Conyers and Full Employment Caucus Members Introduce Legislation to Strengthen Federal Reserve System's Jobs Mandate

Statement

Today, Representative John Conyers, Jr. (MI-13), with support from 6 members of his Congressional Full Employment Caucus, introduced the "Full Employment Federal Reserve Act of 2015." The bill instructs the Federal Reserve System to target a 4 percent unemployment rate and other indicators of a strong labor market before acting to slow the economy by raising interest rates.

"My new legislation will help to ensure that Federal Reserve policymakers prioritize job creation and wage growth for workers above Wall Street jitters about possible inflation. It is unacceptable for any branch of our government to take any action to slow our economy before all Americans have the opportunity to experience the jobs recovery and see meaningful wage growth," said Rep. Conyers.

Congress amended The Federal Reserve Act in 1977 to mandate that the Federal Reserve System promote the goals of "maximum employment" and "stable prices," which became known as the "dual mandate." As a result, Federal Reserve board members seek to determine what is the lowest unemployment rate consistent with stable inflation (known as the "nonaccelerating inflation rate of unemployment," or NAIRU).

Rep. Conyers' new legislation amends the Federal Reserve's mandate to define "maximum employment" as "as an economy with an unemployment rate of not more than 4 percent," in addition to "a labor market in which median wages are rising with worker productivity, job seekers can find work, and involuntary part-time work is at a minimum."

The bill also replaces "stable prices" with "a stable rate of inflation," to comport with the consensus among economists that some level of inflation is necessary and healthy.

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