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Can a high school dropout turned top economist give a new perspective to the Fed?

Mary Daly dropped out of high school and ended up as president of the Federal Reserve Bank of San Francisco. As a part of our weekly series Making Sense, Paul Solman travels with Daly to Boise, Idaho, where through a unique lens of economic policy, she tries to help others find the same success in the workforce as she did.

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  • Judy Woodruff:

    Now the story of a top economist and how her journey from high school dropout to key policy-maker informs her decisions today.

    Economics correspondent Paul Solman has our profile of a leading figure within the Federal Reserve.

    One thing we must note: Fed officials do not make public comments just before a meeting of the Federal Reserve Open Market Committee. That meeting is next week.

    But Paul did this interview well in advance for our weekly segment Making Sense.

  • Mary Daly:

    I will run in place because it's chilly.

  • Paul Solman:

    In Boise, Idaho, last month, a small nonprofit with an unassuming, but lofty visitor.

  • Mary Daly:

    Oh, this is cool. May I introduce myself?

  • Tracy Hitchcock:

    Absolutely.

  • Mary Daly:

    Hi. I'm Mary.

    (CROSSTALK)

  • Mary Daly:

    Nice to meet you.

  • Paul Solman:

    Mary Daly is the new president of the San Francisco Federal Reserve Bank, responsible for, among other duties, monitoring the economies of the nine Western states and Pacific territories.

  • Mary Daly:

    If you don't visit the areas, you don't really get all the information you need, all the different ways that firms and businesses and individuals and households might interact. So you need people on the ground, like regional Fed presidents, to go out there and learn.

  • Tracy Hitchcock:

    Everyone in a black smock is actually an employee.

  • Paul Solman:

    That's why CEO Tracy Hitchcock was teaching her about Create Common Good, which teaches professional kitchen skills to refugees and others facing hardships and looking for work.

  • Tracy Hitchcock:

    We are a step along the way for someone working to achieve their biggest dreams. And for every adult head of household that graduates our program, their kids have tremendously better outcomes around health and education and future employment. And that benefits everybody in Boise.

  • Mary Daly:

    Well, as an economist, I always tell people it's a virtuous cycle. If we invest in each other, then other people lift up, and they invest in others, and you create this virtuous cycle.

  • Paul Solman:

    Mary Daly knows about hardship firsthand.

  • Mary Daly:

    I grew up in Missouri. My father was a postal worker. And when I was 15, he lost his job. My mom, she got some part-time work, but not enough. Then both of them fell on ill health. My siblings moved in with my grandparents, and I moved in with a friend.

  • Paul Solman:

    And dropped out of high school?

  • Mary Daly:

    Dropped out of high school because my family is imploded essentially and scattered. And so I needed to think about, how do I just make a living? So I just cobbled together different part-time jobs, working in a donut shop, working at a deli, working at a Target, and living with this family who let me stay with them, only charged me $5 a month.

    It was a way to let me keep my dignity, even though they were completely helping me.

  • Paul Solman:

    Also helping, a mentor, who gently nudged.

  • Mary Daly:

    She didn't say, Mary, you should just go to college. Be a president of the Federal Reserve Bank of San Francisco. She says, maybe you can get a GED.

  • Paul Solman:

    She got the GED. Her mentor then suggested a semester of college.

  • Mary Daly:

    I actually never heard of college.

  • Paul Solman:

    Never heard that there was such a thing as college?

  • Mary Daly:

    Didn't know anything past high school. Everybody in my experience had gone to high school and then went and got a job. You might be a postal worker, what my father was. You might get a union job as a bus driver, or go work on the assembly line for McDonnell Douglas, when it was still in Missouri.

  • Paul Solman:

    So, when she nudges you to take a semester in college, you say?

  • Mary Daly:

    Why? And then she says, well, you know, you're good in school. It's good. You will have a lot of other opportunities.

    I had to tell her I couldn't afford it. And she takes her checkbook out, and she just writes me a $216 check. And I give it to the bursar, and I start my adventure.

  • Paul Solman:

    Longer story short, she graduated from University of Missouri, earned a Ph.D. in economics at Syracuse University.

    And then the rest is history, sort of.

  • Mary Daly:

    And then the rest is sort of history. Ironically, I trained in labor economics and public policy. And I take a job in macroeconomics and monetary policy.

  • Paul Solman:

    But, for Daly, monetary policy is a means to more personal ends: prosperity for as many of us as possible.

  • Mary Daly:

    How many here think you will be better off than your parents?

  • Paul Solman:

    Measured by population and job growth, in percentage terms, Boise is the star community in Daly's district, the fastest growing city in America, Idaho the fastest growing state.

