The Corner

Monetary Policy

A Missing Part of a Pro-Worker Agenda

The last few years have heard a steadily louder drumbeat that Republicans should become a “worker’s party.” I think there’s a lot to like in that idea — although I’d prefer for Republicans to be a “parent’s party” first — and have looked on with interest as policy thinkers have tried to work out what it would mean. But these efforts have largely (not always, but largely) neglected an important issue where Republicans could stand to do some fresh thinking.

There are a lot of government policies that might be helpful to hard-working Americans at, say, the 25th percentile of income. But it’s hard to beat a tight labor market for delivering gains up and down the income spectrum. The two periods in recent decades that saw the most widespread wage gains, including for people starting with low wages, were the late 1990s and the 2015-2019 period. Both were characterized by relatively (and increasingly) stable growth of nominal spending.

Having the Federal Reserve aim for such stable growth has not, however, been a priority for conservatives, to say the least. When spending dropped dramatically during the great recession, with the brunt of the resulting economic pain being borne by blue-collar workers, Republicans warned that attempting to restore it would be dangerously inflationary — in the midst of one of the longest stretches of low inflation we have had since World War II. They advanced legislation that would explicitly direct the Fed not to consider the effect of monetary policy on labor markets.

Republicans are currently considering the Fed nomination of Judy Shelton, who has spent most of her career urging that monetary policy be ever tighter but has very recently aligned herself instead with the completely opposite views of President Trump. The Fed is already falling short of what it should be doing to stabilize the economy in the wake of this year’s contraction, and there’s a risk that confirming Shelton would tilt it further in the wrong direction.

Those Republican senators who believe their party needs to do more for workers ought to consider whether her confirmation — a vote could come next week — would serve that goal.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.


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