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Inflation, Race, & Labor: An Interview with Darrick Hamilton


Darrick Hamilton (@DarrickHamilton) is the Henry Cohen Professor of Economics and Urban Policy and founding director of the Institute for the Study of Race, Power, and Political Economy at The New School.

Raúl Carrillo (@RaulACarrillo) is an Academic Fellow at Columbia Law School and the former Deputy Director of the LPE Project.

This post is part of a symposium on inflationRead the rest of the symposium here.


On Martin Luther King Jr. Day, Raúl Carrillo spoke with Dr. Darrick Hamilton, the Henry Cohen Professor of Economics and Urban Policy at The New School. Considered one of the foremost economists and public intellectuals in the United States, Hamilton’s scholarship, including work on a Federal Job Guarantee, has inspired many bills and policy platforms, and he has frequently testified before Congress, including around economic COVID-19 policy responses.

The conversation below, which has been edited for length and clarity, covers the political economy of the Fed’s approach to unemployment, the racialized harms of shifting the burden of price stability onto workers and poor communities, and the long struggle for truly fair and full employment.

Thanks for joining us this afternoon, Dr. Hamilton. I want to ask you a bit about history and current events, but before I do, I’d like to unpack a few basic concepts. The opening post of our series challenges the Fed’s mandate and broader power over the economy. In the meantime, we live in the Fed’s world.

Within this world, what does employment have to do with prices? Can you elaborate on the Fed’s mandate and the ways that the tradeoff between employment and price stability is being presented?

Media and political commentators are fueling anxiety and framing the impact of the stimulus and the trend in higher wages, specifically, as leading to higher prices throughout the economy. My concern is the use of politically exaggerated anxiety around inflation as a pretense that this economic stimulus and expansionary labor market needs to be cooled down.

By no means do I want to be callous towards the real harm that many families are experiencing trying to make ends meet in a context of rising prices. Still, as my colleague Demond Drummer and I have stated in a recent Washington Post Op-Ed, “(w)e are nowhere near an inflation crisis.” Our concern is the extent to which the concern with price stability is being manipulated to thwart fiscal policies that would promote more stable employment with higher wages and better working conditions. This is a political choice—not something necessarily grounded in economic reality, even though the politics are necessarily intertwined with economic conditions.

The normative perspective of the Fed is to center price stability. Under the status quo, a non-diverse elite apparatus of policy experts determines a “tolerable” level of joblessness generally without an adequate demographic or historical lens of who bears the blunt of this joblessness, consistent with the primacy of price stability. In their view, there is a Non-Accelerating Inflation Rate of Unemployment (NAIRU), a term that is asserted as if it is a technical positivist fact devoid of norms or values. NAIRU presents increases in employment and inflation as causally linked. In an expansionary economy, as workers negotiate wages upward, firms raise prices.

This is not exclusively true, nor is it exclusively bad. There are indeed periods in which we’ve had high inflation and high unemployment, as well as periods when we’ve had low inflation and low unemployment. There have been empirical trade-offs at certain points in history, but NAIRU extrapolates beyond history, usually suggesting that a 4-6% unemployment rate is a “natural” target. This is not “natural” economic calculus, but rather a choice, and a choice heavily influenced by the norms and values of those with power to impose that choice. NAIRU as a concept explicitly places the primacy of price stability onto the shoulders of worker wages and employment prospects.

I appreciate how you’re focusing on power from the start.

There are winners and losers in price stability. For instance, to a large extent, households with existing debt can benefit from some inflation. Inflation decreases the value of what they have to pay back tomorrow. And in terms of wages and inflation, shouldn’t we be willing to live with some level of inflation if it is accompanied by workers receiving real wage increases in a distributionally inclusive way? The point is that inflation in and of itself need not be a bad thing, despite some of the non-nuanced anxiety around inflation. What we want is a stable trend in which real wages are rising faster than inflation.

We should care about and focus on who is gaining purchasing power. Under the economic regime governing our economy for the last 50 years, which many including me have labeled the neoliberal regime, workers have scarcely seen increases in their purchasing power, especially when juxtaposed against their productivity and work hour contributions. Quite the opposite: tremendous gains have gone to the wealthy and upper-middle class elites, and this delicate two-step between fiscal tax-cuts, bank bailouts, and deregulation has happened within a context of Fed-emphasized “price stability.”

