US Fed Dreaming of 'Full Employment', Focuses on Inequality... Powell Says "No Place for Racism"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The issue of racial discrimination sparked by the death of Black man George Floyd is bringing winds of change to the United States. As calls grow louder for substantial changes to reduce income and living disparities between races, concerns have begun from central banks to corporations.

On the 10th (local time), Bloomberg reported that the U.S. Federal Reserve (Fed) raised the benchmark interest rate, which affected unemployment rates differently by race. It introduced that right after the Fed raised the benchmark interest rate for the first time in seven years in December 2015, the unemployment rate for Whites was 4.4%, but for Blacks, it rose to 8.5%.

This disparity is analyzed to stem from the Fed's policy goals. The Fed targets full employment and price stability as policy objectives, but officials have pursued full employment for decades without considering racial disparities in unemployment. David Stein, a professor at the University of California who studies social movements in the U.S., pointed out, "Former Fed chairs like Paul Volcker made decisions to make credit harder to obtain or to raise benchmark interest rates, choices that undermined life opportunities and labor market chances for marginalized workers, including Blacks."

Bloomberg analyzed that especially during economic recessions, inequality is not prominently visible, but when recovery begins, Whites tend to be employed faster than Blacks. In fact, last month, the U.S. unemployment rate was 13.3%, with the White unemployment rate at 12.4%, lower than the average. Meanwhile, the Black unemployment rate was 16.8%, more than 3 percentage points higher than the average. While the White unemployment rate slightly improved compared to April, the Black unemployment rate worsened.

Fed Chair Jerome Powell emphasized at a press conference held via video after the Federal Open Market Committee (FOMC) meeting that day, "There is no place for racial discrimination to take root in the Fed or in our society," adding, "Everyone deserves the opportunity to fully participate in our society and economy." He added, "This principle guides everything we do, including monetary policy, focusing on diversity and ensuring fair access to credit nationwide," and said he would reiterate this message on this occasion. Since his inauguration in February 2018, Powell has expressed the need to reduce inequality, and this is interpreted as a message that he considers inequality factors in monetary policy as well. In April, Powell also expressed concern that "unemployment tends to rise much faster among minorities and low-income groups."

Companies are also introducing policies for Blacks. On the same day, Goldman Sachs announced it would establish a $10 million fund to support organizations reducing structural and economic racial inequalities. Earlier, Bank of America (BoA) pledged $1 billion to organizations working to reduce inequality. Sportswear manufacturer Adidas announced plans to allocate at least 30% of its U.S. workforce to Blacks and Hispanics and provide scholarships to Black students at universities, supporting the Black community with $20 million (approximately 23.93 billion KRW).

However, U.S. President Donald Trump maintains a negative stance toward change. After large-scale protests, when the U.S. Department of Defense expressed willingness to rename military bases named after Confederate generals who supported slavery, President Trump dismissed it, saying, "I will not even consider it." Through Twitter, he emphasized, "These monumental and very powerful bases are part of the great American heritage and the history of victory and freedom," adding, "As the greatest country in the world, our history will not be manipulated at will. Respect the military."

Meanwhile, on the same day, Philonise Floyd, George Floyd's brother, appeared as a witness at a hearing discussing the police reform bill proposed by the Democratic Party, raising his voice, saying, "It is not right that my brother died over $20," referring to the $20 bill George Floyd had presented when trying to buy cigarettes on May 25. The Democrats plan to pass this bill, which includes broad measures such as limiting police qualified immunity, banning chokeholds, and restricting the use of lethal weapons, in the House this month before sending it to the Senate.

This content was produced with the assistance of AI translation services.