Fed Gov Brainard: Barriers on Labor Mkt Disparities Remain

By Jean Yung

     WASHINGTON (MNI) - The economic expansion will likely continue to benefit

disadvantaged groups in the labor market by drawing them back into employment,

but a number of structural barriers remain that cannot be easily address by

Federal Reserve policies, Fed Gov. Lael Brainard said Tuesday. 

     Factors such as discrimination, access to education, and social networks

may be contributing to higher rates of unemployment among black and Hispanic

populations, which continue to pose challenges to the Fed's goal of fostering

maximum employment. 

     "As the economic expansion continues and brings more Americans off the

sidelines and into productive employment, it seems likely that the positive

trends in employment and participation rates for historically disadvantaged

groups will continue," she said. 

     "That said, the benefits of a lengthy recovery can only go so far, as the

research points to some barriers to labor market outcomes for particular groups

that appear to be structural." 

     Differences in unemployment rates across racial and ethnic groups are now

near historic lows and will likely "continue to shrink if the overall

unemployment rate falls further," Brainard said.

     But the Fed's upcoming triennial Survey on Consumer Finances, to be

released Wednesday, finds the disparities in the labor market mirrored in

groups' income and wealth. 

     The average income for white families in 2015 was about $123,000 per year,

compared with $54,000 for black families and $57,000 for Hispanic families, the

survey found. Average wealth holdings for white families in 2016 were about

$933,000, compared with $191,000 for Hispanic families and $138,000 for black

families. 

     "A significant portion of the gaps in unemployment rates across racial and

ethnic groups cannot be attributed to differences in their underlying

characteristics, such as age and education levels," Brainard said. 

     Unfortunately, policy tools available to the Fed are not well suited to

address some of these underlying issues, though Fed researchers strive to

increase the public's understanding of these issues, Brainard said. 

     Brainard noted that consulting data outside of the headline unemployment

rate and inflation pressures is necessary in assessing how close the labor

market is to the Fed's full employment goal. This is "especially true at a time

when the traditional Phillips curve relationship is flatter than in the past,

which means that price inflation is likely to be less informative regarding

labor market tightness than it was previously," she said.

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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