Federal Reserve Chair Janet Yellen said the labor market has not yet reached full employment, in a speech to the Economic Club of Washington on Wednesday.
Yellen cited the monthly gain of about 195,000 jobs since June, saying this data reflected consistent improvement in the labor market.
"Despite these substantial gains," Yellen said, "We cannot yet, in my judgment, declare that the labor market has reached full employment."
"To begin with, I believe that a significant number of individuals now classified as out of the labor force would find and accept jobs in an even stronger labor market," she said. "Some who are counted as out of the labor force might be induced to seek work if the likelihood of finding a job rose or if the expected pay was higher."
"In October, almost 2 million individuals classified as outside the labor force because they had not searched for work in the previous four weeks reported that they wanted and were available for work," she said. "This is a considerable number of people, and some of them undoubtedly would be drawn back into the workforce as the labor market continued to strengthen."
The Federal Open Market Committee will gather for their next meeting on Dec. 15 and 16 and will decide whether to raise interest rates or keep them near zero, where they have been since December 2008. The committee will assess the progress of the economy, focusing on its two goals of maximum employment and inflation rising to its 2 percent objective.
At the event, Yellen said that progress has been made towards full employment, while less has been made toward price stability.
"On balance, the moderate average pace of real GDP growth so far this year and over the entire expansion has been sufficient to help move the labor market closer to the FOMC's goal of maximum employment," said Yellen. "However, less progress has been made on the second leg of our dual mandate--price stability--as inflation continues to run below the FOMC's longer-run objective of 2 percent."