the risks to our policy objectives. let me now explain how i get to this conclusion. conflicting signs in the labor market to judge the success of policy, you have to know when you ’ ve actually reached your targets. knowing when we hit our inflation target is straightforward. after all, a 2 percent increase in pce prices is an easily identifiable number. but full employment is a far more nuanced concept. as the fomc ’ s annual january “ statement on longer - run goals and monetary policy strategy ” recognizes, maximum employment can be influenced by a large number of structural factors that can change over time and may not be directly measureable. in light of this uncertainty, the committee considers many factors in gauging maximum employment. judging the degree of slack along these many dimensions is a difficult and complex task. but it is one that is critical for the conduct of monetary policy – we must have a good idea of what constitutes achievement of our full employment target. many economists, our chicago fed staff included, have been working long and hard on research related to this topic. in my remarks today, i will briefly talk about some of our results that touch on several of the most contested labor market issues on the table today. these involve labor force participation, job openings and wages. to give you the punch line, this research and work done by others in the field lead me to conclude that, although we have made great strides, a good deal of slack remains in the labor market. labor force participation and employment as everyone in this room is aware, the labor force participation rate has fallen throughout the recession and recovery and is now at a 35 - year low. 2 much of that decline is due to trends that far predate the great recession. the movement of baby boomers into retirement age and the long - running declines in teenager and prime - age male participation would have significantly reduced labor force participation rates independently of the economic downturn. see yellen ( 2014 ). the labor force participation rate is defined as the share of the population aged 16 and older who are either employed or unemployed. to be unemployed, a person has to not have a job but be actively looking for work in the prior four weeks and to be currently available to work. these data are collected by the u. s. bureau of labor statistics as part of its monthly current population survey. bis central bankers ’ speeches chicago fed economists first did work on the prospects for a declining labor force participation trend back in 2001 – near

two waves of large - scale asset purchases ( march 2009 and november 2010 ), and, more recently, extended the maturity of the assets on our books ( september 2011 ). in august 2011, we added a particular type of forward guidance to our policy, first saying we would likely keep rates low until mid - 2013 and then, in january, indicating that sub - par economic performance would likely warrant exceptionally low rates until at least late 2014. working to complement these efforts and to improve fomc communications more generally, we also added two major communications initiatives : a statement of our monetary goals and long - run strategies, and publication of fomc participants ’ projections for the federal funds rate. krugman ( 1998 ). see, for example, bernanke, reinhart and sack ( 2004 ) and eggertsson and woodford ( 2003 ). bis central bankers ’ speeches i have strongly supported each of these developments, believing that they improved transparency and also provided welcome further monetary accommodation for the u. s. economy. however, as i have been talking about in public for some time, i think there are additional tools we could use to deliver more effective policy accommodation. in particular, i would like to see our forward guidance take a different form – one that explicitly ties liftoff in the funds rate to observable economic outcomes ( you can think of this as a ulysses - type forward guidance : we tie ourselves to the mast to avoid the siren calls of premature tightening. ) as i will talk about shortly, i believe such policy could provide more clarity about our attitudes toward providing monetary accommodation – and would be more in line with a structure i would have preferred to have seen in our august 2011 and january 2012 actions. this policy also can be structured in a way that would represent a balanced risk - management approach to achieving the dual goals of maximum employment and stable prices that the united states congress has mandated to the federal reserve. communications enhancements first, though, i ’ d like to discuss the fed ’ s latest initiatives to enhance communications. as an accountable central bank in a democratic society, the federal reserve has an obligation to clearly articulate what it is trying to achieve with monetary policy. i believe that our latest communications efforts are an important step in further increasing such accountability to the public, as they reaffirm our commitment to both legs of the dual mandate and describe the ways in which we will seek to achieve those objectives. the framework statement let ’ s start with the framework statement of