Can Fed Money Policy Help Solve Racial Disparities?
Video by Bill Sorem; Text by Michael McIntee and Bill Sorem
The nation’s most influential financial organization is teaming up with activists in Minneapolis to help close the income gap between white and black Minnesotans.
Last week, Minneapolis Federal Reserve Bank President Neel Kashkari visited the offices of Minnesota Neighborhoods Organizing for Change (NOC) in a historic meeting to discuss race and economic disparities between black and white communities. NOC has been at the center of fights for racial and economic justice, from organizing protests over the police shootings of Jamar Clark and Philando Castile to campaigning for a $15 minimum wage.
Kashkari pledged to put the Fed’s “smart economists” on the job of figuring out why Minnesota has one of the largest income gaps in the country. “I’m working very closely with my research staff to understand why are there these big gaps in Minnesota. Minnesota has a lot going for it. A lot of things are really positive but why are there these big gaps? I haven’t gotten good answers to that yet. We need to understand the why before we can design potential solutions.”
Those solutions according to Kashkari could involve monetary policy, action by Congress or some combination of the two.
Fed’s Help Is “A Big Deal”
Anthony Newby, Executive Director of NOC says the Fed’s research will help identify the structural barriers that prevent so many black Minnesotans from earning a decent income. “That’s a big deal and a starting point.”
“Educational disparity is one factor leading to the structural higher unemployment for blacks versus whites,” said Kashkari. “And by the way the Minneapolis Fed has done a lot of work for example in early childhood education and has been a real leader in that and that’s now being implemented in the state of Minnesota which I think is a very positive step.”
Minnesota now has all-day kindergarten and this week Governor Mark Dayton announced how $25 million in recently approved state funding would help about 3,000 four-year-olds get free pre-K education.
NOC is part of the Fed Up Coalition, a diverse coalition of community-based organizations, unions, and other non-profits working to build an economy that works for everyone by engaging with the Federal Reserve. After NOC’s meeting with Kashkari, Fed Up will have met with all 12 regional Fed presidents.
Appointed to head the Minneapolis Fed earlier this year, Kashkari has already made waves by launching an effort at the Minneapolis Fed to seek transformational solutions to end “Too Big to Fail” banks. Kashkari is poised to take on an even greater role when he joins the Federal Open Market Committee in 2017. He discussed massive racial disparities in unemployment and working conditions between black and white communities in Minneapolis and the Minneapolis Fed region, which covers Minnesota, Montana, North Dakota, South Dakota the northern half of Wisconsin and the upper peninsula of Michigan.
At a time when the Federal Reserve has come under increasing scrutiny due to its lack of diversity, this meeting between Kashkari, who happens to be the only regional Fed president that is not white, and racial and economic justice activists at NOC generates a unique and powerful dialogue.
Kashkari was working with the Treasury Department when the recession hit. “One thing I learned in 2008 is you don’t tackle a crisis with incremental solutions. You tackle a crisis with overwhelming force. And so if this is a crisis, and I think certainly parts of this are, then we need to bring overwhelming force.”