On Monday evening, the U.S. Senate voted to confirm the nomination of Janet Yellen to become chair of the Federal Reserve, the country’s central bank. She’s expected to start the new position at the beginning of February.
Yellen carries on a tradition of Jewish Fed chairs, following Ben Bernanke, who she is replacing, and his predecessor Alan Greenspan, as well as two others in the past century. She is also supremely qualified, having spent the last three years as Bernanke’s number two at the Fed and many others working in central banking in various positions. But one thing about her is completely different than all other Fed chairs before her. She’s a woman.
That’s right: since the Federal Reserve was created 100 years ago, it has always been led by a man. The United States isn’t an outlier here, however. Just 19 of the world’s 177 central banks are run by women. That’s about 10 percent. (Women make up half of the world’s population, of course.) It’s not that women don’t have an interest in central banking. Nearly half of the Fed’s employees are women. They just haven’t risen to the top.
The deck may be stacked against them. Despite Yellen’s long history of experience and impeccable track record on making predictions, President Obama resisted nominating her for a long time, wanting his buddy Larry Summers to get the nod instead. Advisers whispered that Yellen lacked “gravitas” — a euphemism for not living up to fuzzy and impossible standards if ever there was one — and that she was overly prepared and thought independently, or in other words, was poo poohed for striving to be twice as good.
This is the subtle, and sometimes not subtle, sexism that is a part of why women still remain largely shut out of the most influential positions. In economics, the World Trade Organization has never been led by a woman, and the United States Treasury Secretary has always been male. Women make up just 4.5 percent of the CEOs at America’s largest companies. We’ve never had a woman president, and Congress has never been more than 18 percent female. As of July, just 19 countries were led by women.
This is an issue of equality, first and foremost. Women and other groups deserve proportional representation in the halls of power. But we also cheat ourselves when women are kept out of leadership. Research has found that we can chalk up as much as 20 percent of American economic growth and productivity over the past half century to removing barriers for women and minorities in the workplace. That’s because there is an “improved allocation of talent” when potential candidates aren’t just pale and male — in other words, when the pool expands, more cream will rise to the top. Yellen is a good example of this given that she is perhaps one of the most qualified Fed candidates we’ve had. More evidence that diverse leadership pays off: gender diverse corporate boards have been found time and again to outperform those that remain largely male.
Yellen will take the helm at a tough time to lead the institution, with an economy that is slowly improving yet not reaching many Americans and decisions about how quickly to wind down the Fed’s controversial stimulus program. But she’s already broken a glass ceiling, and that matters in its own right.
Bryce Covert is the Economic Policy Editor for ThinkProgress and a contributor for The Nation. She lives and writes in New York City.
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