Expansionary policy with a keen eye towards distributional inclusion and environmental security is necessary to promote a healthy and just economy, especially in the context of a global pandemic. Still, I wouldn’t be telling you the truth if I didn’t admit that inflation is associated with fiscal expansion. But that’s not necessarily a bad thing. If people with money have to pay more for an Uber, yes, that depletes some of their purchasing power; but if it that higher price was the result of empowered Uber drivers who negotiated for better terms, it would also make for a fairer economy. Fiscal and monetary policy should aim to shift resources to the exploited and vulnerable people who have scarcely experienced a real wage raise over the last 40 odd years.

My understanding is that this approach to inflation and labor is at least partially codified in law, specifically the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978, which actually aimed for maximum employment in the context of price stability. As I understand it, at the time the legislation was passed, Coretta Scott King and a large political coalition were demanding true full employment, but inflation was the macroeconomic issue of the moment, presenting substantial obstacles. What was happening on the Hill and on the ground?

Well, as far as the Hill and the academy go, the neoliberal political-economic revolution happened, ratcheting up in the early-to-mid 70s. People don’t talk about the racialized aspect of this enough, but the neoliberal movement was fueled by reaction against gains from the Civil Rights Movement. The movement was also fueled by its rhetorical elegance in its language of “freedom,” “choice,” and a specific notion of rights – not economic rights of people, but the economic rights of property. This rhetoric of property rights was devoid of an honest reckoning with the immoral practice by which that property had come to be distributed in the first place.

The rhetorical illusion of “freedom and choice,” without an adequate understanding of power and initial endowment (i.e. “property”), is a rhetoric that naturalizes poverty and inequality and sets up those people without resources and power for exploitation or the whims of charity.

Ultimately, Humphrey-Hawkins was a compromise. The original proposal was literally for a Federal Job Guarantee: a legal right to a good job. That’s clearly not what we got. Instead, we got NAIRU and an emphasis on price stability with a neoliberal political regime that naturalized poverty and inequality.

Despite Jerome Powell’s relative dove-ishness compared to his predecessors, the Fed will soon raise rates necessarily arguing labor is the problem. That decision certainly has a disparate distributive impact.

Under the neoliberal conventional wisdom, it is inevitable that Powell will raise rates because the current conversation is held in a climate of fear and charges of irresponsibility on the part of government for directing stimulus towards people and the environment. We’re constrained to a policy apparatus that a neoliberal elite has imposed upon us.

The Fed has a great deal of power with respect to growth and distribution – directing rates of borrowing and investment capacity, injecting liquidity into the economy, and dictating the distributional rules and allotment of how and where that investment and liquidity will take place. In particular, the Fed positions banks in a privileged way, and likewise has a great deal of sway over the terms in which finance can engage with the American people.

As you’ve written, Black workers tend to be the first fired and last hired: the Black unemployment rate is typically far above the median unemployment rate. At LPE we ask, “Where is the economy?” The Federal Reserve’s model doesn’t even seem concerned with wide sectors of society it modulates ‘normal’ market-based labor, excluding domestic, agricultural, and carceral labor, as well as other work predominantly done by Black folks and BIPOC communities more broadly. What does the Fed’s decision mean in a racialized political economy?

I agree with LPE that the economy is a concept, and in practice it is not a concept devoid of politics, power, and racial and other social identity hierarchies: it’s never strictly the result of “unfettered agents” guided by their “free-will” in transactional relationships. Social hierarchies of power have always mattered!

We are naïve if we don’t recognize every policy in the U.S. is racialized, and the impact of this racialization is by no means limited to Black people. Ignorance of the past and existing racial hierarchy under the guise of forward looking “race-neutrality” is basically what Eduardo Bonilla-Silva accurately describes as color-blind racism. This type of racialization and identity group stratification is not unique to the U.S. Throughout time and space, structures of power have demarcated subgroups of people in hierarchical ways that reverberate politically as to who is worthy and entitled to receipt of public benefit.

