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Yellen developed the âÂÂefficiency wageâ model of unemployment, suggesting that if people feel underpaid, theyâÂÂll work less efficiently and will be more likely to quit, implying that cutting wages could lower productivity. âÂÂShe thinks [unemployment] is a terrible scourge,â says Alan Blinder, a Princeton University economist nominated to the Federal Reserve Board of Governors with Yellen in 1994. âÂÂThese are not just statistics to me,â Yellen said in a speech to the AFL-CIO in February. âÂÂWe know that long-term unemployment is devastating to workers and their families. The toll is simply terrible on the mental and physical health of workers.âÂÂ
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