Does the new Fed chair care about jobs?

Summary

Podcast Summary: "Does the new Fed chair care about jobs?"

The Indicator from Planet Money (NPR)
Date: July 2, 2026
Hosts: Darine Woods, Waylon Wong, Angel Carreras
Featured Guest: Economist Claudia Sahm
Main Theme:
The episode explores the Federal Reserve’s “dual mandate”—balancing price stability (controlling inflation) and maximum employment (jobs)—and questions whether new Fed Chair Kevin Walsh (sometimes mispronounced “Borsch/Warsh” in the episode) is as committed to the employment side as his predecessors. Through an accessible breakdown of central bank policy, historical context, and expert analysis, the hosts examine the challenges and implications of Federal Reserve priorities amid current labor market conditions.

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Key Discussion Points and Insights

1. June Jobs Numbers and the Fed’s Legal Mandate

• June Jobs Report Highlight: The U.S. added 57,000 jobs; unemployment rate at 4.2% (up only slightly from May’s 4.3%)
  (00:12-00:26)
• Fed’s Dual Mandate:
  • Quote (Waylon Wong, 00:50):
    “Congress gave the Fed what’s known as a dual mandate—stable prices and maximum employment.”
• Question Raised:
  After new Fed Chair Kevin Walsh’s first press conference, the hosts note that he emphasized “price stability” repeatedly but said little about jobs.
  • Quote (Compilation of “price stability”; 01:06-01:12, Kevin Walsh and Darine Woods)
    “Price stability, price stability, price stability...”

2. The Dual Mandate in Global Context

• Comparison: Most central banks, such as the European Central Bank, Bank of Japan, and Swiss National Bank, have a sole focus on price stability. Only a few, including the Reserve Bank of Australia and the U.S. Fed, explicitly mention employment.
  (02:46-03:16)

3. Origins of the Dual Mandate

• Historical Context:
  • Added in the late 1970s, partly due to civil rights advocacy—especially Coretta Scott King.
  • Quote (Coretta Scott King, via Angel Carreras, 03:48):
    “It has to do with health care, housing, education, transportation, crime, energy—all of the problems that we face in our central cities and in our rural areas too.”

4. Defining “Maximum Employment” and Measuring It

• Expert Commentary: Economist Claudia Sahm (creator of the Sahm Rule recession indicator) explains that “maximum employment” means everyone who wants a job can get one, but it’s a subjective target without a clear number.
  • Quote (Angel Carreras paraphrasing Sahm, 04:17):
    “Maximum employment, broadly speaking, is the idea that everyone who wants a job has a job... But it doesn’t have a number attached to it.”
• Complications for Fed:
  • The two mandates can be in tension—pushing hard for jobs can spark inflation, which then harms workers.
    • Quote (Angel Carreras, 04:49):
      “If we push too hard, we might end up with a bunch of inflation, and that would hurt exactly those same workers...”

5. The Limits of the Fed’s Powers

• Interest Rates as a Blunt Tool:
  • Lowering rates boosts demand and, in turn, employment, but if labor is tight, it triggers inflation instead.
    • Quote (Angel Carreras, 05:13):
      “If there’s demand out there... they’re going to need workers to make it happen. And so that can kind of indirectly lead to more employment.”
    • Quote (Carreras, 05:31):
      “The Fed’s tool with interest rates: very blunt instrument.”
  • Fed can’t precisely target specific sectors or fix deep structural labor inequalities (e.g., racial disparities, state-by-state differences).
    • Quote (Carreras, 06:09):
      “The labor market has had big structural inequities, discrimination, differences across workers... That’s been baked in for decades and decades.”
• Limits of Policy:
  • Fed can’t ensure “every worker” gets a job—its tools are too general, leading to a “danger in giving the Fed too many goals with too few tools.”
    • Quote (Carreras, 06:44):
      “Getting every worker across the finish line, that’s tough... There’s a danger of giving the Fed too many goals with too few tools... because it can’t.”