To chart a more just course, the Fed should be actively “anti-racist” with its interventions; by no means does this mean that the Fed should ignore the plight of White people, especially those castigated as receiving their “just deserts” by the neoliberal framing that has naturalized poverty as the artifact of fair and efficient markets; but rather that Fed’s interventions should actively ensure that they are racially and economically inclusive.  

So where do we go from here? You mentioned the Job Guarantee.

Although we fall way short with implementation, perhaps a general consensus in the U.S. is that government has a fiduciary responsibility to guarantee political, civil, social, and even cultural rights to its people. At least as important in an enlightened democracy, especially one with plenty, are economic rights. We need economic rights to ensure that people have adequate access to income, healthcare, tuition and debt-free college, housing, capital, finance, etc. Along with various other colleagues, I have long argued for a Federal Job Guarantee – a right to a productive public sector job with a living wage, health insurance, and other benefits.

A Job Guarantee has clear macro-employment stabilizing effects. It establishes a baseline level of employment with bargaining and purchasing power for workers. The minimum wage defined by the program effectively becomes an overall implicit minimum wage (which is currently zero, given the structural unemployment that we tolerate by way of NAIRU and other policy actions or inactions). The Job Guarantee itself also serves as an automatic fiscal stabilizer – when there is an economic downturn, the programs kicks into higher gear, and in times of economic expansion, program activity slows. Further, the program has regional stabilizing effects; resources are directed and deployed to the regions and people that need them most. The program becomes an effective way to implement industrial policy consistent with our national interests. We can use the program to build our public, human, physical, and environmental infrastructure in ways that would, for example, promote a “care economy” and make us more climate, pandemic, and economically secure and resilient. We are long overdue for a coherent industrial policy that promotes innovation and more equitably shared prosperity.

Indeed, if we had a Job Guarantee, the Fed would have more room to focus on price stability and other aspects of finance more broadly.

I really appreciate how you frame the Job Guarantee vs. the mainstream Fed vision as a demand. As you know, we debate rights quite a bit in LPE. Even in policy circles, there’s intense discussion about the framing of a “right to a job”, for instance.

For me, the rights framework is politically mobilizing. I see rights as a baseline for participation and engagement. Without economic rights, individuals and communities are left to the whims of charity or disposed to exploitation by those that are endowed with power and resources. Excuse a clumsy metaphor, but it is like asking someone to come to a gunfight with a knife, or worse a sling-shot.

The concept around economic rights is not without precedent. Coming out of World War II, the U.N. Human Rights Commission included economic rights in its vision, including a right to a good job. I see this as at least in part a strategy to counteract economic conditions that predicated the atrocities of fascism. Of course, the rest of the world was not innocent of atrocities, before or after World War II. And given the tendency across societies, especially plural societies, to organize and stratify along identity hierarchy, these rights should be intentionally inclusive (i.e. anti-racist), in how they are designed and implemented

As I understand it, in the 60s and 70s a significant convergence of interests supported the Job Guarantee – we saw that in the Freedom Budget, as well as the platforms of the Poor People’s Campaign, the Black Panthers, the Young Lords, many unions, and for some time, the Democratic Party. I feel compelled to note the fight for a Job Guarantee crystallized the country’s first and arguably strongest “Latino and African-American” legislative alliance.

But it didn’t work.

The Job Guarantee is once again on the table. I believe that we will win, but how do we build a successful (multi-racial) coalition?

The “capture class” is able to get people doing poorly to identify with the dominant group by offering them relative status. In the U.S., that’s whiteness, which functions as a property right, as Cheryl Harris and other critical race theorists have described. In exchange for political coherence, relative status is conferred on those belonging to socially privileged identity-groups, even those on the low end of economic distribution. In fact, the property rights in whiteness become more salient with growing overall inequality. Basically, “however bad your lot in life is, at least you’re not them” (in the case of the U.S., Black people). And this right isn’t just psychic, but material as well. With scarcity and increasing threats to employment, “Whiteness” serves as a “chit” to offer relative protection from being the first fired.

To counteract the seduction and lure towards this type of immoral identity property right framework, we need an inclusive economic human rights policy framework that promotes a different set of values, grounded in a baseline set of enabling goods and services that promote shared security and prosperity. With greater economic security, the vulnerability and despotic appeal to fascism has less currency.