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Unemployment is above 20% for the lowest paid workers, says Fed Brainard

Federal Reserve Board Governor Lael Brainard speaks at the John F. Kennedy School of Government at Harvard University in Cambridge, Massachusetts, USA, March 1, 2017.

Brian Snyder | Reuters

Unemployment for the lowest paid workers in the United States is above 20%, a figure that Federal Reserve Governor Lael Brainard said underscores the importance of political assistance to the economy.

The figure shows how uneven the recovery has been since efforts to control the Covid-1

9 pandemic resulted in the largest quarterly GDP decline since the Great Depression.

“The damage from COVID-19 is concentrated among already challenged groups,” Brainard said in a speech Wednesday. “The K-shaped recovery remains very uneven with certain sectors and groups
experiencing significant difficulties. “

At a time when the national unemployment rate has fallen from the pandemic peak of 14.7% to the current 6.7%, Fed economists estimate that unemployment is low, that unemployment for the lowest quartile of wage earners is “probably above 20 percent, said Brainard.

That comes as the black unemployment rate is 9.9% and the Spanish-speaking rate is at 9.3% while the rate for whites is 6%.

Fed officials have prioritized “inclusive” employment and have adjusted policy to try to make that happen. A new approach will allow inflation to run higher than the Fed’s target of 2%, and unemployment will fall below what has traditionally been an indicator of higher inflation before the Fed raises interest rates.

In recent days, speakers from central banks have offered somewhat different views on the future of policy, and some are concerned that inflation is rising faster than expected.

Brainard did not commit to a timeframe for policy adjustments, but noted that “the economy remains far from our goals.”

“We are strongly committed to achieving our maximum employment targets and average inflation targets,” she said. “It is too early to say how long it will take. The committee has made it clear that significant further progress is needed towards our target before purchasing adjustment.”

Fed power buys at least 120 billion. Dollars in bonds each month and has kept its short-term borrowing rate anchored close to zero. Fed officials have continued to call on Congress for more fiscal assistance.

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