6. Recent Changes in Fed Communications Under Kevin Walsh

• Update to Strategic Language (2020):
  • Fed used to describe maximum employment as a “broad based and inclusive goal”
    (07:05)
• Chair Walsh’s Skepticism:
  • Quote (Darine Woods, summarizing Walsh, 07:14):
    “Last year he gave a speech where he questioned whether the new language was, quote, simply a political nod.”
• First Press Conference:
  • Walsh distanced himself from the notion that you must tolerate higher inflation for higher employment.
    • Quote (Kevin Walsh, 07:36):
      “I don’t share the view... that Federal Reserve chairman show up at a podium like this and say, you’ve got to choose... I don’t believe in that.”
• Changes Noticed:
  • Fed’s latest policy statement was shorter; it omitted explicit reference to “maximum employment.”
    • Quote (Darine Woods, 08:09):
      “While the statement did mention the Fed’s dual mandate, it removed an explicit reference to maximum employment. Claudia says she doesn’t like these changes.”
  • Quote (Angel Carreras (Claudia Sahm), 08:25):
    “I think it’s important for Fed communication as a tool to be accountable for the Fed to explain itself to regular people… Come on, just spell it out.”

7. Is Walsh Signaling a Change in Priorities?

• Open Questions:
  • What would Walsh do if the labor market got weaker? Would he prioritize jobs again, or stay focused on inflation?
    • Quote (Carreras, 09:04):
      “There are these questions about, what would [Walsh] want the committee to do if the labor market did start to wobble?... We’ve never heard from Kevin Walsh how he thinks about it, how he defines it. That’s a really important missing space.”

8. Current Fed Focus: Inflation

• Historical Precedent:
  • When the two mandates are in tension, the Fed tends to prioritize the more urgent issue—currently inflation.
    • Quote (Darine Woods, 09:29):
      “When the two parts of the Fed’s dual mandate have been in tension, the Fed will focus on the more urgent matter. And right now, inflation is the priority.”

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Memorable Quotes & Moments

• “Price stability, price stability, price stability, stability, price, price, price…”
  — Kevin Walsh (01:06-01:12)
• “Maximum employment can’t really be measured. And this goal poses a couple of different complications for the Fed.”
  — Darine Woods (04:36)
• “The labor market has had big structural inequities, discrimination, differences across workers—whether it’s race, ethnicity, education...”
  — Angel Carreras (06:09)
• “There’s a danger of giving the Fed too many goals with too few tools and also a danger of this idea that the Fed can just do it all, because it can’t.”
  — Angel Carreras (06:44)
• "It’s important for Fed communication as a tool to be accountable for the Fed to explain itself to regular people…"
  — Claudia Sahm (via Angel Carreras, 08:25)

---

Notable Timestamps:

• 00:26-00:50 — Jobs numbers update and Fed’s dual mandate explained
• 01:06-01:12 — Walsh’s “price stability” focus repeated
• 02:46-03:16 — Global comparison of central bank mandates
• 03:26-03:48 — Coretta Scott King’s role in dual mandate history
• 04:17-05:31 — Claudia Sahm explains maximum employment, Fed’s blunt tools
• 06:09-06:44 — Labor market inequities; Fed’s limits
• 07:14-07:36 — Walsh’s skepticism of “inclusive” language; press conference quote
• 08:09-08:25 — Omission of “maximum employment” from new statement, Sahm’s critique
• 09:04-09:29 — Lingering questions about Fed’s true priorities
• 09:29-09:41 — Historical Fed response: Focus on the urgent mandate

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Summary Takeaway

The episode offers a concise yet richly detailed look at the tension within the Fed’s dual mandate of price stability and maximum employment—the two economic levers that don’t always move together. The new Fed Chair, Kevin Walsh, is so far signaling a firmer commitment to controlling inflation, possibly at the expense of the employment side of the mandate—or at least, that’s the implication from his language and recent policy statement tweaks. Economists and policy-watchers worry that leaving employment less defined and less visible in Fed communications could signal a shift in priorities, a critical question as the U.S. economy navigates slow job growth and persistent inflation. As always, the true balance may become clear only when the two mandates truly come into conflict.

---

For listeners wanting a crisp, clear grasp of the Fed’s role in the labor market—and how the language of its leaders signals more than meets the eye—this episode is a timely primer.

