How Raising Fed Interest Rates Directly Harms Black People
I’ve spent the past six years of my life organizing in the Black community across the nation, including Washington, DC. I know firsthand that too many people in my community are struggling to make ends meet. With the rising cost of inflation to the exorbitant gas prices, I know personally what it’s like to pick up a spare job just to pay for gas or to lose your job at the beginning of the pandemic with little to no notice.
For me, this meant getting a call from the sandwich shop I was working at about 24 hours before I was laid off. There was no severance; in fact, there was no offer of any kind of assistance. So, like the rest of us, I scrambled to find a way to make ends meet on top of paying for my college tuition. I was lucky to have the support of my family, but I know that I’m the exception, not the rule.
This grim reality plagues Black America every day. Despite some encouraging signs from the latest national jobs report, for many, job opportunities are scarce and systemic barriers to economic opportunity make it even harder for Black people to find work. And the Feds raising interest rates will only make matters worse.
The Federal Reserve’s decision to raise interest rates in their ongoing attempts to combat inflation is taking a toll on Black consumers, and it’s only a matter of time before it impacts the economy as a whole. The Fed is risking full employment for Black workers, setting back this community even further at a time when economic recovery is what Black people desperately need. It’s time for the Fed to find a better way.
The Black community was the hardest hit throughout the pandemic, dying at disproportionate rates and shouldering the burden of the economic crisis in this country. Despite the encouraging pace at which the Black unemployment rate has fallen since the pandemic began, Black unemployment remains nearly double that of white Americans. The over-employment of Black people in the gig economy is part of a larger, systemic issue. Unemployment for Black workers in my hometown is 12.5%. Gig work is low and unstable, and swings in this sector have outsized negative impacts on its workers — Black Americans.
That’s why the move by the Fed to raise interest rates last month — the biggest single jump in rates since 1994 — is so alarming. Worse, they’re threatening to increase rates again later this month. The trickle-down effect of higher rates means lower wages and fewer job opportunities, which will harm Black recovery, leaving more Black people behind.
The Fed continues to ignore the plight of Black people and the country at large. Consumer sentiment around the higher interest rates is growing more pessimistic by the day. While it’s true that the country overall needs relief, there is only a marginal positive impact of these rates for my community. Most Black working adults rely on public transit for their commuting because we can’t afford to have vehicles with the poorly paying jobs we currently have.
A more effective solution would be to implement economic policies that lead to higher wages and job creation, particularly in Black communities, because this will actually lead to real economic recovery for the people most in need. Policies that make it easier for Black Americans to buy homes and build generational wealth would be a great start. Using the Administration’s power of the purse to change the way federal contracts are administered could help us reach maximum Black employment, particularly if we focus on building apprenticeship programs that employ young Black workers and offer paid leave. Student loan relief could also have an outsized impact on the Black community. The list goes on.
Raising interest rates is going to do more harm than good for those who desperately need economic opportunity. The gains that Black people have made could be completely wiped out, and if our ultimate goal is to see our country thrive with full employment, Black Americans must reach full employment first.
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Aniyah Vines is a graduate of Howard University with a degree in both Political Science and Criminology. Her passion for social justice became action after she and her family experienced the senseless murder of her cousin, Delrawn Smalls, who was killed by an off-duty police officer in Brooklyn. She formally served as Howard University’s NAACP Education Committee Chairwoman from 2019-2020, and Howard University’s NAACP President from 2020-2021. She leads volunteer and mentorship programs within various juvenile diversion programs in Charlotte, North Carolina. She also is the founder of a non-profit organization based in DC called The Live Movement, a student-led National HBCU Coalition, founded on June 1, 2020. Their latest Direct Action is the 34-day occupation of Howard University, the #Blackburn Takeover.
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