Notes from the Federal Reserve
We often find out that an organization we think of in one light actually has a persona that extends more deeply in another direction. Everyone I talk to about this topic finds this emphasis surprising on the face of it, even though the logic makes perfect sense. The Federal Reserve Bank conducts a bi-annual community development conference. Its purpose, as one conference co-chair said, is to help the Fed “understand all issues that bear on the economy.”
The organization gives the topic of community development serious attention. Fed Chair Janet Yellen pointed out at this year’s just-ended conference that, separate from its work supporting economic decisions, the Fed has a large staff doing research on a range of topics, with one big focus being the related topics of income inequality and economic mobility. This year’s conference focused on families (what characteristics predict upward mobility), communities (how do locational differences affect economic mobility) and the economy as a whole. On this last point, Chair Yellen commented, “it seems obvious” that opportunity and mobility contribute to a strong economy.
The Fed is a cautious and careful research organization. But the news from a range of research they report on the topic is sobering. Ray Boshara, from the St. Louis Fed’s Center for Household Financial Stability, described America as dividing increasingly into two broad population groups, one that might be called “Thrivers” constituting about a quarter of the population, and the other three-quarters of the population who might more aptly be called “Strugglers.” In Boshara’s words, “demographic factors increasingly determine whether you are among the one-quarter Thrivers or the three-quarters Strugglers.” That, in turn, leads to a reluctant conclusion that “our fundamental social contract that promises economic rewards for hard work has been called into question.”
Sobering thoughts indeed. We’ll have a few more comments from this important gathering in our next blog.