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Minneapolis Fed begins exploration of inequality issues with two-day conference
Dozens of leading researchers are in Minneapolis to identify ways the central bank can assist their work.
May 21, 2017 at 11:47PM
And yet, inequality and poverty remain as persistent a problem in the United States today as a half-century ago.
Starting Monday, dozens of the nation's top economists and researchers on poverty and inequality will participate in a two-day conference at the Federal Reserve Bank of Minneapolis to explore that paradox — and whether the nation's central bank can do anything about it.
The conference is the first public event of the Opportunity and Inclusive Growth Institute formed late last year at the Minneapolis Fed. The bank's president, Neel Kashkari, had encountered the poverty paradox as a politician in California and an official in the U.S. Treasury Department.
"I'm really having trouble reconciling what seems to be progress on the ground at a micro level and seemingly a total lack of progress at the national level," he said in an interview last week.
The data point that stands out for him, Kashkari added, is that blacks tend to be unemployed at twice the rate of whites no matter what the economic conditions are.
"Recession or booming economy, it's always 2X," he said. "Even if you take college graduate against college graduate, or high school dropout against high school dropout. It's all 2X. It's extraordinary."
He said he doesn't believe the central bank can solve the problem through monetary policy or the use of interest rates to influence behavior in banking and business. But he noted the Fed is the biggest recruiter and employer of economic researchers.
"If we could put our research talent focused on this and come up with nonpolitical analysis that just diagnoses the problem, maybe other policymakers, Congress, state legislatures, could come up with policy solutions," Kashkari said.
Ron Feldman, the Minneapolis Fed's first vice president, said an early goal of the effort is to identify whether there are gaps in economic research that can be filled by the Fed and its regional banks. The Fed, he said, may have the ability to do longer-term studies than can be performed or paid for at universities and think tanks.
"We can do something that's not going to pay off for two, or four or five years," Feldman said. "We're uniquely positioned to help fill that gap."
Kashkari said he and other leaders of the effort want to change the culture of the Federal Reserve system itself. "We're going to have researchers [at the conference] from almost every Federal Reserve bank to think about what role they can play," he said.
He said that the Fed's powerful Open Market Committee, which sets interest rate policy, recently began to examine data about racial gaps in employment as it reviews broader macroeconomic conditions.
"Historically, the Federal Reserve's posture has been monetary policy cannot address gaps, so it's not our problem," Kashkari said. "So the Fed as an institution is changing its thinking."
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Pioneering surgeon has run afoul of Fairview Health Services, though, which suspended his hospital privileges amid an investigation of his patient care.
