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Jobless Numbers Add to Concern on Monetary Policy

Douglas Graham/CQ Roll Call
During Yellen’s confirmation hearing late last year, Schumer questioned her about why she thinks income inequality in the United States is growing.

During Yellen’s confirmation hearing late last year, Sen. Charles E. Schumer, D-N.Y., asked the nominee what she viewed as the reasons for growing income inequality in the United States. Indeed, many of the Fed’s critics say the central bank’s policies, such as quantitative easing, have helped bankers and stock-market investors post record profits, while Main Street businesses and ordinary workers have struggled.

“I want to echo my agreement with you that this is a very serious problem,” Yellen told Schumer.

She said the gap had many factors and among them may be “globalization, with institutional changes in the United States, including the decline of unions.”

Peres said he agrees with the correlation about unions.

“If you look at the rise in income inequality, it matches the decline in union density in the United States, especially from the mid-’70s where you had a beginning in a precipitous decline in union membership,” he said. Collective bargaining, he said, is a “way to lift workers’ wages,” which could create more demand for goods and services in the overall economy.

The austerity push by Congress, he said, has made matters worse.

Bernstein of the Center on Budget and Policy Priorities agreed, and he doesn’t expect Capitol Hill to do much to help the employment scene this year. “But I think they might do less harm,” he said.

Between 2009 and 2013, the deficit as share of gross domestic product fell from 10 percent to 4 percent, as Congress tightened the nation’s purse strings in response to the great recession. “That’s the largest four year drop since 1950,” Bernstein said. “There’ll be less of that this year.”

But, he said, if Congress does not extend the unemployment benefits, that will create “more fiscal drag” that could offset the uptick of the budget deal easing some of the sequester cuts.

Peter Colavito, government relations director for the Service Employees International Union, said the unexpected Senate vote in favor of cloture on the unemployment benefits measure “shows how much pain there still is in communities. That’s an indication, when you can break through those partisan walls, how much struggle there is for workers.”

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