Reed, Colleagues Reintroduce Respect for Workers Act to Ensure Fed’s Board of Governors Includes Worker Representation
WASHINGTON, DC – U.S. Senator Jack Reed today reintroduced legislation to strengthen America’s economy and ensure workers have an advocate at the Federal Reserve’s decision-making table. The Respect for Workers Act would require that at least one Federal Reserve Governor has demonstrated primary experience in supporting or protecting the rights of workers.
Reed’s bill is cosponsored by Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Cory Booker (D-NJ), Sheldon Whitehouse (D-RI), Tammy Baldwin (D-WI), Alex Padilla (D-CA), Jeff Merkley (D-OR), and Bob Casey (D-PA).
The Federal Reserve System is America’s central bank. It sets the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates. The Board of Governors is a seven member body in Washington, DC, that oversees the Federal Reserve System, including the 12 regional Federal Reserve Banks.
Each of the Governors is nominated by the President and must be confirmed by the full U.S. Senate in order to secure a 14-year staggered term. Existing law stipulates that in nominating Governors to the Federal Reserve Board, which has a dual mandate of stable prices and maximum employment, the President must “have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.” In 2015, Congress updated the law directing the President to select “at least 1 member with demonstrated primary experience working in or supervising community banks having less than $10,000,000,000 in total assets.”
Arguably no group is more impacted by the Federal Reserve’s efforts to meet its dual mandate to promote stable prices and maximum employment than workers. But, at present, no Federal Reserve Governor is specifically required to represent workers. In an effort to ensure that the Board of Governors properly reflects the needs and importance of hardworking families, the Respect for Workers Act would require that at least one Governor has demonstrated primary experience in advocating for the rights of workers. This bill would ensure workers’ economic needs are front and center at the Federal Reserve and ensure that workers get the very same representation that community bank interests already have on the Board of Governors.
“The Fed is required by law to promote stable prices and full employment for the American public. While banks and Wall Street have long been well-represented on the Fed Board, workers have not. And when prices for basic necessities rise or unemployment spikes, hardworking Americans suffer most. This legislation would ensure workers are being properly represented too. It would require the Board to have at least one member with a proven track record of standing up for the rights and needs of American workers. The goal of requiring proper representation on the Board is to promote a stronger and healthier economy that works for all,” said Senator Reed, a senior member of the Banking, Housing, and Urban Affairs Committee. “Workers built this country and working families fuel our economy. By ensuring that working men and women have a seat at the monetary policy decision-making table, their voices and interests will help inform the Fed’s actions to foster as strong a labor market as possible for the benefit of all Americans.”
“American workers power our economy – ensuring their success is at the core of our economy’s success. But while the Federal Reserve’s decisions have a major impact on them, there’s no requirement that anyone on the Board of Governors has labor experience. Workers have earned a seat at the Fed where these critical decisions are being made,” said Senator Van Hollen.
“Without inclusive economic policy, we cannot expect inclusive economic growth. This is particularly true for the Federal Reserve, the most important economic institution in our country, whose actions are deeply felt by workers and their families,” said Senator Booker. “Thanks to actions by Congress and President Biden, workers are seeing wage gains and employment levels at their highest rates in decades. We must continue to build toward a more just economy, and that begins with meeting the most basic right – the right to work. That’s why I am proud to introduce this bill that would reserve at least one spot on the Board of Governors for someone to bring the voices of workers to the table at the Federal Reserve. We must ensure the Fed has the best interests of working people in mind and that it will continue to address our nation’s economic inequities.”
“No one is more impacted by the Federal Reserve’s duty to maintain maximum employment and price stability than our nation’s workers,” said Senator Padilla. “We must make sure that at least one Federal Reserve Governor has demonstrated experience in supporting and protecting the rights of workers. Our bill would ensure that the very people the Federal Reserve is mandated to support are represented, giving workers a voice at the highest levels of the Federal Reserve.”
Reed’s bill has also been endorsed by the AFL-CIO; MIT Professor and Former International Monetary Fund (IMF) Chief Economist Simon Johnson; Groundwork Collaborative; National Employment Law Project; and Georgetown Law Professor Adam Levitin.
MIT Professor and Former IMF Chief Economist Simon Johnson called Reed’s proposal: “A long overdue proposal to ensure that the congressional commitment to full employment is reflected in Federal Reserve decision-making. Who is at the table always matters for what decisions are made. Millions of workers have had a rough ride over recent decades. This legislation would help redress the imbalance in power and access that has hurt so many people.”
“The Federal Reserve has been putting Wall Street interests ahead of workers and families for years and it's long past time for that to change. The Respect for Workers Act would be a strong step toward ensuring that those who are most affected by the Federal Reserve's decisions have a say in how the economy is run, and more pressure is put on them to truly take full employment and other worker concerns seriously,” said Groundwork Collaborative Executive Director Lindsay Owens.
“The bill is important legislation to ensure that the Federal Reserve will always take seriously both parts of its dual mandate of price stability and full employment. By providing that the Federal Reserve Board must include a member with experience supporting or protecting the rights of workers, this legislation makes sure that the goal of full employment will not be subordinated to price stability,” said Georgetown Law Professor Adam Levitin.
“Strengthening the Federal Reserve’s commitment to fostering the strongest possible labor market will ensure that this Fed and those in the future continue to put the interests of workers up there with the interest of bankers,” concluded Senator Reed. “The Respect for Workers Act will better equip the Federal Reserve Board with the representation needed to fulfill its dual mandate of price stability and full employment.”