to step out of line and raise questions about the accepted
wisdom in the field. But Yellen downplays that narrative,
and describes her work as a natural evolution.
“When I first went into macroeconomics, the view that I
had and had learned in graduate school was that a gener-
ally strong economy with a low unemployment rate would
benefit workers across the income spectrum—that a so-
called rising tide lifts all boats,” Yellen tells Fortune. “But
sometime in the mid-’80s that really began to change, and
it became no longer true that when the economy was do-
ing well overall that everybody benefited.”
Yellen came to realize that while full employment was
still important, it wasn’t enough to address long-term
declines in income for the majority of Americans. “And so
I have focused for many years on understanding what the
forces are that have been making it so difficult for workers
to succeed,” she says. “And because such a large share of
the workforce hasn’t been able to get ahead, income and
When she met again with Congress in 2016, she took a
markedly different tone. “It is troubling that unemploy-
ment rates for these minority groups remain higher than
for the nation overall, and that the annual income of the
median African-American household is still well below
the median income of other U.S. households,” she said.
Around the same time, Yellen created a task force to di-
versify hiring practices within the Federal Reserve itself.
Now Yellen is bringing that same perspective to the
Treasury. David Clunie, executive director of the Black
Economic Alliance and the executive secretary of the
Department of the Treasury under President Barack
Obama, has been working with Yellen to ensure that the
department is focused on racial inequality while work-
ing through COVID-relief programs. Recent surveys
found that Latino and Black Americans have experienced
economic hardship during COVID-19 two to three times
as great as that of white Americans. The pandemic has
also had a disproportionate effect on women compared
with men. (See “Is America Giving Up on Working
Women?”) “I’ve been encouraged by what I’ve seen," says
Clunie. “She seems to have a new freedom to speak in
much more outward terms about what this means to her
personally.”
Yellen tells Fortune that at the Treasury she will fight
publicly to address inequality. But, perhaps thinking back
to that contentious 2014 hearing, she has a message for
her Republican friends in Congress. “The wage gap and
income inequality should not be politicized,” she says.
“They’re facts that everyone recognizes.”
It’s also a fact that her new job is more overtly political
than any she has held before. Yellen brings to it a distaste
for politics as usual and a reverence for data. And that
might be just what the economy needs.wealth inequality has been the theme.”
In 1998, under Bill Clinton, Yellen took the lead on a
landmark study, “Explaining Trends in the Gender Wage
Gap.” It proved to be a pivotal moment in her career. The
paper concluded that women earned 25% less than men,
and it was published just as America was celebrating the
35th anniversary of President Kennedy’s signing of the
Equal Pay Act. The resulting media attention elevated her
profile and eventually helped boost her into her next major
role as president of the Federal Reserve Bank of San Fran-
cisco in 2004.
While at the Fed, Yellen’s views on racial justice and
the economy evolved. In July of 2015, Yellen received
some blowback from testimony she gave to Congress that
seemed to imply that there was little the Federal Reserve
could do to improve disproportionately high Black unem-
ployment rates. Progressive groups and senators pushed
Yellen on the topic. She listened.
1979 1990 2000 2010 2017
SOURCE: CONGRESSIONAL BUDGET OFFICE NOTE: INCOME AFTER TAXES AND TRANSFERS050100150200250300%CHANGE IN HOUSEHOLD INCOME BY INCOME GROUPTOP 1% EARNERSTOP 20%MIDDLE 20%BOTTOM 20%WHAT COMES NEXT : THE ECONOMY$68.1
BILLIONU.S. trade deficit with China in November, a 14-year
high. Despite tariffs imposed under President
Trump, the $61.2 billion in consumer goods imported
from China to the U.S. was the highest on record.