – their policy mandate has always come from Congress. Clarification of this mandate is wholly appropriate, and until the Fed takes targeting genuine full employment seriously, low wage workers and working-class communities across the United States have little hope of seeing sustained wage gains over time."
"Ro Khanna's full employment bill is a once in a generation game changer for American workers," said Shawn Sebastian, Campaign Director for the Fed Up Coalition that has been lobbying for reforms at the Federal Reserve. "Fed Up is proud to support Khanna's bill, a monumental step towards realizing the dream of the Civil Rights Movement: ‘Civil Rights plus Full Employment equals Freedom.'"
Original cosponsors: Rep. Frederica S. Wilson (FL-24), Rep. Alcee L. Hastings (FL-20), Rep. Yvette D. Clarke (NY-09), Rep. Mark Pocan (WI-02), Eleanor Holmes Norton (DC-AL), Rep. Keith Ellison (MN-05), Rep. Donald M. Payne Jr. (NJ-10), Rep. Janice D. Schakowsky (IL-09).
Read the bill online here.
About the Office
Congressman Khanna represents the 17th District of California, which covers communities in Silicon Valley. Visit his website at khanna.house.gov. Follow him on Facebook and Twitter @RepRoKhanna.
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Khanna Press Office: 202-225-2631