Transcript

[Angel Carreras]

Npr.

[Darine Woods]

This is the indicator from Planet Money. I'm Darine Woods.

[Waylon Wong]

I'm Waylon Wong. And welcome to Jobs Thursday.

[Darine Woods]

Jobs Thursday? Yes, the Bureau of Labor Statistics released its numbers for the month of June today. It's a day earlier than usual because of the July 4th holiday. So we're sending you into the long weekend with a look at the labour market.

[Waylon Wong]

The US economy added 57,000 jobs in June, and the unemployment rate was 4.2%. That's mostly unchanged from May's rate of 4.3%.

[Darine Woods]

As you know, we make a point of studying the jobs numbers every month because it tells us how workers in the US Are doing. The Federal Reserve cares a lot about the employment numbers, too. In fact, it's legally obliged to care about jobs.

[Waylon Wong]

That's because Congress gave the Fed what's known as a dual mandate, stable prices and maximum employment.

[Darine Woods]

But last month, new Fed Chair Kevin Walsh presided over his first interest rate decision and press conference, and he had a lot to say about stable prices,

[Kevin Walsh]

price stability, price stability, price stability, stability, price, price, price, price, price stability, price

[Darine Woods]

stability, price stability, price stability. But he didn't talk much about maximum employment. So does Kevin Walsh even care about jobs?

[Waylon Wong]

Oh, the humanity. Today on the show, we talk about how the dual mandate is tricky for the Fed to fulfill, and we parse some early clues about how Kevin Borsch might be tackling this part of the mission.

[Angel Carreras]

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[Waylon Wong]

let's take a whirlwind tour of central bank mandates around the globe. We will start in Frankfurt with the European Central Bank Bank. Their mandate is to maintain price stability.

[Darine Woods]

Then onto the bank of Japan, price

[Waylon Wong]

stability, the Swiss national bank, price stability, bank of England financial and price stability.

[Darine Woods]

Then we have the Reserve bank of Australia. It talks about both price stability and full employment, which mirrors the Federal Reserve in the US but this two goal structure is relatively rare among central banks.

[Waylon Wong]

And the Federal Reserve's current mission is kind of recent. It wasn't until the late 70s that Congress changed the Fed's mandate to be about price stability and maximum employment.

[Darine Woods]

This update came out of a pivotal time in American history, the civil rights movement. One leader who pushed for this legislation was Coretta Scott King, the widow of Martin Luther King Jr. The King center website has a video from the 1970s, and in it, Coretta Scott King speaks about full employment as part of a larger set of policies.

[Angel Carreras]

It has to do with health care, housing, education, transportation, crime, energy, all of the problems that we face in our central cities and in our rural areas too.

[Waylon Wong]

Economists like Claudia Sahm have their own way of describing this concept. Claudia used to work at the Federal Reserve and she knows all about the labor market because she actually has a recession indicator tied to unemployment named after her. It's called the SOM Rule.

[Angel Carreras]

Maximum employment, broadly speaking, is the idea that everyone who wants a job has a job. It's like the sweet spot for the economy. People are working. The ones who want to be working, they have good job opportunities, but it doesn't have a number attached to it.

[Darine Woods]

Maximum employment can't really be measured. And this goal poses a couple of different complications for the Fed.

[Waylon Wong]

Complication number. These two goals of maximum employment and price stability can be in tension with one another.

[Angel Carreras]

If we push too hard, we might end up with a bunch of inflation, and then that would hurt exactly those same workers that we're trying to get across the finish line.

[Darine Woods]

Here's why. Pushing on jobs can affect inflation. So the Fed has one main tool at its disposal, interest rates. Lowering rates makes it cheaper for people and businesses to borrow money. And then demand for stuff goes up.

[Angel Carreras]

Well, if there's demand out there, if consumers are out buying and businesses are investing, well, they're going to need workers to make it happen. And so then that can kind of indirectly lead to more employment.

[Waylon Wong]

But what if there aren't enough workers to fill those jobs at current wages? Or there aren't enough workers trained in a particular skill?

