william c dudley : " remarks at the economic press briefing on the regional economy " remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the economic press briefing on the regional economy, federal reserve bank of new york, new york city, 10 august 2017. * * * good morning, and welcome to the new york fed ’ s regional economic press briefing. today, we will provide an update on economic conditions in the region, and then discuss the issue of regional wage inequality. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. 1 current economic conditions the federal reserve has pursued an accommodative monetary policy since the great recession to facilitate achieving our dual mandate of maximum sustainable employment and price stability. this policy stance has provided support to the economy and helped lower the unemployment rate from 10 percent at the depths of the great recession to 4. 3 percent currently. measures of underemployment have also improved considerably and are near precrisis levels. stronger labor market conditions are perhaps the best means to improve the economic wellbeing of most americans, particularly those who have been struggling and are most vulnerable to economic downturns. improved job opportunities have helped to support household income growth, consumption, and saving, as well as the housing market. and, as discussed in the fed ’ s recent monetary policy report and in chair yellen ’ s testimony before congress, it is encouraging that unemployment rates continue to fall for most major demographic groups, including africanamericans and hispanics. at the same time, we should remain concerned about those groups, for which the jobless rates remain above the unemployment rate for the nation. our outlook anticipates a continued moderate growth trend, with some further strengthening in the labor market and an increase in inflation over the medium term toward our objective of 2 percent. although job growth in our region has slowed somewhat in recent months, economic activity continues to expand. after outpacing the united states as a whole for a number of years, job growth in new york city is now running a bit below the national average. and, as has been the case for some time, job growth in northern new jersey remains a little below new york city ’ s pace. over the past year, job growth has flattened out in much of upstate new york, with albany remaining a bright spot in the region. unfortunately,

unfortunately, substantial differences in economic mobility exist within the united states. important research by raj chetty and his co - authors suggests that upward mobility strongly depends on where one grew up. 4 that is, places themselves seem to have a measureable effect on economic outcomes for children as they reach adulthood. in particular, this research indicates that higher upward mobility is associated with areas that are less residentially segregated by race or income, and that have higher - quality schools, stronger social networks, greater community involvement, and stable family structures. significantly, they find that places with greater upward economic mobility tend to have lower income inequality. this evidence suggests that there is a fundamental inequality of opportunity for advancement that is tied to where people live. reducing inequality of opportunity is something we should all work toward. directions for policy so, what are some specific ways policy can address inequality and improve economic mobility? while this is a difficult and complex set of issues with no easy answers, i do have a few thoughts. first and foremost, we can improve the quality of education for our most vulnerable citizens. children who attend better schools and attain higher levels of education have more favorable long - term outcomes, including better job prospects and higher earnings. there are large disparities in the quality of education a student receives, which are highly correlated with where that student lives. we need to look for ways to provide higher - quality education regardless of where people live. reducing the role of local property taxes in school financing to better equalize school quality across locations is one example. 5 in addition, education ’ s benefits start very early in life and are cumulative. while we need to further strengthen primary and secondary education, there is convincing evidence that educational investments in early childhood have especially high rates of return in terms of lifetime earnings and are associated with many other positive outcomes. 6 workforce development is another key policy area that can improve economic mobility and reduce inequality. because of the swift pace of economic change driven by advances in technology and globalization, we ought to step up efforts to help workers build the skills necessary to adapt to change. this means providing these types of services at the local level. these efforts should include innovative workforce development programs, coursework and certifications in key skills that are in demand, and fostering partnerships between higher education institutions and local employers. here, i would point to monroe community college in rochester as a model of successful collaboration with employers to create job - training programs that align with current employment opportunities. 7 conclusion the issues of economic inequality