In her nine months as head of the
But Yellen's ascension is still likely to have a significant and long-lasting impact on women in the financial services industry, both from her direct influence and the message her role sends to others. Here are four key insights into why Yellen's success at the Fed matters and what it means for other women.
Yellen has become an important role model for women in finance.
One of the most enduring effects Yellen's appointment could have on the industry would be to attract more women into economics and finance. Studies have shown that young women respond to having role models in their selected fields — and Yellen's new position as the most influential central banker in the world should certainly give her increased visibility, even outside of the banking industry.
"It sends a huge signal that no job should be closed to women in financial services," says
Yellen's trajectory seems to have been set early on, despite a paucity of potential female role models in economics at the time. The
While her innate talents are clearly at the root of her success, there's hope that her rise, and greater discussion of her story, could spur increased participation in math and related fields among younger women today.
"Here you have a woman in the most important policy position in America in which mathematics is very relevant," says former congressman
For now, the crucial pipeline of women studying economics and finance remains slack. Women are underrepresented among MBA graduates, and they earn just one-third of economics PhDs and an even smaller portion of finance PhDs.
"It's still mysterious to me why economics and finance attract so few women," says
Yellen's appointment underscores that gender disparities in the industry persist, particularly in positions of leadership.
Despite significant and ongoing progress, there remains a dearth of women in the top spots across the financial services industry. No woman has ever led one of the country's megabanks, served as Treasury secretary, or chaired the banking committee in either the House or the
An analysis by
Yellen, who declined to be interviewed for this story, acknowledged last spring that efforts to bring more women into the field are still lacking. "In my own profession, there has been a gradual increase in the share of women in economics, but women still remain underrepresented at the highest levels in academia, in government and in business," Yellen, 68, said at a
It's worth noting, however, that although Yellen is the first woman to lead the central bank, the
Yellen previously led the Federal Reserve Bank of
"It's significant that you now have two of the most powerful positions in the
Yellen's succession was still a struggle.
Despite her many professional successes — including more than a decade at the Fed and more than three years as the Fed's No. 2 — Yellen's appointment to lead the Fed was not a forgone conclusion when former chairman
"She was the most qualified person for the job," says
Yellen was always viewed as being on the shortlist for Bernanke's replacement, but her candidacy was temporarily overshadowed by chatter that
"The issue was that presidents, senators, higher officials don't stop being human beings," says Frank. "
The consideration of Summers was particularly galling to some because of comments he made as president of Harvard that were perceived as questioning women's natural abilities in math and science.
Yellen was reportedly unaffected by the political firestorm, including rumors that she wasn't up to the task.She did very little advocating on her own behalf. This may have frustrated some of her colleagues, but supporters came to the aid of the unassuming academic in droves, publicly and privately.
"It would have been a slap in the face to women for her not to get the job," says
At the same time,
Ultimately, Yellen's quiet fortitude and unflappability during the deliberation process paid off, and Summers pulled his name from consideration following the left-wing backlash.
"The way in which Janet handled the whole thing really raised my already high opinion of her," says
Still, the incident is a reminder of the difficult balancing act women face when advocating for more power or responsibility. Research suggests that they often underestimate their own abilities and lack the confidence needed to take career risks. But when they do speak up, they can quickly be labeled as pushy — or worse.
Yellen's success (or failure) will help shape the economy, and the lives of women all over the country, for years to come.
Yellen inherited a host of challenges when she took office. She is still in the process of managing the tapering of the Fed's massive quantitative easing program and must decide when it will be safe to raise interest rates without sending the economy stumbling. She also has to put her stamp on implementing several unfinished pieces of the Dodd-Frank Act.
In navigating those upcoming policy debates, Yellen will need to draw on her demonstrated abilities to communicate effectively and foster cooperation.
"She's just a uniquely talented person at building consensus and listening to people," says Romer. "Anybody watching the Fed these days knows that it's a really tough time, because there's such a big difference of opinion about whether bubbles are developing and inflation is about to take off. You need a consensus builder and a strong intellectual leader to try and get the Fed to not fracture — and to also figure out what's the right path."
While neither skill is exclusively female, the ability to listen and establish consensus are some of the core strengths that experts suggest female leaders can bring to the boardroom.
The banking industry will be watching carefully to see how hard Yellen comes down on the largest institutions, as the regulator works to resolve ongoing debates over capital standards and the best way to wind down the most complex financial institutions in a future crisis, among other issues.
"There have been some tough rules that have come out under her chairmanship, and most people look to the power that she has given Fed Gov.
Meanwhile, schisms among members of the central bank's monetary policy arm, the Federal Open Market Committee, have already begun to surface. Yellen has so far been tasked with carrying out many of the policies launched under Bernanke to rescue the country from the financial crisis and the ensuing recession. But as the recovery continues, she will be forced to draw increasingly from her own playbook. Already policy hawks are calling for higher interest rates to head off fears of inflation, while doves like Yellen worry more about unemployment.
"Yellen believes that the economic challenges are more structural, due to demographic and skills mismatches. So she's likely to stay accommodative for longer than Bernanke, even though they were both architects of the same policy," says
"One dissent is okay, even two is manageable, but once you get to three and four, you're going to get questions from business leaders and analysts and investors as to where things are going," says Ware. "Deep divisions cause dislocations in the market."
Yellen's decision about when to raise rates is likely to be closely tied to her concerns about unemployment and wages — long-time priorities for the central banker. She even voiced her desire to help struggling Americans during her first speech as Fed chair in March, which has helped set the tone for her reign thus far. "When the Federal Reserve's policies are effective, they improve the welfare of everyone who benefits from a stronger economy, most of all those who have been hit hardest by the recession and the slow recovery," she told attendees at a community reinvestment conference in Chicago.
Some saw the speech as important, not just because of how her focus could help female workers, who are more likely to have low-wage or part-time jobs, but because of where she gave it. "It's symbolic when this is the first foray that a Fed chair makes out into the world, instead of speaking first to a bankers association or visiting
Still, how much she works with — and even pushes back on — her opponents will have profound effects on the economy and the struggling workers she has pledged to help.
And even though continuity has been her hallmark so far, how she handles what comes after the challenges that preceded her into office is bound to set her apart. "The test will be a true crisis or when the time comes to pivot away from the policies of the last several years," says Mills.
Yellen's rise to the top of the world's most powerful central bank is historic, but her legacy is still being defined.
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