Yellen's Storyline Strategy

Storyline, launched this week at the Washington Post, is "dedicated to the power of stories to help us understand complicated, critical things." Storyline will be a sister site to Wonkblog, and will mix storytelling and data journalism. The editor, Jim Tankersley, introduces the new site:

"We’re focused on public policy, but not on Washington process. We care about policy as experienced by people across America. About the problems in people’s lives that demand a shift from government policymakers and about the way policies from Washington are shifting how people live. 

We’ll tell those stories at Web speed and frequency. 

We’ll ground them in data — insights from empirical research and our own deep-dive analysis — to add big-picture context to tightly focused human drama."

I couldn't help but be reminded of Janet Yellen's first public speech as Fed chair on March 31. She took the approach Tankersley is aiming for. She began with the data:

"Since the unemployment rate peaked at 10 percent in October 2009, the economy has added more than 7-1/2 million jobs and the unemployment rate has fallen more than 3 percentage points to 6.7 percent. That progress has been gradual but remarkably steady--February was the 41st consecutive month of payroll growth, one of the longest stretches ever....But while there has been steady progress, there is also no doubt that the economy and the job market are not back to normal health. That will not be news to many of you, or to the 348,000 people in and around Chicago who were counted as looking for work in January...The recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics. At 6.7 percent, the national unemployment rate is still higher than it ever got during the 2001 recession... Research shows employers are less willing to hire the long-term unemployed and often prefer other job candidates with less or even no relevant experience."

Then she added three stories:

"That is what Dorine Poole learned, after she lost her job processing medical insurance claims, just as the recession was getting started. Like many others, she could not find any job, despite clerical skills and experience acquired over 15 years of steady employment. When employers started hiring again, two years of unemployment became a disqualification. Even those needing her skills and experience preferred less qualified workers without a long spell of unemployment. That career, that part of Dorine's life, had ended. 

For Dorine and others, we know that workers displaced by layoffs and plant closures who manage to find work suffer long-lasting and often permanent wage reductions. Jermaine Brownlee was an apprentice plumber and skilled construction worker when the recession hit, and he saw his wages drop sharply as he scrambled for odd jobs and temporary work. He is doing better now, but still working for a lower wage than he earned before the recession. 

Vicki Lira lost her full-time job of 20 years when the printing plant she worked in shut down in 2006. Then she lost a job processing mortgage applications when the housing market crashed. Vicki faced some very difficult years. At times she was homeless. Today she enjoys her part-time job serving food samples to customers at a grocery store but wishes she could get more hours."

The inclusion of these anecdotes was unusual enough for a monetary policy speech that Yellen felt obligated to explain herself, in what could be a perfect advertisement for Storyline.

"I have described the experiences of Dorine, Jermaine, and Vicki because they tell us important things that the unemployment rate alone cannot. First, they are a reminder that there are real people behind the statistics, struggling to get by and eager for the opportunity to build better lives. Second, their experiences show some of the uniquely challenging and lasting effects of the Great Recession. Recognizing and trying to understand these effects helps provide a clearer picture of the progress we have made in the recovery, as well as a view of just how far we still have to go."

Recognition of the power of story is not new to the Federal Reserve. I noted in a January 2013 post that the word "story" appears 82 times in 2007 FOMC transcripts. One member, Frederic Mishkin, said that "We need to tell a story, a good narrative, about [the forecasts]. To be understood, the forecasts need a story behind them. I strongly believe that we need to write up a good story and that a good narrative can help us obtain public support for our policy actions—which is, again, a critical factor."

But Yellen's emphasis on personal stories as a communication device does seem new. I think it is no coincidence that her husband, George Akerlof, is the author (with Rachel Kranton) of Identity Economics, which "introduces identity—a person’s sense of self—into economic analysis." Yellen's stories of Dorine, Jermaine, and Vicki are stories of identity, conveying the idea that a legitimate cost of a poor labor market is an identity cost.