    But as Daly learned in a series of interviews she taped for a podcast she's starting, "Zip Code Economies," there's still plenty of anxiety.

  • Mary Daly:

    We're the people making policy right now for your future. And I would like to know what you want from us.

  • Paul Solman:

    Economics and finance students at Boise State University.

  • Student:

    Boise's a very competitive job market right now. So, it's like college graduates, we're competing with some of that California influx. And so what I want when I graduate this field is to get a decent job here in Boise.

  • Mary Daly:

    What makes you worry about your future?

  • Student:

    For me, it would be economic uncertainty as it relates particularly to the debt that the federal government carries, and also for student loans and how these raises in the interest rate will affect, you know, the student — the burden of student debt that we're going to — we inevitably will carry.

  • Mary Daly:

    Not that I know anything about interest rate policy.

    (LAUGHTER)

  • Mary Daly:

    I want to be clear.

  • Paul Solman:

    Of course, Daly knows quite a bit about interest rate policy. As president of the San Francisco Fed, she's a voting member of the Fed's Open Market Committee, charged with setting short-term interest rates.

  • Mary Daly:

    Monetary policy is the tool kit we have for a strong, healthy and sustainable economy.

  • Paul Solman:

    That means you're — in one metaphor, you're steering a course between too hot an economy, too cold an economy. And you like to use hot and cold as the metaphor.

  • Mary Daly:

    Exactly, yes, hot and cold or — and so Congress has given us two goals, two mandates, and we call it the dual mandate. And one is low and steady inflation, and the other is full employment.

    You want to have everybody who can work engaged and wants to work, and jobs are there, and you want to make sure inflation doesn't run away, so that the value of the dollar doesn't erode for people.

  • Paul Solman:

    In trying to avoid too hot, the Fed has raised rates six times since President Trump took office. That's drawn the ire of a president dedicated to the proposition of a hot economy.

  • Donald Trump:

    My biggest threat is the Fed, because the Fed is raising rates too fast.

  • Paul Solman:

    In late November, he attacked Fed Chair Jay Powell.

    "So far, I'm not even a little bit happy with my selection of Jay," he told The Washington Post.

    What did you make of the president's critique of Chairman Powell, whom he, after all, appointed to the job?

  • Mary Daly:

    My view on this is, I have responsibility for the Federal Reserve Bank of San Francisco, for voting on monetary policy, for working with my Fed colleagues to make the best monetary policy.

  • Paul Solman:

    And you won't answer that question.

  • Mary Daly:

    I just don't think of it. The great thing about the Fed is that we have been given independence. There are no politics in the Fed.

    Who do you want to be five years from now?

  • Paul Solman:

    Well, there are certainly no politics at the work refuge Create Common Good, where Daly also recorded conversations for her podcast.

  • Man:

    I'm Shawn. I'm actually originally from Missouri, and we moved out here.

  • Mary Daly:

    Me too.

    (LAUGHTER)

  • Man:

    Awesome.

  • Paul Solman:

    Shawn McKelley explained that he was autistic.

  • Man:

    And it's really hard to, as an autistic person, to get a job where people treat you the same as other people, and not treat you as this delicate little flower.

  • Paul Solman:

    Alexia Petronis has wrestled with drug addiction.

  • Mary Daly:

    May I ask you something? And I hope it's not too personal. Do you find that the skills and the connection to the work force help you maintain your sobriety?

  • Woman:

    Yes. It does a lot, because it gives me something to look forward to.

  • Mary Daly:

    Do you feel better about yourself?

  • Woman:

    Yes, I do, a lot better.

  • Mary Daly:

    That's a great thing, right?

  • Woman:

    Yes, I love it.

  • Mary Daly:

    I know. It's a sense of relief.

  • Woman:

    Yes.

  • Mary Daly:

    You're not carrying a weight.

  • Woman:

    Yes.

  • Mary Daly:

    I don't know if that's how you feel, but I have felt that way myself.

  • Woman:

    Yes, it is. Yes.

  • Paul Solman:

    Does your nontraditional background — and I mean dramatically nontraditional — does it give you a different point of view than other Fed presidents?

  • Mary Daly:

    I don't think my experience is something that I have overcome and now I can get a place at the table. I think of it differently. I think of my experience as something that influences my thinking and helps me be good at the place at the table.

  • Paul Solman:

    At the table setting interest rates, or at places like Create Common Good and Boise State, seeing how economic policy affects everyday Americans.

    From Boise, Idaho, this is economics correspondent Paul Solman for the "PBS NewsHour."

  • Mary Daly:

    I will be on your side.

  • Woman:

    Thank you so much.

  • Mary Daly:

    Yes.

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