Bernie Sanders Calls Fed Rate Hike Bad News for Working Families

The Federal Reserve’s announcement on Wednesday that it would raise interest rates 0.25 percent was met with strong criticism on Tuesday with Sen. Bernie Sanders blasting the decision as “bad news for working families” and the country’s “disappearing middle class.”

The rate hike is the first since the 2007 financial crash, and economists have long-warned that employment and wage growth are still far too low to justify the increase.

“At a time when real unemployment is nearly 10 percent and youth unemployment is off the charts, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people,” Sanders said.

“When millions of Americans are working longer hours for lower wages, the Federal Reserve’s decision to raise interest rates is bad news for working families,” he added.

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Economists are concerned that Wednesday’s rate hike will imperil the country’s incomplete economic recovery by stagnating job growth and wages. This mostly threatens those at bottom of the employment pyramid, who were most impacted by the recession—and even in the recovery saw national income shift four percentage points from wages to corporate profits. 

In a statement on Wednesday, the Fed defended the rate increase, saying that “economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further.” Further, it said that a range of recent labor market indicators, including “ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year.”

However, Dean Baker, economist and a co-director of the Center for Economic and Policy Research (CEPR), argued that while the unemployment rate is not “extraordinarily high,” other key measures of the labor market border on recession levels.