When Neel Kashkari began his role as the president of the Minneapolis Federal Reserve in January 2016, it left many of us in Minneapolis with a sour taste in our mouths, because, out of just 12 regional banks, he was the fourth Goldman Sachs alum to be appointed as a president. It felt impossible that someone right out of Wall Street would be able to seriously address the concerns of someone like me, a full-time retail worker, living right on the poverty line.
Today, a year and half later, my skepticism has washed away. Not only has Kashkari made an effort to reach out and engage with our communities several times since his appointment, he has spoken up for low-wage workers in the meetings where it matters most: when the Fed is setting interest rates for the country.
I applaud Kashkari for getting outside of the privileged confines of the Federal Reserve and Wall Street to see how actual American workers are faring amid a stalled recovery from the 2008 financial crisis. He sets an example for what all Fed policymakers should be doing.
A sensible, data-driven approach
The fact that Kashkari is of Indian descent and the only nonwhite member among 12 Fed regional presidents sets him apart. But what really distinguishes him most from the Fed policymakers that have come before him is that he kept a promise he made when he visited the Neighborhoods Organizing for Change (NOC) offices last summer to talk about the economy.
At that meeting, Kashkari said that he was in the business of creating jobs and didn’t see a reason to raise rates until inflation became a problem. His is a sensible, data-driven approach that prioritizes jobs, which helps all of us, and disproportionately helps people of color.
We’re used to seeing policymakers promise one thing and then do another, but Kashkari proved to be a man of his word this past March when he became the only Fed official in the room to vote against a rate hike. The Federal Reserve works hard to achieve consensus and unanimous decisions, so Kashkari standing up alone against his colleagues was a big deal.
In a post published shortly after the meeting, Kashkari explained his dissent. “The key data I look at to assess how close we are to meeting our dual mandate goals haven’t changed much at all since our prior meeting. We are still coming up short on our inflation target, and the job market continues to strengthen, suggesting that slack remains.”
Other relevant factors
Kashkari brings up an interesting data point. While the headline number for unemployment is at a 16-year low of 4.3 percent, wage growth remains sluggish and the labor force continues to shrink, suggesting that many workers have simply stopped looking for work — which contributes to the low headline figure.
The other members of the rate-setting Federal Open Market Committee are all too happy to sacrifice job gains and wage gains from a tighter labor market for an inflation threat that hasn’t yet arrived. The Fed uses a 2 percent inflation target, but the economy has been undershooting this target for almost a decade. The Fed claims to be data-driven, but its decisions lately seem to me arbitrary and capricious. That’s why it’s imperative that we not only applaud the fact that he took a stand and voted against the rate hike but also set the precedent that when people in power make decisions based on the actual facts, they get our support.
If the Fed claims to make data-driven decisions, they have to actually look at the data. We’ll continue watching Kashkari to make sure that he lives up to his promises, but so far, he’s the only one who is making decisions based on the facts. We only wish more Federal Reserve presidents would do the same.
Katie Drahos is a full-time retail worker and a member of Neighborhoods Organizing for Change and the Fed Up campaign.
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