Speaking at the “A Trans-Atlantic Agenda for Shared Prosperity” conference sponsored by the AFL-CIO, Friedrich Ebert Stiftung and the IMK Macroeconomic Policy Institute in Washington on Monday, Federal Reserve Vice-Chair Janet Yellen admitted in her speech that the officialunemployment rate of 7.9 percent is actually incorrect because of a variety of factors.
According to Yellen, who is considered a potential successor to Fed Chairman Ben Bernanke, stated that the unemployment rate is actually 14.4 percent. This number includes about 800,000 discouraged workers who have given up seeking employment and roughly eight million workers who are in part-time jobs but would prefer to work a full-time job.
“The unemployment rate now stands at 7.9 percent. To put this number in perspective, while that’s a big improvement from the 10 percent reached in late 2009, it is now higher than unemployment ever got in the 24 years before the Great Recession,” said Yellen in her prepared remarks.
“Moreover, the government’s current estimate of 12 million unemployed doesn’t include 800,000 discouraged workers who say they have given up looking for work. And, as exhibit 6 shows, 8 million people, or 5.6 percent of the workforce, say they are working part time even though they would prefer a full-time job. A broader measure of underemployment that includes these and other potential workers stands at 14.4 percent.”
The former president and CEO of the Federal Reserve Bank of San Francisco also conceded that the poverty rate is a lot higher than it had been for the past decade and presently stands at 15 percent of the general population in the United States. The results of the recession, says Yellen, have been consequential for these individuals.
“Even those today who are fortunate enough to hold jobs have seen their hourly compensation barely keep pace with the cost of living over the past three years, while labor’s share of income – as measured by the percent of production by nonfinancial corporations accruing to workers as compensation – remains near the postwar low reached in 2011,” stated Yellen. “It will be a long road back to a healthy job market. It will be years before many workers feel like they have regained the ground lost since 2007.”