News / Economy

Yellen: US Job Market Still Hampered

Federal Reserve Chair Janet Yellen arrives for a dinner during the Jackson Hole Economic Policy Symposium at the Jackson Lake Lodge in Grand Teton National Park near Jackson, Wyoming, Aug. 21, 2014.
Federal Reserve Chair Janet Yellen arrives for a dinner during the Jackson Hole Economic Policy Symposium at the Jackson Lake Lodge in Grand Teton National Park near Jackson, Wyoming, Aug. 21, 2014.
Reuters

U.S. labor markets remain hampered by the effects of the Great Recession and the Federal Reserve should move cautiously in determining when interest rates should rise, Fed Chair Janet Yellen said on Friday in a defense of her policy approach.

In a speech at a central banking conference here, Yellen laid out in detail why she feels the unemployment rate alone is inadequate to evaluate the strength of the U.S. job market.

The jobless rate has fallen faster than expected, but Yellen said the economic disruption of the last five years has left millions of workers sidelined, discouraged, or stuck in part time jobs - facts that are not captured in the unemployment rate alone.

Judging whether the economy is close to full employment is “complicated by ongoing shifts in the structure of the labor market and the possibility that the severe recession caused persistent changes in the labor market's functioning,” Yellen said in the opening address at the Fed's annual economic policy conference.

“Assessments of the degree of remaining slack in the labor market need to become more nuanced because of considerable uncertainty about the level of employment consistent with the Federal Reserve's dual mandate” of stable prices and full employment, she added.

In such an environment “there is no simple recipe for appropriate policy,” Yellen said, arguing for a “pragmatic” approach that allows officials room to evaluate data as it arrives without committing to a preset policy path.

Yellen's speech included lengthy references to the possibility that labor markets may in fact be tighter then they seem, and the Fed may be at risk of having to raise rates sooner and faster than expected.

But overall the remarks marked a defense of her basic premise that the 2007-2009 financial crisis and recession damaged the economy and work force in ways that are not fully understood.

The Fed has held benchmark rates near zero since December 2008, and has said it would wait a “considerable time” after winding down a stimulative bond-buying program in October before raising them. Financial markets currently expect rates to raise around the middle of next year.

The debate over Yellen's evaluation of labor markets - and over when to raise borrowing costs - is intensifying within the Fed's policy committee.

Some policymakers, including Kansas City Federal Reserve Bank President Esther George, the host of the annual conference in Jackson Hole, Wyoming, are becoming more vocal in their view that the Fed risks falling behind and should raise rates soon.

At the central bank's last policy meeting in July, some officials argued against characterizing the amount of slack in the labor market as “significant,” which the Fed did do in its post-meeting statement. Many officials agreed that characterization may have to change soon.

Determining the degree of labor market slack has become the central debate at the U.S. central bank. Yellen wants to be sure employment has recovered as fully as possible before raising rates. Inflation “hawks” at the Fed, however, worry more months of near zero rates will cause inflation or possible asset bubbles.

A slate of academic papers at the conference will dissect the issue over the next two days, arguing for example that the United States' job-generating ability may be on the wane.

Outside the conference room, closed to all but the few dozen attendees from government, foreign central banks, academia and the media, Yellen will get some unexpected support.

A handful of workers in green “What Recovery?” t-shirts are also staying at the resort, pulling policymakers aside as they can in the mountain view bar and main lodge area to press the case that many families are still struggling. 

You May Like

Photogallery Pistorius Sentenced, Taken to Prison

Pistorius, convicted of culpable homicide in shooting death of girlfriend Reeva Steenkamp, will likely serve about 10 months of five-year sentence, before completing it under house arrest More

UN to Aid Central Africa in Polio Vaccinations

Synchronized vaccinations will be conducted after Cameroon reports a fifth case of the wild polio virus in its territory More

WHO: Ebola Vaccine Could Be in Use by January

WHO assistant director Dr. Marie Paule Kieny says clinical trials of Ebola vaccines are underway or planned in Europe, US and Africa More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7798
JPY
USD
106.41
GBP
USD
0.6203
CAD
USD
1.1242
INR
USD
61.430

Rates may not be current.