Progressive economists and other critics on Wednesday called out the U.S. Federal Reserve for officially announcing its widely expected third 75-basis-point interest rate hike this year.
While addressing the decision during an afternoon press conference, Fed Chair Jerome Powell also said that “we anticipate that ongoing increases will be appropriate” to meet the central bank’s goal of returning inflation to 2%.
With each rate hike — and other central banks following suit — warnings of a global recession have mounted, and opponents of the Fed’s approach have stressed that low-income workers and other marginalized people are bound to bear the brunt of the negative impacts.
“It’s a central bank in full recession-creating mode,” Crooked Media editor in chief Brian Beutler said Wednesday after the Federal Reserve rose its rate up to a range of 3%-3.25%.
U.S. Sen. Elizabeth Warren (D-Mass.), a vocal critic of previous hikes, was among those who focused on the expected effects for those who can least afford another rate increase.
“Chair Powell just announced another extreme interest rate hike while forecasting higher unemployment,” she said Wednesday. “I’ve been warning that Chair Powell’s Fed would throw millions of Americans out of work — and I fear he’s already on the path to doing so.”
Janelle Jones, chief economist at the Service Employees International Union (SEIU), similarly said that “today the Fed decided to risk mass joblessness in its fight against inflation. Raising interest rates, and pushing the economy toward a recession, will result in millions of workers being unemployed or taking pay cuts.”
“And we know who those workers will be,” she continued. “The workers most likely to face an economic crisis are workers of color, women, and low-wage workers. The same groups who already face worse economic outcomes in the labor market.”
Unemployment rising to 4.4% next year likely translates to a Black unemployment rate of 8.8%. We don’t have to make this choice for Black workers. https://t.co/RvoLGAA9aM
— Janelle Jones (@janellecj) September 21, 2022
In addition to also emphasizing that “raising interest rates puts the burden of fighting inflation on low-wage workers,” former U.S. Labor Secretary Robert Reich suggested that “for once, let’s take aim at an actual driver of inflation: corporate profits.”
Specifically, Reich — now a professor of public policy at the University of California, Berkeley — advocated for a windfall profits tax, price controls, higher taxes on corporations and the rich, and reining in monopoly power.
Noting another tweet from Reich with those same messages, Groundwork Collaborative argued Wednesday that he is “exactly right” that the Fed’s recent moves largely burden lower-wage people and “corporate profits must be the target, not workers.”
.@RBReich is exactly right. To add additional context, Black workers will be especially burdened by a Fed-induced recession — since their unemployment rate is roughly double that of white workers.
Corporate profits must be the target, not workers. https://t.co/zhTsOfJElr
— Groundwork Collaborative (@Groundwork) September 21, 2022
“You can’t fix the economy by hurting people — but that’s exactly what the Fed chose today,” Groundwork Collaborative added. “Throwing millions out of work won’t address the root causes of inflation and we implore policymakers to remember that #WeAreTheEconomy — not Wall Street and wealthy corporations.”
Reich and Rakeen Mabud, chief economist and managing director of policy and research at Groundwork Collaborative, are among the experts scheduled to testify Thursday morning before a panel of the House Committee on Oversight and Reform.
The Subcommittee on Economic and Consumer Policy hearing — titled, “Power and Profiteering: How Certain Industries Hiked Prices, Fleeced Consumers, and Drove Inflation” — is set to highlight that while input costs have begun to fall, some companies and sectors “are keeping prices higher anyway, prolonging inflationary pressures that have harmed American consumers.”