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Federal Reserve Chairman Jerome Powell on Wednesday disputed the notion that the current social safety net is dissuading Americans from seeking work.
During a Senate Banking Committee hearing, Sen. John Kennedy,a Republican of Louisiana, pushed Powell on reasons why the U.S. has a much smaller proportion of eligible workers participating in the labor market compared with other advanced economies.
Kennedy wondered if “the richness” of public assistance played a role.
Powell said he did not see this connection.
“If you look at it in real terms, adjusted for inflation, at the benefits that people get, they’ve actually declined. It isn’t better or more comfortable to be poor and on public benefits now. It’s actually worse than it was,” Powell said.
Instead, the Fed chairman said the opioid crisis has played a role, and a lag in U.S. educational attainment. Boosting labor force participation should be a national priority, he said.
Read: Powell says Fed will aggressively use QE to fight next recession
In January’s employment report, the share of working Americans who had jobs or were actively looking for work — known as the labor force participation rate — ticked up to its highest level in seven years, to about 63.4%.
Related: U.S. adds 225,000 jobs in January as hiring speeds up again
As Powell addressed the congressional panel, stocks were higher, with the Dow Jones Industrial Average DJIA, +0.77% up almost 200 points at one point Wednesday.
