WASHINGTON – Top Federal Reserve policymakers on Tuesday underscored their concern that Black and Hispanic people are sharply underrepresented in the economics field, which lessens the perspectives that economists can bring to key policy issues.
“If we don’t have a diverse group of people in the field, we won’t have the right topics to focus on,” said Eric Rosengren, president of the Federal Reserve Bank of Boston.
At a webinar sponsored by the 12 regional Fed banks, the officials and many outside economists addressed the problem on the same day that a study from the Brookings Institution reported that the top ranks of the Federal Reserve system remain disproportionately white, particularly on the boards of the regional banks.
The viral pandemic and last summer's racial justice protests have thrown a national spotlight on longstanding racial and gender disparities within the U.S. economy, with unemployment rates chronically higher for African Americans and Hispanics and levels of wealth, income and homeownership sharply lower. Yet even in that context, economics trails other fields in measures of diversity, the officials said, and the profession has been slow to address racism as a source of economic inequality.
“Race is a variable that economists are lazy about,” said Raphael Bostic, the president of the Atlanta Fed and the first Black president of a regional Fed bank in the system's 108-year history. "That means we’re drawing conclusions that are often not reflective of reality.”
In an interview, Bostic noted the Fed's adoption last summer of a new policy framework that calls for the central bank to wait for actual increases in inflation before potentially raising its benchmark interest rate. Previously, the Fed would raise rates on the expectation that inflation was poised to accelerate, even though those forecasts didn't always prove accurate.
This new framework, Bostic suggested, reflects the Fed's broadening recognition of the consequences of its policymaking.
“If you cut off the recovery because of fears of inflation, even when you haven’t seen it, you’re preventing groups of people from really fully participating in the economy,” Bostic said. “And when you look at those groups, they tend to be lower-income people, and they tend to be minorities that are the last ones to benefit.”