If recent reports regarding the selection of the next New York Federal Reserve president are true, the New York Fed Board's failure to listen to the public is deeply disappointing. Community groups, labor unions, and elected officials at the local, state, and federal level were clear about what they wanted: an open and transparent process with significant public involvement that results in someone who prioritizes full employment, is an effective regulator of large financial institutions, and represents the diversity of the district.
These requests have apparently been ignored, and the consequences could be devastating for the over 100 million Americans who are economically insecure and striving to access quality jobs and rising wages.
The president of the New York Fed has tremendous influence on economic policy in part because that leader gets a permanent seat on the committee that votes on interest rates. John Williams, the presumptive new president, has underestimated maximum employment for years. In March 2015, Williams said we were close to full employment when the overall unemployment rate was 5.5 percent and Black unemployment was 10.4 percent. As Matthew Yglesias points out, if Williams had been at the helm of the New York Fed over the last couple of years and successfully raised interest rates in the way that he called for, millions of people would have remained either locked out of the labor market or stuck with flat paychecks.
The perspectives of low-income and working-class people matter because they have a pulse on the real employment situation in America and how to maximize our human potential. They know that while the headline unemployment number may be low at just above 4 percent, that number hides the reality of persistent joblessness and racial inequity in the labor market. They know that we can do better than 6.9 percent unemployment in the Black community. They weighed in on the New York Fed process because they are the ones whose livelihoods are on the line when officials choose to err on the side of higher unemployment.
The New York Federal Reserve Board still has time to listen to the public and restart the process. If the New York Fed chooses to appoint Williams, I believe a vetting of the process and the candidate in federal hearings is appropriate, so the public can ask vital questions and get answers from one of the most powerful economic policy makers in America and someone who will have enormous influence over all of our economic lives.