For release on delivery
1:00 p.m. EST
November 17, 2020
Strengthening Diversity and Inclusion in Economics
Remarks by
Lael Brainard
Member
Board of Governors of the Federal Reserve System
at
Exploring Careers in Economics
(via webcast)
November 17, 2020
It is a pleasure to be here today to talk about the future of economics with the next
generation of economists who will shape it. I hope you will take away from what you
hear today that a rigorous grounding in economic analysis can help you succeed in
whatever field you choose. I will share a few thoughts on what economics can do for you
and what you can do for the field of economics.1
Let me start with what economics can do for you. Just as there are a variety of
reasons that people decide to pursue economics, so too there are many career fields where
a degree in economics can be a powerful enabler. I have to admit I had some reservations
that led me not to major in economics as an undergraduate. That changed during my first
job out of college, when I recognized that economics can provide powerful tools to
analyze and design programs to improve opportunities and financial security for workers
and their families.
Economics can give you a powerful framework to explore the questions that
matter most to you. Let me give a few examples of some important questions and the
economic practitioners who made a big impact in addressing them.
So here's one: How can we help protect working women and men and their
families from the financial devastation of job loss due to forces beyond their control?
Frances Perkins first began thinking about that question as a young White girl in the
manufacturing hub of Worcester, Massachusetts in the 1880s. When Frances asked her
father why nice people could fall into poverty, he replied that this was a question little
girls should not concern themselves with. Fortunately, Frances did not listen to him. In
college, Perkins took an economics class where she started exploring the impact of rapid
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industrialization on the lives of working people. Her professor encouraged students to
visit local factories to see firsthand some of the brutal working conditions facing women
and children. That early field research sparked Perkins' determination to bring about
improved working conditions and established her careful attention to gathering data.2
Perkins went on to become a key author of the New Deal, and served as Labor
Secretary for a record 12 years, despite considerable opposition to the appointment of the
first woman Cabinet secretary. She persuaded Roosevelt to put in place a system of
unemployment insurance and built the Labor Department's capability to compile the
necessary employment statistics. She worked hard to secure legislation codifying core
labor rights, and she played a key role in designing and implementing Social Security.3
As Perkins was advocating for policies to improve working conditions facing
women and children, another young economist was gathering evidence on the lives of
Black working people. In her doctoral dissertation, Sadie Tanner Mossell Alexander
examined the living standards of Black families who were migrating to Philadelphia to
meet the demand for labor brought about by World War I.4 Alexander would become the
first Black American to earn a PhD in economics. She would subsequently become the
first woman to receive a law degree from the University of Pennsylvania because of the
barriers she encountered in the field of economics.
Black workers were fleeing the South, Alexander explained in her dissertation,
because of poor wages, segregation, lynching and disenfranchisement, seeking higher
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wages, better education, "the ballot," and "greater justice" in the North. And what did
those Black workers migrating to Philadelphia find? Alexander's path-breaking research
showed that one-third of Black families earned less than what she defined and calculated
to be a fair standard of living. About one-quarter of the Black families she studied were
underfed. Keep in mind Alexander wrote this in 1921, almost 50 years before the U.S.
government adopted a formal definition of the poverty level. Alexander decried the
systemic discrimination in housing, education, and so much more that held Black people
back in Philadelphia. And yet, Alexander was optimistic that Black workers moving
North for better paying jobs would eventually attain the education and standard of living
of what she called the "Great American Middle Class."
Since that time, a college degree has become more important for financial
security. That raises the vitally important question of how to make college more
affordable for low-income students. It turns out Lois Dickson Rice spent much of her
career addressing that question. As the daughter of a janitor and a maid determined to
send their five children to college, Rice was inspired by her parents' dedication to
education.5 Denied an alumni club state scholarship because she was Black, Lois, with
the help of her high school teachers, secured a better scholarship directly from Radcliffe.6
From there, she went on to a career at the College Board, becoming widely known as the
"mother of the Pell grant." Originally called the Basic Educational Opportunity Grant,
over almost half a century later, the program Rice designed and her tireless work to make
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college accessible to all, have helped around 200 million Americans afford a college
education.7
Economics can also provide powerful answers to questions such as, "What is the
cost of discrimination?" This question was explored extensively by Andrew Brimmer, a
child of sharecroppers who earned his PhD in economics at Harvard. Brimmer served
with great distinction as the first Black governor of the Federal Reserve Board from 1966
to 1974, where he contributed to decision-making on monetary policy, and went on to
publish research on systemic risk in capital markets and the Fed's lender of last resort
function.8 Brimmer estimated that discrimination cost the U.S. economy 3.8 percent of
gross domestic product in 1993.9 In case you are wondering about the cost in today's
economy, Dana Peterson, who is the chief economist of the Conference Board and served
as a research assistant at the Federal Reserve Board, estimated closing racial gaps could
add roughly $5 trillion to the economy over the next five years.10
I wanted to share these examples of pathbreaking economic scholar-practitioners
who overcame daunting barriers to make important contributions on economic questions
that touch the lives of working people all around our country. We created Exploring
7
Lois Fitt Rice and David Mundel, "The Impact of Increases in Pell Grant Awards on College-going
among Lower Income Youth," (Washington: The Brookings Institution, November 2008),
https://www.brookings.edu/research/the-impact-of-increases-in-pell-grant-awards-on-college-goingamong-lower-income-youth. See also https://fas.org/sgp/crs/misc/R45418.pdf and
https://blog.ed.gov/2012/06/celebrating-success-40-years-of-pell-grants/.
