April 23, 2021

Gillibrand Reintroduces Bicameral Legislation Requiring The Federal Reserve To Address Economic Inequalities, Close Racial Employment And Wage Gaps

U.S. Senator Kirsten Gillibrand, alongside U.S. Senator Elizabeth Warren (D-Mass.) and Representative Maxine Waters (D-Calif.), reintroduced bicameral legislation to address economic inequalities and close racial employment and wage gaps. The Federal Reserve Racial and Economic Equity Act would require the Federal Reserve to use its authority to eliminate racial employment and wage gaps and report on progress to address existing disparities over time. 

“Not only did the pandemic reveal the substantial racial gaps in our economy, but its disproportionate harmful impact on communities of color deepened the divide, especially in our financial system,” said Senator Gillibrand. “As we rebuild our economy, the government has a responsibility to address racial disparities in wages, economic opportunity and wealth. Now is the time to act and to give the Federal Reserve the explicit mission of combating institutional racism in our economy.”

According to a report from the Federal Reserve, financial insecurity was more prevalent among Black and Latino New Yorkers even before the pandemic—these New Yorkers often had a much smaller financial buffer than their white counterparts to cushion the blow of job loss, reduced income or unexpected expenses. The pandemic deepened the financial challenges for communities of color and drained local economies — addressing these economic disparities, advancing racial equity, and ensuring underserved communities have access to good-paying jobs will be key to rebuilding a strong economy. 

Specifically, the Federal Reserve Racial and Economic Equity Act: 

  • Makes Reducing Inequality Part of the Fed's Mission: This bill adds a new section to the Federal Reserve Act that would require the Fed to carry out its functions in a way that "minimizes and eliminates racial disparities in employment, wages, wealth, and access to affordable credit."
  • Ensures that Racial Economic Disparities are Not Ignored: This legislation requires the Federal Reserve Chair to identify in his or her semiannual testimony before Congress: (1) the existing disparities in employment, income and wealth across racial and ethnic groups and (2) how the Fed is using its authorities to reduce these disparities.
  • Requires Robust Reporting on Disparities in Labor Force Trends: This bill requires the Fed's Semiannual Monetary Policy Report that the Fed releases in conjunction with the Chair's testimony to include recent labor force trends with "a comparison among different demographic groups, including race, gender, and educational attainment."

The legislation is co-sponsored in the U.S. Senate by Senators Richard Blumenthal (D-CT), Edward J. Markey (D-MA), Chris Van Hollen (D-MD), Dianne Feinstein (D-CA), Raphael Warnock (D-GA and Jack Reed (D-RI). The House Financial Services Committee recently passed the bill. 

Full text of the legislation can be found here

A summary of the Federal Reserve Racial and Economic Equity Act can be found here