Yellen: Fight against inequality starts with full employment

SINGAPORE: Keeping the US economy near full employment is lifting pay for unskilled workers and helping ease inequality in the country, former Federal Reserve chairman Janet Yellen ( pic) said.

It’s important to see the benefits that an economy operating at full employment confers to low-wage workers who are typically the most vulnerable, Yellen said at the Bloomberg New Economy Forum in Singapore yesterday. She cited examples such as unemployment for black Americans declining since peaking in 2010 and companies investing in training workers as hiring becomes more difficult.

Most of the discontent with capitalism in the US stems from inequality and the stagnation of wages, which dates back to the 1980s and can be traced broadly to automation and globalisation, Yellen said.

“I’m tempted to say there isn’t a whole lot central banks can do” about inequality, but there are some options, like following policies to keep the economy as close to full employment as possible, she said.

Other steps include keeping regulations in place that safeguard the economy against another financial crisis, the former Fed chief said.

Yellen left the Fed in February after President Donald Trump replaced her as chairman with Jerome Powell after just one term at the helm of the central bank. Having returned now to her role as an economics professor, Yellen has gradually become more vocal about her concerns on the global economy and central banking. – Bloomberg