The Federal Reserve Board of Governors is under pressure to improve its hiring practices after a report from its inspector general (IG). It highlighted a decline in diversity among late-stage job applicants.
The report, posted on the Office of IG’s website on Monday and dated 25 September, pointed out that from 2018 to 2022, the diversity of applicants significantly decreased during the final stages of the hiring process at the Board.
In response, the inspector general has made seven recommendations to improve the Board’s hiring process. These recommendations include anonymising resumes to reduce bias, providing mandatory training for hiring managers, establishing clear guidelines for the entire hiring process, and collecting demographic data on applicants to track and analyse diversity trends.
The report comes at a time when the Federal Reserve has faced increasing criticism for the lack of diversity, particularly in its upper ranks. The Board of Governors is known as one of the largest employers of doctorate-level economists in the US, yet only about a quarter of these professionals are non-White. This lack of representation has raised concerns about whether the institution can fully reflect the broader population it serves and promote diverse perspectives in its decision-making.
In response to the IG’s findings, the Fed’s division of management has expressed its agreement with most of the recommendations. It has also outlined several actions it will take to address the identified issues. The Federal Reserve’s commitment to promoting diversity is seen as a critical step toward strengthening its role in maintaining the stability, integrity and efficiency of the nation’s financial systems.
