The President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, testified and took questions from legislators during a Minnesota Senate Finance Hearing on Tuesday morning.
In his testimony, President Kashkari indicated the reported unemployment rate is 6.7% nationally, but unofficial rate is roughly 10%. This high rate of unemployment is in indication that we need to continue to look at stimulus (unemployment insurance and stimulus checks) as a way to boost the economy. To combat COVID-19 at a national level, he believed our national financial posture needed to be more in line with war time spending as we continue to find ways to help Minnesotans weather this unfair and difficult crisis.
While the state government can’t run up a deficit, Kashkari said there are ways the state can help Minnesotans rebound from the recession. At the top of the list is making sure vaccines are distributed quickly and widely. He also highlighted the need for continuing state-run programs for small businesses and helping keep the child care industry afloat, which creates jobs that are often filled by women, and allows parents to return to work, he said. Women have lost more jobs than men during the pandemic. Another area of state support that would help is in the expansion of high-speed internet. Until herd immunity is reached, he argued these should be the fiscal priorities.
Kashkari also added that “far more people out of work than there are businesses looking to hire.” He said often businesses are too slow to raise pay or benefits and should consider that, as well as on-the-job training, to attract workers.
The questions legislators asked of President Kashkari were wide-ranging from education outcomes to the importance of broadband access across the state. The conversation highlighted many of the legislators’ interests and provided some insight in legislators priorities for the upcoming session, and also gave a glimpse of the policies that federal economic policymakers believe can best help during this crisis.