[Angel Carreras]

So then all of a sudden you can point a lot of demand into the economy, have labor shortages and end up causing inflation and a lot of stress on businesses. And it's not like the Federal Reserve has this very fine dial they can turn and optimize for different parts of the economy. The Fed's tool with interest rates, very blunt instrument.

[Darine Woods]

And this bluntness of the instrument is the second complication for the Fed when it comes to promoting maximum employment. Raising or lowering interest rates can only do so much for a system as complex as the American labor market.

[Angel Carreras]

The labor market has had big structural inequities, discrimination, differences across workers, whether it's race, ethnicity, education. I mean, like, there's a lot of unequalness in the labor market. And that's been baked in for decades and decades.

[Waylon Wong]

For example, the unemployment rate for black workers has historically been higher than the overall rate. Jobless rates can also vary quite a bit by state. The Fed can't use interest rates to boost a specific group of workers. So that's a pretty big constraint on its ability to promote maximum employment.

[Angel Carreras]

Getting every worker across the finish line, that's tough. Like, that is not something that we have accomplished at any point in the US History. And the Federal Reserve again cannot get us there on its own. There's a danger of giving the Fed too many goals with too few tools and also a danger of this idea that the Fed can just do it all, because it can't.

[Darine Woods]

In 2020, the Fed updated its language around its strategy. The the bank described maximum employment as a, quote, broad based and inclusive goal.

[Waylon Wong]

New Fed chair Kevin Warsh has expressed skepticism around this phrasing. Last year he gave a speech where he questioned whether the new language was, quote, simply a political nod.

[Darine Woods]

That speech was before Walsh was formally nominated for Fed chair last month. During his first press conference, Walsh critiqued how some of his predecessors tackled the dual mandate.

[Kevin Walsh]

I don't share the view that was expressed a few generations ago that Federal Reserve chairman show up at a podium like this and say, you got to choose and you're going to have to decide whether you're willing to tolerate higher inflation to put more people at work. I don't believe in that.

[Waylon Wong]

War said he believed low prices and strong employment could be mutually compatible. But he didn't say much more about jobs. And economist Claudia Somm and other Fed watchers clocked some changes in the Fed's statement.

[Darine Woods]

For starters, the statement was shorter. It was a terse 132 words. And while the statement did mention the Fed's dual mandate, it removed an explicit reference to maximum employment. Claudia says she doesn't like these changes.

[Angel Carreras]

I think it's important for Fed communication as a tool to be accountable for the Fed to explain itself to regular people. Like, not everybody knows what the dual mandate is. It's like, come on, just spell it out. Let's be open and clear about

[Sponsor Announcer]

where

[Angel Carreras]

our mission is and what our responsibilities are.

[Waylon Wong]

I guess the deletion of that phrase, it's like one way to read it could be, oh, he's just trying to be less wordy. But another reading of it could be he's signaling where his priorities are right. And do you feel like it's kind of like an open question, like the intention behind that deletion?

[Angel Carreras]

Absolutely. We're left guessing. There are these questions about, well, what would, what would want the committee to do if the labor market did start to wobble? Like, would, would they come to the rescue? Would they stand firm on inflation? There's so many ways to think about and define maximum employment. We've never heard from Kevin Warsh how he thinks about it, how he defines it. That's a really important missing space.

[Darine Woods]

Claudia says that historically, when the two parts of the Fed's dual mandate have been in tension, the Fed will focus on the more urgent matter. And right now, inflation is the priority.

[Waylon Wong]

This episode was produced by Angel Carreras with engineering by Travis Hagan. It was fact checked by Sierra Juarez. Katkin Cannon is our show's editor and the indicator is a production of npr.

[Sponsor Announcer]

This message comes from Capella University. You know that feeling when there's a spark building inside you, that you were meant for more? That's your own drive pushing you towards what's next. Capella University gets that with their flexpath learning format, you can set the pace and earn your degree without putting life on pause. You've built experience and know what you're capable of. Now this is your time to turn that momentum into more. The only real question is, what can't you do? Learn [e-mail]. this message comes from Ethos. Protect your family when the unexpected happens. Get life insurance through Ethos 100% online, covered in minutes. Get your free quote [e-mail] NPR application times may vary.