- Presidents normally keep a Federal Reserve chair on for a second term even if they were appointed by a predecessor. Janet Yellen is pre-eminently qualified for the role, and would have been likely to keep stimulating the economy and stock market in her position. In the workplace, and especially in economics, there is no level playing field for women, and there are so many layers of constraints that even the foremost qualifications and preparation are often not enough land you the starring role.
There was no better candidate for Federal Reserve chair than Janet Yellen.
So why did Trump go with Jerome Powell, a Fed governor and former private equity executive who, while qualified, is not nearly as ready for the job as the person already doing it?
One plausible reason? Powell is a man.
Here are Yellen’s qualifications for the position – in which she will remain until February. She is a premier scholar of monetary policy and also one of its most eminent, competent practitioners. Yellen has spent over a decade in top roles at the central bank, first as San Francisco Fed President, then vice chair of the board and, starting in 2014, the first woman the chair the Fed in its over 100-year history.
Yellen was also ideal from a political standpoint. Confirmation – no problem. A rare act of bipartisanship? Check. A low interest rate policy that can help charge up growth as Donald Trump has promised to do? Very much so.
Yellen has presided over an unusually stable four years of economic recovery where the unemployment rate has fallen steadily to a historically low 4.1%, the stock market – which Trump and his deputies see as scorecard on the presidency – have hit record after record. That doesn’t mean Powell is going to do a bad job. He’d be the first Fed chair in four decades without a degree in economics, but in the scheme of things, he’s probably one of Trump’s most reasonable appointments. He has previous government experience, having worked in the Treasury under George W. Bush, and knows financial markets well. He’s not an interest rate buff by training but he’s certainly had time to learn on the job since joining in 2012. Here are a couple of other reasons why Trump might have decided to drop Yellen. She was appointed by President Barack Obama, and Trump seems intent on undoing as much of the Obama presidency as possible. Also, she’s a Democrat and served in the administration of former US President Bill Clinton. But the decision not to grant Yellen a second term as chair is a break with the recent tradition of presidents nominating sitting chairs to a second term, even when they have different political affiliations. Keeping the Fed chair on for a second term – especially when they’re doing a good job – is a way of taking politics out of the central bank. Ultimately though, it’s impossible to look at this decision and not think of the reality faced by millions of women in the workplace, and especially in economics – there is no level playing field, and there are so many layers of constraints that even the foremost qualifications and preparation are often not enough land you the starring role.
It also emboldened Trump critics who say he’s averse to seeing women in positions of power. Recall, Trump had a shortlist of five candidates. Yellen was the only woman ever even remotely mentioned as a possibility.
Maybe age was a factor as well. Yellen is 71 (like Trump), while Powell is 64. Studies show that women face increasing work discrimination as they age.
Pressed about the reasoning behind the unusual change of guard on a call with reporters, a senior White House official said Trump “had a very favorable view of her but in the end he thought governor Powell would be the best choice.”
Sadly, those words are likely all too familiar to the women reading this post.