8
Andrew F. Brimmer (1984), "The Federal Reserve as Lender of Last Resort: The Containment of
Systemic Risk," a paper presented before a joint session of the American Economic Association and the
Eastern Economic Association, Dallas, Tex., December 19, pp. 35-40; and Andrew Brimmer (1989),
"Distinguished Lecture on Economics in Government: Central Banking and Systemic Risks in Capital
Markets." Journal of Economic Perspectives, vol. 3, number 2, pp 3-16.
9
Thomas D Boston, A Different Vision: African American Economic Thought, Volume 1 (Abingdon, UK:
Routledge, 1997).
10
Dana M. Peterson and Catherine L. Mann, "Closing the Racial Inequality Gaps," Citi Global
Perspectives & Solutions, September 2020,
https://www.citivelocity.com/citigps/closing-the-racialinequality-gaps/.
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Careers in Economics to help you answer the question of whether economics is right for
you. Today you will hear from my colleagues about why they chose economics, and you
will learn about the many rewarding career opportunities available to you. Through our
partnership with Howard University, you will see how students there are working with
our economists to take a hands-on approach to research.11 I want to thank our colleagues
in Federal Reserve Education for cohosting and helping to make this event available to
students, educators, and groups across the nation.12
So that should give you a sense of what economics can do for you. What can you
do for economics? You can bring your diverse backgrounds and life experiences and
unique talents and interesting questions to strengthen the study and practice of
economics. Economics is a powerful field that influences public policy and the
economic opportunities facing all Americans. We should not be satisfied until the people
in our field and those sitting around every economic decisionmaking table represent
America in all its strength and diversity.
A growing body of research and evidence makes clear that the quality of the
economics profession and its contribution to society will be greater when it reflects a
broader range of people and perspectives. Research shows that greater diversity results in
better outcomes-it broadens the range of ideas and perspectives brought to bear on
solving problems, and it brings important insights to the analysis of our economy. As
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research demonstrate the benefits of diversity for group deliberations and decisionmaking.
For instance, one well-known experiment found that racially diverse groups of students
outperformed other groups in solving problems, and another found similar benefits from
gender diversity.13 A review of 2.5 million research papers across the sciences found that
those written by ethnically diverse research teams received more citations and had a
greater impact than papers by authors with the same ethnicity.14
It is notable that when Congress established the Federal Reserve System, it took
great care to ensure that there would be a diversity of perspectives around the
decisionmaking table with regard to regional representation. That is why we have 12
Reserve Bank Districts represented on the Federal Open Market Committee. But we
have not yet lived up to that standard on racial and ethnic diversity. For instance, it was
not until 2017, more than 100 years after the creation of the Federal Reserve, that the first
African American, Raphael Bostic, was chosen to lead a Reserve Bank.
We need to address the stubbornly persistent gap in the awarding of economics
degrees.15 Among U.S. citizens and permanent residents earning a doctorate in
economics from U.S. universities, the representation of those identifying as Black,
Hispanic, or Native American was 10 percent in 2018. The share of women overall
obtaining a doctorate in economics was slightly above 30 percent in 2018, little changed
from 1994. By contrast, Blacks and Hispanics make up 13 percent of medical students
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and women overall make up just over half of all medical students in the country.16
Economics also lags behind law as well as science and engineering in the share of
underrepresented minorities and women receiving advanced degrees. But the gap starts
at the undergraduate level, as highlighted by Rhonda Sharpe.17 From 2011 to 2015,
Black women accounted for only 1.5 percent of undergraduate economics degrees,
compared with their 6.2 percent share of all undergraduate degrees.18
Diversity and inclusion need to be priorities for every economics department
around the country-and for the think tanks, governments, businesses, and many other
organizations that train and employ economists. Many of my colleagues in economics
and education are working hard to make progress, including by developing programs to
support and mentor diverse talent interested in this consequential discipline. We need to
make it a national goal to catch up to medicine, science, engineering, and other fields in
developing robust programs, conducting ongoing evaluation, and constantly adapting to
improve the inclusivity of economics and our ability to recruit and retain diverse talent.
We want to be known within the profession as a place where minorities and women are
confident they have the opportunity to make an impact and feel they are respected and
heard by leadership.
We must continue to make progress towards a more just society, and I am hopeful
that economists will contribute to that progress. Studying economics will provide you
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matter
with a powerful, intellectual framework for asking and answering questions that to
you. It will enable you to influence people's lives for the better. It will enable you to
craft policy to change our world. It will enable you to teach and help shape the next
generation. It will enable you to pursue a range of opportunities, not just in economics,
but also in business, finance, policy, and nonprofits. I wish you good luck and success in
your studies, and I trust that I will soon be reading about the questions-and answers-
that matter most to you.