Closing the Gender Gap in the Fed's Hallowed Halls

Janet Yellen, President Obama’s superb pick to be the next chair of the Federal Reserve, should have been a shoo-in all along. In fact, it was widely thought this past spring that, as vice chair of the Federal Reserve, she was the most likely candidate to replace Ben Bernanke when his term as chair was scheduled to end early in 2014. But in the months before October 9, when she stood beaming next to President Obama in the White House as he finally announced her as his pick to succeed Bernanke, a curious campaign had emerged to nominate Larry Summers, a close economic advisor to the president, for the position. The Summers push received copious media coverage, reportedly fueled by senior White House advisors.

As summer reached its doldrums, journalists began reporting that high-level White House advisors worried that Yellen lacked “gravitas,” was too “soft-spoken,” or might not be good in a crisis. A few journalists pointed out that these coded words suggested sexism. (The gender dynamics of the Yellen vs. Summers debate are brilliantly illustrated in a cartoon by Jen Sorensen, a recent winner of the prestigious Robert F. Kennedy award for political cartooning.) Given that 20 Democratic senators wrote a letter to the President urging him to nominate Yellen, and that many pundits—including Bob Kuttner for the Prospect—pointed out the many difficulties Summers would have winning confirmation for that position, I am flummoxed as to why that pro-Summers campaign was ever waged in the first place. But, as a female economist, perhaps I should not have been surprised.

Yellen’s path to nomination reflects both the potential and the problems of economics, which is still largely—academically and professionally—a man’s field. Today, women make up 34 percent of PhD students in economics, but less than 12 percent of full professors. While these statistics could simply reflect the time needed for new PhD’s to become full professors, progress in integrating women at the higher levels has been extremely slow. It has been nearly 40 years since the American Economic Association established the Committee on the Status of Women in the Economics Profession, which tracks progress (and lack thereof) in improving gender diversity within the field. It’s not that there has been no progress; it is just that progress is moving at a glacial speed, and even occasionally moving backward. That’s too bad—not just for women, and not just for ensuring the economics discipline benefits from the best talent (a field that rules out nearly half the available talent pool is obviously not at its peak strength), but for all of us affected by economic policymaking. Perhaps that’s why 505 male and female economists across the ideological spectrum signed a letter urging President Obama to nominate Yellen the week before Summers withdrew. The popularity of the letter among economists—which stated that Janet Yellen was the best qualified person for the job—can be explained, perhaps, by their taking some responsibility for the profession’s dismal performance in the 1990s and 2000s, which led to huge regulatory gaps, a giant asset bubble that broke with catastrophic effect, including massive loss of wealth, high unemployment, and growing poverty and income inequality, leading to our worst recession since the 1930s. I believe letter signers wanted to be sure to put their discipline’s best talent forward for this most important position.

Like Janet Yellen, I pursued a PhD in economics (we overlapped for about a year in the graduate program at Yale University) because I saw economic policy as a force for good, a tool to answer the social policy questions with which we, as a nation, continue to grapple. I founded the Institute for Women’s Policy Research (IWPR) specifically to apply economic analysis and social science research to show how public policies affect women and their families. As women continued to march steadily toward becoming half of the workforce, and were increasingly responsible for the financial stability of their families, discussion about the economy that ignored them would be incomplete—or even wrong.

Many studies have shown the impact of more women in political leadership and elected positions. It turns out, when more women have more say in making laws, those laws turn out to be better for women. This should not be a surprising finding. Women’s and men’s lives do differ, with women earning less and spending more time on family care, for example; issues around equal pay and caregiving are likely to resonate more with women than men. I would love to see a similar study reviewing the impact of more women in economic policymaking. (Note to funders: IWPR is ready and willing to do this research. Give us a call!)

As many have noted, Janet Yellen will hold one of the most important policymaking positions in the world. As the Fed sets interest rates and monitors inflation, she will have a key role in shaping almost every major economic decision people and businesses make. As a labor economist, I am especially thrilled to see that the next Fed chair will have a clear and nuanced understanding of labor markets and their relationship to overall economic growth. I’m hopeful that Yellen’s policies will continue to prioritize full employment. Such policies can have a significant impact on the health of our economy and the stability of our family incomes, since full employment is crucial to both. I’m particularly hopeful that more women at the head of the most important economic policymaking tables will lead to policies that improve the economic status of women, and of the families who rely on their incomes. Single mothers, in particular, suffer in a weak labor market, because they must look for flexible jobs that enable them to care for their families on their own, which makes finding suitable jobs more difficult. A tight labor market raises demand for their labor and provides them with more job options. And better bank, lending, and mortgage regulations, coupled with low interest rates, should make it easier for families to regain some equity position in the housing market and begin to grow their wealth again.

I have no doubt that Janet Yellen, by achieving a highly visible and powerful position through supreme intelligence, effort, and skill, will inspire the ambitions of young, talented women, who are interested in pursuing an advanced degree that will help them solve pressing issues facing the country and the world.

High-ranking women in any profession tend to shift perceptions about who is best qualified for top positions, proving that it is hard to patch a glass ceiling once it is cracked. The glass ceiling in economics has begun to crack—hallelujah! 

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