Janet Yellen made a speech on Monday at the National Interagency Community Reinvestment Conference in Chicago, Illinois. The speech, which has been labeled by the press as extremely dovish, focused on unemployment. Yellen stated that she believes that there is still a significant amount of “slack” in the job market. She defined slack a time when “significantly more people willing and capable of filling a job than there are jobs for them to fill” and that “during a period of little or no slack, there still may be vacant jobs and people who want to work, but a large share of those willing to work lack the skills or are otherwise not well suited for the jobs that are available.”

 

Yellen cited the unusually high number of workers who are working part time but would like a full time job, the fact that the decline in unemployment has not helped raise wages, the large number of unemployed who have been out of work for six months or more and the low participation rate as evidence for the “slack.” In fact, Yellen stated that the 63% participation rate could actually be “overstating the progress in the labor market.”

 

She went on to say that the country is experiencing cyclical unemployment and that monetary policy is an effective tool for stretching the recovery and creating jobs.

 

In a somewhat unusual move for a Chair of the Fed, Yellen humanized the issues at hand by specifically mentioning the cases of three individuals: Dorine Poole, Jermaine Brownlee, and Vicki Lira. All three have lost their jobs during the recession and have not been able to find another, and thus are “a reminder that there are real people behind the statistics."

This foray away from the standard hard facts usually found in a speech given by Chairs of the Fed did not exactly go swimmingly, however. As it turns out, two of the individuals cited by have criminal records that may have been preventing them from getting jobs, muddling Yellen’s message somewhat.

http://www.federalreserve.gov/newsevents/speech/yellen20140331a.htm

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