Reed Introduces Respect for Workers Act to Ensure Fed’s Board of Governors Includes Worker Representation
WASHINGTON, DC – In an effort to strengthen America’s economy and ensure workers have a seat at the Federal Reserve’s decision-making table, U.S. Senator Jack Reed (D-RI) introduced the Respect for Workers Act (S. 1474). This legislation would require that at least one Federal Reserve Governor have demonstrated primary experience in supporting or protecting the rights of workers.
Reed’s bill is cosponsored by U.S. Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Chris Van Hollen (D-MD), and Kirsten Gillibrand (D-NY).
The Federal Reserve System is America’s central bank that conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. The Board of Governors in Washington, DC is the seven member governing body of the Federal Reserve System, which also includes a dozen Reserve Banks located around the country.
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. The law stipulates that in nominating Federal Reserve Governors, 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.”
The Respect for Workers Act would require that at least one Governor with demonstrated primary experience in supporting or protecting the rights of workers would have a seat on the Federal Reserve Board, which has a dual mandate of stable prices and maximum employment. So the bill ensures that worker interests get the very same representation that community bank interests already have on the Board of Governors.
“The Fed has tremendous power over interest rates and is required by law to promote the goal of full employment. This bill would ensure at least one member of the Board has demonstrated primary experience in supporting or protecting the rights of workers. The Board should always have someone who can be a voice for working men and women and whose perspective is informed by their experience in standing up for workers’ rights. Ensuring worker representation on the Board would promote a stronger and healthier economy,” said Senator Reed, a senior member of the Banking, Housing, and Urban Affairs Committee. “Working men and women built this country and fuel our economy. Workers deserve our respect, gratitude, and a seat at the Fed’s boardroom table so their voices are directly heard and their interests can be served by macroeconomic decision-makers. The Respect for Workers Act would ensure that future Boards of Governors continue this Board’s efforts to remain highly focused on fostering as strong a labor market as possible for the benefit of all Americans.”
Senator Warren: “The Federal Reserve has an opportunity to lead by example by ensuring that at least one Federal Reserve Governor has experience in labor and protecting workers’ rights – and our new bill will require the Fed to do so. I’m proud to work alongside my colleagues to introduce legislation and stand shoulder-to-shoulder with America’s workers to give them a real seat at the table and a voice in Washington.”
“The Fed has such a huge impact on workers and their families – we must guarantee there is always a Governor with a track record in protecting them,” said Senator Brown, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs. “The Respect for Workers Act reserves a spot on the Board for someone with a background in supporting workers and will ensure that workers get a fair share of the economic growth they create – not just Wall Street hedge fund managers and the top 1 percent. We can take on economic inequality and shrink the racial wealth gap by building an economy based on the dignity of work, and that starts by ensuring the Fed and its Board of Governors are focused on protecting the rights of all workers.”
Reed’s bill has also been endorsed by the AFL-CIO; Columbia University Professor and Nobel Laureate Joseph Stiglitz; MIT Professor and Former International Monetary Fund (IMF) Chief Economist Simon Johnson; and Georgetown Law Professor Adam Levitin.
“Having a voice matters. For far too long the Federal Reserve has made critical economic decisions affecting working people while looking through the lens of Wall Street,” said AFL-CIO President Richard Trumka. “While we applaud the Fed’s recent focus on jobs and wages, sustained economic policymaking that works for all must include the perspective of working people, and this Federal Reserve bill ensures our voices will be heard. It is an important step toward tackling some core issues of inequality.”
“In this long year of the pandemic, we have seen workers repeatedly risk their lives to keep America safe, fed and healthy. It is yet another reminder of the critical importance they play in the economy, often with little acknowledgement or reward. That is why it is so important to ensure that at least one member of the Board of Governors of the Federal Reserve Board has experience in fighting for and supporting workers. The goal of full employment must remain front and center,” said Columbia University Professor Joseph Stiglitz.
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 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.
“The COVID-19 pandemic has demonstrated how essential workers are to our economy and the nation’s well-being. Grocery store workers, nurses, firefighters, delivery workers, and other workers in both the public and private sectors, took personal health risks to keep the economy going and deliver needed services to their fellow citizens. Workers held together the fabric of our society and economy during this public health emergency,” concluded Senator Reed. “This Federal Reserve has already stated that it ‘will remain highly focused on fostering as strong a labor market as possible for the benefit of all Americans,’ but we need this enshrined in everyday economic policy to ensure this Fed and those in the future continue to put the interests of workers up there with the interest of bankers. The Respect for Workers Act will ensure the Federal Reserve is better equipped to fulfill its dual mandate of price stability and full employment.”