Sen. Mike Johanns has questioned the Federal Reserve chairwoman on whether she is satisfied with the progress on the federal unemployment rate.
Johanns, during a Senate Banking Committee hearing, told Federal Reserve Chairwoman Janet Yellen that while a 6.1% percent unemployment rate looks impressive, only about 63% of Americans are actually in the labor market.
“We haven’t seen those kinds of numbers since Jimmy Carter was president,” Johanns told Yellen.
Johanns asserted the unemployment rate’s decline doesn’t reflect the reality that many Americans have become discouraged and have dropped out of the labor market. Others, according to Johanns, have been forced into part-time jobs often working two or three to try to make ends meet.
Yellen agreed, in part.
The Federal Reserve chairwoman told Johanns some of the drop in labor market participation has to do with demographics. In particular, as the country’s population has aged, more and more people leave the labor force.
Still, Yellen said there are discouraged workers out there. She predicted they would return to the labor force as the economy continues to improve. The influx of more workers will keep the unemployment rate from dropping as it has recently.
Yellen denied the Fed is satisfied with a 6.5% unemployment rate.
“So, that’s never been our target and 6.1% is not our target either,” Yellen replied to Johanns.
The Fed has been keeping interest rates extremely low and propping up the economy through its monthly bond-buying stimulus program.
Johanns praised Yellen for reducing the purchases, but expressed concern that the Federal Reserve purchases have grown to $4.4 trillion.
Yellen said that if the labor market shows improvement into the fall and inflation stays in check, the Fed would likely end the stimulus program in October.
AUDIO: Brent Martin reports [:45]