Who Is Janet Yellen?

Janet Louise Yellen is a distinguished American economist who has made history as the 78th United States Secretary of the Treasury since January 26, 2021, under President Joe Biden's administration. Prior to this role, she served as the 15th Chair of the Federal Reserve from 2014 to 2018, showcasing her extensive experience in economic policy and leadership. Yellen is notably the first woman to lead the U.S. Treasury Department and the Federal Reserve, as well as the first person to have headed both these institutions and the White House Council of Economic Advisers.

In nominating her to head the Fed, Former President Barack Obama called Yellen, “one of the nation’s foremost economists and policymakers” who is “renowned for her sound judgment and ability to build consensus.”

Early Life and Education

Janet Yellen, born on August 13, 1946, in the Bay Ridge neighborhood of Brooklyn, New York, to a Polish Jewish family, has had a distinguished career in economics and public service. Her mother, Anna Ruth, was an elementary school teacher and her father, Julius, was a doctor who treated patients out of the family's brownstone. Demonstrating early academic prowess, Yellen served as editor-in-chief of her high school newspaper at Fort Hamilton High School, where she graduated as valedictorian in 1963. She graduated summa cum laude with an economics degree from Brown University in 1967 and went on to receive her Ph.D. from Yale University in 1971 under the guidance of Nobel laureate James Tobin.

Her exceptional note-taking in Tobin's class led to the creation of "Yellen Notes," a valuable resource for future Yale economics students. Recognized for her academic excellence by her professors, including Joseph Stiglitz, Yellen embarked on a teaching career at prestigious institutions such as Harvard, The London School of Economics, and the University of California at Berkeley, before joining the Federal Reserve Board of Governors as an economist from 1977 to 1978.

Notable Accomplishments

Janet Yellen has made significant contributions to economic policy and governance through her roles on various economic committees and councils, including the Organisation for Economic Cooperation and Development (OECD), the U.S. Council of Economic Advisors, and the American Economic Association. She was also an advisor for the U.S. Congressional Budget Office. She has served as a research associate for the National Institute of Economic Research and held positions on the board of the Pacific Council on International Policy, among other affiliations.

Yellen began three decades' worth of service in the Federal Reserve System when she served as a governor for the Federal Reserve Board between 1994 and 1997. In 2004, she became president and chief executive officer (CEO) of the Federal Reserve Bank of San Francisco, where she was credited with foreseeing the subprime mortgage crisis more accurately than her peers.

Janet Yellen's notable accomplishments also include her role as Vice-Chair of the Federal Reserve from 2010, where she advocated for using all available tools to reduce unemployment, a stance that was somewhat controversial at the time. In 2013, she broke new ground as the first woman to chair the Federal Reserve, guiding the U.S. economy through a period of significant recovery and staunchly supporting financial reforms to strengthen the banking sector.

During her tenure, the unemployment rate fell from 6.7% to 4.1%, with decreases every month she was in office. She was a strong defender of the Dodd-Frank Financial Reform and Consumer Protection Act, arguing that it strengthened the banking system. After her term at the Fed, Yellen joined The Brookings Institution before being nominated by President-elect Joe Biden as Treasury Secretary, a position in which she was confirmed in January 2021, continuing her focus on employment and economic recovery.

On the Federal Reserve Board

Yellen was appointed to the role of the Federal Reserve's vice-chair for a four-year term on Oct. 4, 2010, by then-President Obama. Yellen used her position to convince the Fed to adopt a 2% annual inflation target, a policy aimed at stabilizing prices and guiding economic expectations. Her appointment as Chair of the Federal Reserve was urged by Democrats, who favored her over former Secretary of the Treasury Larry Summers, citing her exceptional qualifications, dedication to addressing unemployment, and proven track record in bank regulation.

On October 9, 2013, Obama nominated Yellen to succeed Ben Bernanke as the first female Chair of the Federal Reserve Board, a position she assumed in February 2014. Taking office in February 2014 as the Fed's 15th chair, Yellen was tasked with keeping the gradual recovery of the economy on track.

Yellen's four-year term was slated to end on Feb. 3, 2018.  She was scheduled to remain a Member of the Board of Governors of the Federal Reserve System until 2024. But on Nov. 20, 2017, she announced her resignation from the Federal Reserve Board as soon as Jerome Powell was sworn in. She was the first chair in nearly 40 years to not receive a second term.

