The Fed — Yes, the Fed — Can Help Fix Inequality

The Federal Reserve is poised to better consider how its policies affect low-income Americans

Federal Reserve Board Chairman Jerome Powell testifies during a full committee hearing on “Monetary Policy and the State of the Economy” on July 10, 2019 in Washington, DC. Photo: Brendan Smialowski/AFP/Getty

Speaking before the House Financial Services Committee earlier this month, Federal Reserve Chair Jerome Powell acknowledged something radical about the state of the American economy: It’s only now, 10 years into the recovery from the Great Recession, that we’re entering a period that benefits the most vulnerable Americans, and that finally delivers wage gains to middle-income Americans.

“As you can see in your communities, the expansion is now reaching groups that are at the margins of the labor force,” Powell explained. “That’s because we’re pushing ahead and having a very long expansion with quite low unemployment, and that’s really benefiting these people at the margins.” In simpler terms, Americans who’ve historically had a hard time finding jobs — for example, people with criminal records — are finally getting better access to the labor force.

Implicit in Powell’s testimony is a crucial admission: The kind of economy that benefits these Americans looks very different from the kind of economy that benefits upper-income Americans. What Powell didn’t say, but which many believe to be true, is that by considering the economic well-being of low- and…