Janet Louise Yellen will make history for a second time if she’s confirmed by the Senate as Biden’s Treasury secretary.*
The Treasury secretary wields enormous power both in advising the president on all economic matters as well as in managing all federal finances – paying the US’s bills and even overseeing the IRS.
The Treasury secretary also puts her signature on all newly minted paper currency. My hand hurts just thinking about it.
Yellen started her economist career teaching at Harvard and took her first government position at the Fed in 1977 - nearly half a century ago.
At her recent Senate confirmation hearing, Yellen restated her support for Biden’s $1.9T stimulus proposal as well as for a federal minimum wage of $15.
Given her labor economics expertise, Yellen is especially well-positioned to speak to the economic effects of increased wages and stimulus remittances.
The current federal minimum wage is just $7.25. When adjusted for inflation, this is nearly 30% less than low-wage earners made 50 years ago.
Economists - including Yellen - tend to agree that increasing the minimum wage could potentially foment inflation. Yet at this point in the economic cycle that just may be another bonus.
Over the last decade, the US has been flirting with deflation, and, as we’ve talked about previously, the US has been hard-pressed to reach the Fed’s 2% annual inflation target.
At this critical point in the Covid recovery increased stimulus and a higher minimum wage likely make good sense for the economy, for the markets, and especially for those toiling at low-wage jobs.
* In 2014, Yellen first made history when she became the first woman to serve as the Chair of the Federal Reserve in its 100-year history.
