If U.S. companies needed more evidence that scrutiny around wages is intensifying, they heard it this week during Federal Reserve Chairman Jerome Powell’s testimony to Congress.
The subject came up several times. One memorable exchange was with Senator Sherrod Brown of Ohio. He asked Powell whether the “Fed’s employment mandate is just to ensure that people are employed” or whether full employment implies something more, that “workers earn a salary and benefits that let them fully participate in the 2019 economy and our country.”
Powell dodged the question, instead reminding Brown that U.S. unemployment is at a 50-year low and that the Fed lacks the tools to “affect every social problem.” It’s true that the Fed’s mandate is to maximize employment, not wages, and that the Fed probably can’t raise wages, even if it wanted to.
But as long as workers continue to receive less than a living wage, no one should be surprised that concerned lawmakers are looking for every opportunity to intervene, however implausible or ill-advised. If companies won’t raise their employees’ pay, the government will try to do it for them.
The Fed’s mandate of maximum employment makes it a tempting target. After all, the point of employment is to make a living, so it’s natural to ask how well the Fed is achieving its mandate when millions of workers earn less than a living wage.Continue reading “If Companies Won’t Raise Pay, Lawmakers Will Try to Do It for Them”