Unemployment for the lowest-paid workers in the U.S. is above 20%, a figure that Federal Reserve Governor Lael Brainard said underscores the importance of policy help for the economy.
The figure indicates how uneven the recovery has seen since efforts to control the Covid-19 pandemic resulted in the biggest quarterly GDP drop since the Great Depression.
“The damage from COVID-19 is concentrated among already challenged groups,” Brainard said in a speech Wednesday. “The K-shaped recovery remains highly uneven, with certain sectors and groups experiencing substantial hardship.”
At a time when the national unemployment rate has come down from the pandemic peak of 14.7% to the current 6.7%, Fed economists estimate the jobless rate for the lowest quartile of earners is “likely above 20%,” Brainard said.
That comes as the Black unemployment rate is 9.9% and the Hispanic rate is at 9.3% while the rate for Whites is 6%.
Fed officials have made “inclusive” employment gains a priority and have adjusted policy to try to make that happen. A new approach will allow inflation to run higher than the central bank’s 2% goal and the unemployment rate to fall beneath what had traditionally been an indicator of higher inflation before the Fed will raise interest rates.
In recent days, central bank speakers have offered somewhat differing views on the future of policy, with some worrying about inflation rising faster than expected.
Brainard did not commit to a time frame for policy adjustments but noted that “the economy remains far from our goals.”
“We are strongly committed to achieving our maximum-employment and average inflation goals,” she said. “It is too early to say how long it will take. The Committee has stated clearly that it needs to see substantial further progress toward our goals before adjusting purchases.”
The Fed currently is buying at least $120 billion of bonds each month and has kept its benchmark short-term borrowing rate anchored near zero. Fed officials have continued to call on Congress for more fiscal help.