Yellen still sees US on track to hit full employment next year

[WASHINGTON] Treasury Secretary Janet Yellen said she still expects the US economy to return to full employment "next year," even after a slowdown in the pace of hiring.

"The labor market in many ways is very tight," Dr Yellen said in an interview with MSNBC television that aired on Wednesday morning, adding that the economy is still recovering from the pandemic, which she described as "a very, very unusual shock."

The US labour force has made major steps in 2021, though the Delta variant of the Covid-19 virus has slowed that progress. Employment reports for August and September came in well below economists' estimates.

The US unemployment rate has dropped to 4.8 per cent, compared to 3.5 per cent just before the pandemic struck, with some of that decline explained by thousands of Americans departing the workforce - in part thanks to those opting for early retirement.

Dr Yellen also noted that US employers especially in the service sector may have to raise wages as the economy adjusts to a labour shortage but that would be a "good thing" for workers.

"It's good to see wages rise and working conditions improve for people working in low wage sectors of the economy. This is something that we've wanted to accomplish for a long time, Dr Yellen said.

Companies nationwide are struggling to find workers to fill open positions, especially service firms like restaurants and hotels, while big employers like Amazon and Walmart have raised wages amid a massive push to bring in more workers ahead of the holiday shopping season. "They may have to pay more, and that will be part of the adjustment," Dr Yellen said of service firms.

BLOOMBERG,AFP