Chairman of the Federal Reserve Jerome Powell Wednesday painted a grim picture of the state of employment in the United States, saying continued aggressive political support is needed to address the myriad problems workers still face.

Solving this problem will require “patiently accommodative monetary policy that takes into account the lessons of the past” regarding the benefits that low interest rates bring to the labor market, central bank chief told the Economic Club of New York.

Even though the economy has recovered more than 12 million jobs since the early days of the covid pandemic, Powell said the United States is “far away” from where it needs to be in terms of jobs.

“Full realization of the benefits of a strong labor market will require continued support from both short-term policy and longer-term investments so that all who seek employment have the skills and opportunities that will enable them. to contribute and share the benefits of prosperity, ”he said in prepared remarks.

The pace of job creation has slowed down considerably.

Although the unemployment rate has fallen from its peak of 14.8% in 2020 to 6.3%, the non-farm payroll only increased by 49,000 in January and fell by 227,000 in December. More than 10 million workers are still unemployed, 4.4 million more than before the pandemic a year ago.

Powell further said the overall unemployment rate had “dramatically underestimated” the real damage, including the biggest 12-month drop in labor force participation since at least 1948.

Without the misclassifications that have plagued the Department of Labor since the pandemic began in March, the unemployment rate would be closer to 10%, Powell added. He also noted that the impact has been particularly heavy on low wages, with employment in the bottom quartile falling 17% during the coronavirus crisis, while the top tier has seen a decline of just 4%.

“Despite the surprisingly quick early recovery, we are still a long way from a strong job market with widely shared benefits,” said Powell.

To address the disparities, the Fed adjusted its approach to full employment six months ago to make it a “broad and inclusive” target and said it would not start raising interest rates until that target did. ‘would not have been achieved. At the heart of the approach is the desire to allow inflation to exceed the Fed’s standard 2% target for price stability.

Powell noted that in the last few years of the record-breaking expansion that ended a year ago, wage and job gains began to be distributed more evenly as the unemployment rate fell, without threat of high inflation. When the unemployment rate fell in the past, the Fed would raise rates to avoid inflation, but won’t do so now.

The Fed maintains its benchmark short-term borrowing rate anchored near zero and buys at least $ 120 billion in bonds every month.

While he expressed confidence that the Fed’s new approach will lead to better results, he said monetary policy alone cannot do everything.

“Given the number of people who have lost their jobs and the likelihood that some will struggle to find work in the post-pandemic economy, achieving and maintaining maximum employment will require more than a supportive monetary policy. will require a company-wide engagement, with contributions from across government and the private sector, ”he said.

Powell added that mass vaccinations would help as well as tax programs such as the Paycheck Protection Program, which provides loans to companies that detain their workers.