Fed’s Top Ranks Dominated by White Men Despite Diversity Push

Federal Reserve Chair Jerome Powell has said that there’s no room for racism at the central bank and that diversity and inclusion are a “very high priority.”

A close look at the Fed’s own makeup shows that this powerful institution, the foremost authority on the economy in the U.S., still has a lot of work to do on that front.

In its 106-year history, the Fed has never been led by a person of color and has only had one female chair. Up and down the ranks of staffers within the central bank you’ll see a more diverse mixture of people, but among its hundreds of economists—who directly influence monetary policy—less so. A similar picture emerges at its 12 regional banks around the country.

Powell’s introspection comes as the U.S. faces a moment of reckoning with race. The brutal killing of George Floyd in Minneapolis in May set off protests around the country and has led to renewed questions of just how equal the economy that was built on the back of enslaved people is.

Current Federal Reserve Board Members

Photographers: Bloomberg

Sources: Federal Reserve, Bloomberg research

The nexus of power at the Fed sits with its seven-member Board of Governors, who are based in Washington. Currently they are all White, including two women.

There are two vacancies on the board, to which President Donald Trump has nominated a White man and a White woman.

Since its inception in 1913, the Fed has had three Black governors, starting with the appointment of Andrew Brimmer in 1966. It has had no Latino or Asian governors.

The board is complemented by leadership at its 12 regional Federal Reserve banks around the U.S. The heads of these branches take rotating seats on the monetary policy-setting Federal Open Market Committee along with the board.

These top positions have become more diverse recently, but only slightly.

Presidents of the 12 Federal Reserve District Banks

Photographers: Bloomberg, Federal Reserve

Sources: Federal Reserve, Bloomberg research

Raphael Bostic became the first Black president of a regional Fed bank in 2017. He runs the Federal Reserve Bank of Atlanta. Minneapolis Fed President Neel Kashkari is its second consecutive Indian-American leader.

The other 10 regional banks have never been led by a minority, and none of the 12 have ever been led by a Latino person, according to a Brookings Institution report.

Three of the 12 banks are currently led by women. Bostic and Mary Daly, the head of the San Francisco Fed, are openly gay.

Employment at the 12 Fed branches follows a similar pattern to corporations and businesses across America. When taken as a whole, most of the reserve banks are very diverse by a few different metrics.

At the management and executive level, though, those numbers fall. Of the Boston Fed’s 975 employees, 45% are women, but among its 17 executives, only three are female.

“In the economic profession, women are the significant minority,” said Michelle Holder, an assistant professor of economics at the John Jay College of Criminal Justice in New York. “Issues that affect women don’t really bubble to the surface in terms of mainstream economic theory.”

Black Employee Representation in Fed District Jobs

Sources: Federal Reserve, Bloomberg research

When it comes to race, the Richmond Fed district—which spans a part of the country that was particularly reliant on the labor of enslaved people before the Civil War—represents the highest number of Black residents among the banks at 22.6%.

By comparison, 19% of its employees are Black, and only 11.5% of managers and 5% of executives are.

At most of the other regional Fed banks, Black employees are over-represented compared to their districts’ Black population. Even at the executive level, more than half of the banks have a percentage of Black top brass that is higher than the local population.

This diversity does not extend to Latino employees, which are underrepresented everywhere except for at the Chicago Fed.

Latino Representation

Hispanic representation at the Fed's district banks trails local population levels in almost all regions

Sources: Federal Reserve, Bloomberg research

The Dallas and San Francisco banks, whose districts have the highest percentage of Latino-Americans and cover the U.S. southern border, have a Latino employment of about half that of the districts’ populations.

The Dallas Fed has just one Latino executive out of 17, and the San Francisco bank has two out of its 20 top leaders.

Briefing the governors and the regional Fed presidents are the ranks of economists that make up the central bank’s research department. In total, just about a quarter are women and about the same amount are minorities.

“People need to see themselves in the institution and see the policies that impact their communities, that that impact is well understood by us,” said Sylvain Leduc, director of research at the San Francisco Fed. “It’s important that we don’t have too many blind spots and that we cover a lot of ground with different models, different data sets, different perspectives.”


Minority employment is better than that for female economists

Sources: Federal Reserve, Bloomberg research

The makeup of the central bank’s economic departments is important because these are often a direct pipeline to leadership. Right now, four of the 12 reserve bank presidencies are held by former heads of research.

“Go back into the stream and look at the barriers. Why is the pool so small? Well, the water isn’t flowing in some areas and that’s where you should be stepping up,” said Monica Garcia-Perez, president of the American Society of Hispanic Economists and professor of economics at St. Cloud State University in Minnesota.

In annual reports to Congress about their efforts to increase diversity, each of the reserve banks and the board outline steps they’re taking to look outside the usual pool of hires. Many now list minority economist groups and historically Black colleges and universities among entities they recruit from.

Federal Reserve Board Diversity

Minorities are well represented at the board overall, but less so in executive spots

Sources: Federal Reserve, Bloomberg research

The Fed also plays an integral role in the economics profession even outside its walls: the central bank hires one out of every 25 new doctoral graduates in the field.

“The lack of diversity of background and intellectual training is concerning for the Fed and has serious consequences,” said Aaron Klein, a fellow at Brookings and author of the report on the Fed’s diversity.

Fed leaders in the past few years have put a greater emphasis on reducing minority unemployment rates, with Chair Powell regularly updating Congress on progress. While the 10-year U.S. expansion continued through February, only in the last year or two did the labor market tighten to a degree that pay raises on average accelerated for lower-income workers, including many minorities.

The disappointment with the past expansion is causing Fed leaders to rethink monetary policy and how they should think about slack in the labor market. One idea Fed presidents have talked about is a proposal by economists Jared Bernstein and Janelle Jones that urged the Fed to target the African American unemployment rate when it makes policy decisions.

With lower-income workers being hurt disproportionately in the current recession, Fed leaders are talking more bluntly about racial disparities. The Atlanta Fed’s Bostic said he agreed with the protests against police brutality and called for policy makers at all levels to step up the fight against discrimination. He has also cited structural and institutional racism as being a drag on U.S. growth.

“I think you have seen a pretty significant change in terms of the voice of the Fed in the last six to eight months,” Bostic said last week.

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