U.S. Treasury Secretary

President Joe Biden nominated Janet Yellen as the 78th head of the U.S. Treasury and she was confirmed by the Senate as Treasury Secretary on Jan. 26, 2021. “She has spent her career focused on unemployment and the dignity of work,” Biden said, “She understands what it means to people and their communities when they have good, decent jobs.” As a member of President Joe Biden’s Cabinet, Yellen is the first woman to head the U.S. Treasury Department and the Federal Reserve.

In its first year under Secretary Janet Yellen, the U.S. Treasury made significant strides in pandemic recovery, reducing unemployment to 3.9% and surpassing pre-pandemic GDP levels. Yellen led efforts to restore U.S. global leadership, securing a landmark global corporate taxation deal. Under her guidance, the Treasury implemented key American Rescue Plan programs, disbursed billions in economic relief, and advanced equity through targeted investments in underserved communities.

In fiscal year 2023, the U.S. Treasury, under Secretary Yellen, and the Office of Management and Budget reported a deficit reduction and economic growth, with the deficit over $1 trillion lower than at the start of President Biden's term. The economy added nearly 14 million jobs, with unemployment below 4% for a historic period, and workforce participation at a 20-year high.

Economic Philosophy

Yellen is a staunch economic dove (supporting low-interest rates and expansionary monetary policies, valuing low unemployment over keeping inflation low). Much of the research she performed as an academic economist focused on employment. She and her husband, George Akerlof, are both Keynesian economists who believe that economic markets need governmental regulation to function correctly. They have both created economic models, such as the efficiency wage theory, showing how firms seeking to maximize profits would pay higher than minimum wages. 

Yellen has consistently advocated for fiscal policies that address economic inequality, emphasizing the need for economic policy to benefit all members of society, particularly benefiting workers and middle-class families. Yellen advocates for a modern supply-side economics strategy, which involves significant investments in infrastructure, manufacturing, and clean energy to create jobs and stimulate economic growth. Her economic philosophy includes supporting policies that provide direct financial assistance to middle-class families, such as tax credits and housing assistance, to mitigate the impacts of economic downturns and pandemics.

Yellen's Philosophy With the Fed

Yellen was the first Democrat to chair the Fed in nearly 30 years but stressed the importance of the Fed being independent of political processes and staying nonpartisan. As chair, she sought to emulate the philosophy of James Tobin, an economist who believed that an economy can be rescued from recession through governmental intervention.

While in the public eye, Yellen followed Bernanke’s cautious approach, using meticulously researched data and a technocratic manner to minimize surprise announcements or other releases that could roil the markets. She backed Bernanke’s bond-buyback program and continued his stimulus campaign. During her term, she also tightened financial and banking regulations to prevent the financial abuses that led to the financial crisis of 2007-09 from repeating themselves.

During the latter part of her term, Yellen advocated for "gradual rate hikes" believing a sharp rise in rates could hit the economy with an "adverse shock." While the Federal Reserve does not directly focus on stock market performance, the S&P 500 has returned 46% since she became Fed Chair in 2014, an average of more than 10% per year.

Personal Life

While working at the Federal Reserve in 1977, Yellen met fellow economist George Akerlof. They married in 1978, and have a son, Robert, who is also an economics professor.

Yellen's professional life has been marked by her contributions to labor and macroeconomics, particularly through her work on efficiency wages, which she explored alongside her husband. Her work on this topic studied why firms often choose to pay more than the minimum needed to hire employees. She co-authored two economics books, one with her husband and one with former Fed governor and professor Alan Blinder.

Yellen has been awarded honorary doctoral degrees from institutions including Bard College, Brown University, the London School of Economics, New York University (NYU), the University of Baltimore, the University of Michigan, the University of Warwick, and Yale University. She was also honored with the Wilbur Cross Medal for her outstanding contributions to scholarship, teaching, academic administration, and public service at Yale.

The Bottom Line

Janet Yellen is a highly accomplished American economist who has made history by becoming the first woman to serve as both the Chair of the Federal Reserve and the Secretary of the Treasury. Her economic philosophy emphasizes the importance of government regulation in economic markets and prioritizes low unemployment.

Throughout her career, she has advocated for policies that benefit workers and middle-class families. Yellen's contributions to labor and macroeconomics, including her work on efficiency wages, have left a lasting impact on the field.