In yet another sign of the economic scarring being created by the pandemic, an influential Fed governor acknowledged that the unemployment rate for the lowest earners may be three times the national average of 6.7%.
Unemployment for workers in the bottom wage quartile in the U.S. is likely above 20%, Federal Reserve Governor Lael Brainard said, emphasizing the need for urgent economic policy that can help those who are currently without work.
Brainard referenced the figure in a speech Wednesday, highlighting how uneven the economic recovery has been since the COVID-19 pandemic hit the U.S. in March. While the unemployment rate for the nation’s lowest-paid workers is above 20%, it has fallen below 5% for the nation’s highest-paid workers, she said.
“The deep and disparate damage caused by the pandemic, coming just over a decade after the financial crisis, underscores the vital importance of full employment, particularly for low and moderate-income workers and those facing systemic challenges in the labor market,” Brainard said.
“The damage from COVID-19 is concentrated among already challenged groups,” she continued. “The K-shaped recovery remains highly uneven, with certain sectors and groups experiencing substantial hardship.”
In addition to socio-economic class, race has also been unevenly affected by unemployment. The Black unemployment rate is 9.9% and the Hispanic rate is at 9.3%, while the rate for Whites is 6%, the U.S. Bureau of Labor Statistics reported.
Brainard said the Fed has made “inclusive” employment gains a priority, adjusting its policy to allow inflation to run higher than the previously set 2% goal and the unemployment rate to fall below the previous indicator of higher inflation before the Fed raises interest rates.
“We are strongly committed to achieving our maximum-employment and average inflation goals,” she said, though she noted that the Fed does not have a set timeline for when this will happen. “The economy is far away from our goals in terms of both employment and inflation, and even under an optimistic outlook, it will take time to achieve substantial further progress.”