One manifestation of structural racism in America is that Black people must achieve vastly superior qualifications to obtain leadership roles. Sadly, the U.S. Federal Reserve is no exception.
Consider the Fed’s governors, the people who set policy at the world’s most powerful central bank. In more than a century, only three have been Black: Andrew Brimmer, Emmett Rice, and Roger Ferguson. Their qualifications were extraordinary. Brimmer received an MA in economics from the University of Washington, and a PhD in economics from Harvard University. Rice had an MBA from the City College of New York, and a PhD in economics from Berkeley. Ferguson had an economics PhD and a law degree, both from Harvard. All had rich career experiences that provided a strong foundation for their complex Fed leadership jobs.
White people, by contrast, regularly rise to the position of Fed governor with much weaker qualifications. Only two of the current five, who are all white, have PhDs in economics. Two have no economics degrees at all.
There’s a similar disparity in the appointment of presidents to the 12 regional reserve banks – a process that the governors oversee. Raphael Bostic became the very first Black regional president, at the Atlanta Fed in 2017. He has undergraduate degrees in psychology and economics from Harvard, an economics PhD from Stanford, and has held a long series of important positions in academia and public policy – making him among the most distinguished professionals ever to take the post. In contrast, in the past five years alone, four non-Black men without economics PhDs have become regional presidents.
To be clear, I’m not saying that the Fed should raise the bar for white candidates. People without economics degrees can be great Fed officials, as Chair Jerome Powell has demonstrated. My point is that many similarly qualified Black people can be outstanding Fed leaders. The evidence suggests that the appointment process systematically excludes these candidates.
How does this exclusion happen? In every hiring or appointment, decision makers necessarily put weight on candidates’ “intangibles” – critical attributes, such as knowledge of how a person works with others, that are not directly reflected in their degrees or experience. The evidence suggests that, in the Fed’s case, the largely white decision makers are giving non-Black candidates more credit for such off-the-formal-record qualities. Simply including and relying upon more Black voices in the process could help correct this bias.
Narayana Kocherlakota is a Bloomberg Opinion columnist. He is a professor of economics at the University of Rochester and was president of the Federal Reserve Bank of Minneapolis from 2009 to 2015.
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