Leading with Data: Claudia Sahm’s Journey in Economic Policy
Influencing Policy As An Economist
Claudia Sahm is the Chief Economist at New Century Advisors and the founder of Sahm Consulting. She’s a highly regarded economist, developer of the Sahm rule, and has spent years advising key decision makers at the Federal Reserve, White House, and Congress. Her work is extensively covered in major media outlets.
Public policy mirrors women’s social standing, but its changes also lay the groundwork for further social change. Compared to other first-world countries, the U.S. appears to lag in policies created with women in mind; particularly in pay, maternal leave, and childcare.
The following interview with Claudia provided valuable insight into why some of these disparities persist.
HOW DID YOU KNOW THAT YOU WANTED TO BE AN ECONOMIST?
I went to college with no idea of what an economist was. However, I had a professor who convinced me that economists could do good in the world. There was an opportunity to influence policy and decisions that would impact families.
My training was anchored in data, and I viewed my education as an opportunity to amplify other people’s experiences.
DID YOU FACE ANY CHALLENGES AS A WOMAN IN ECONOMICS?
Yes. There isn’t much outright discrimination, but I’d say that women have extra hoops to jump through. Take Janet Yellen as an example. She’s the first person to be the Secretary of the Treasury, the Chair of the Federal Reserve, and lead the White House Council of Economic Advisors. She’s the first woman to be either the Secretary of the Treasury or the Chair of the Federal Reserve. She’s also the only person ever to hold all three coveted positions. It’s also a demonstration of just how good you have to be, and how much better you have to be than your male peers for similar levels of distinction.
Some of the environments I worked in were also dominated by groupthink because the people working there had limited experiences.
DO YOU THINK THE LACK OF DIVERSITY IN THE ECONOMICS PROFESSION CONTRIBUTES TO THE LACK OF POLICIES TAILORED TOWARD WOMEN?
That’s pretty impossible to prove, but I would be stunned if that wasn’t the case. One-third of economists are women, and different fields of study have very different gender balances. One area is children and families. Upwards of 80% of the economists in that group are female economists.
Macro has very few women, and there is also very little discussion of women’s labor force participation because there aren’t enough questions being asked in the group. Macro also happens to be more influential than other fields due to its implications on policy.
WHY DO YOU THINK THE FINANCIAL LITERACY GAP STILL EXISTS FOR WOMEN?
It’s there from the very beginning. I did substitute teaching when I was in school, and third-grade girls would tell me they couldn’t do math. It was too early for them to doubt their capabilities, but they did and the broader social context made that happen.
The gap in financial literacy exists because of the same deep-rooted biases women have ingrained in themselves. But as one of my colleagues at the Fed noted, people do learn when they need to.
If there aren’t circumstances that push them to take charge of their finances, people fall into the norms and societal expectations.
WHAT DO YOU THINK ABOUT THE ‘TRAD WIFE’ AND ‘STAY AT HOME GIRLFRIEND’ TREND? IS IT A REACTION TO THE ECONOMY RIGHT NOW?
I would think there is some direct connection, but I haven’t found it. I’ve also stayed off of TikTok so I don’t have much more context.
ARE THERE ANY INITIATIVES THAT YOU’RE PARTICULARLY PROUD TO HAVE WORKED ON?
The enhanced child tax credit in the American Rescue Plan.
I worked with the group that helped send out checks in 2021. It was notable because the child tax credit didn’t have a work requirement for caregivers. Taking out the “work incentive” for parents meant that family decisions weren’t tied to parents’ labor status. The initiative slashed child poverty.
This is also the type of initiative that I expect to see again. It had no harmful effects and was politically neutral.
Claudia’s career journey illustrates how much impact we could have through our careers alone and how significant economic policy can be on broader trends. The policy doesn’t shift ingrained beliefs that we develop by the time we’re in third grade. However, there does appear to be some correlation that increasing representation leads to dialogue which allows for tangible and impactful initiatives.
