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MNI BRIEF: Fed's Daly Says Labor Equity is Economic Imperative

Longstanding racial and ethnic disparities in the United States have hurt not only the people who experience the disparities but all Americans more broadly, by depressing U.S. economic output by trillions of dollars over the past 30 years, according to a new paper by San Francisco Fed President Mary Daly.

Daly and coauthors from the San Francisco Fed, Shelby Buckman, Laura Choi, and Lily Seitelman, estimate closing gaps in labor market opportunities and outcomes by race and ethnicity has cost GDP USD22.9 trillion over a 30-year period from 1990 to 2019 and USD2.57 trillion in 2019 alone. "It means there is a lot of talent on the sidelines, or not getting opportunities for the productive activity that they could that would raise output for everyone," Daly told reporters during a press briefing.

While the study doesn't go beyond 2019, Daly said it is clear that Covid in 2020 and 2021 has only exacerbated the "large and persistent" gaps further among racial and ethnic groups in the US. The paper shows that it is important for the Fed to consider a variety of labor market indicators beyond just the unemployment rate when considering monetary policy, she said.

MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com

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