CHICAGO – Federal Reserve Chairman Janet Yellen said here Monday that scars remain in the labor market and the Federal Reserve still needs to make an “extraordinary” effort to get people back to work.
Noting that 7 million people are working part-time, while desiring full time work, Yellen said the Fed’s “extraordinary commitment is still needed and will be for some time.”
Part-time unemployment and frustrated people giving up their job search are evidence of “scars from the Great Recession,” she said. In addition, she noted that pay increases since the recession have lagged other recoveries.
Only 63 percent of people of working age are working, compared to 66 percent before the recession. While some economists have argued that the decline is due to an aging population and more people of retirement age, Yellen said working has also declined among people “in the prime” of their working years.
That suggests the impact of the recession rather than demographics, she said. And that means the Federal Reserve can continue to help improve employment, she said.
Speaking at the National Interagency Community Reinvestment Conference in Chicago, she said efforts to improve job skills and opportunity are also needed.
The Federal Reserve has reduced its quantitative-easing stimulus by buying fewer bonds each month, but that shouldn’t be interpreted as a conclusion of stimulus, she said. The reduction is due to improvements in the job market, but more stimulus is necessary, she said.
“At 6.7 percent, the national unemployment rate is still higher than it ever got in the 2001 recession,” she said. “The numbers of people who have been trying to find work for more than six months or more than a year are much higher today than they ever were since records began decades ago.”