Janet Yellen Told a Story about Childcare Economics

Janet Yellen

Treasury Secretary Janet Yellen spoke on September 15, 2021 about the need for the United States to strengthen its childcare system. A Department of the Treasury report had found that the United States’ childcare system is overloaded. Worse, lack of childcare has significant implications for economic growth.  Yellen told a personal story to make an abstract economic principle come to life.


Janet Yellen’s Economics Story

Good speakers tell stories. Communication researchers call this the “narrative paradigm.” Yellen began her presentation with a personal story about when she needed to pay for childcare as a young working mother in 1981. Her story did not just illustrate her point, but also helped her explain economic theory. Her story showed that working families rely on childcare, that it is important to pay childcare workers a good wage, and that the economy depends on childcare. Here is her story as she narrated it:

“We didn’t plan this, but today is a very appropriate day for me to participate in this event. Because it turns out, forty years ago on this exact morning – September 15th, 1981 – I was returning to work.

“My son Robert had been born over the summer, and by the time the school year rolled around, I was ready to resume teaching again at Berkeley. I needed a babysitter, and I started doing some research. What was the going rate for childcare in the Bay Area? I asked friends with kids and surveyed childcare providers, and when I came to an answer, I called the Classified section of The Daily Californian – people still used those back then – and purchased a ‘help wanted’ advertisement, offering ‘good pay,’ the market rate plus a few dollars more per hour. ‘Job starts on September 15,’ I added.”

Yellen’s story stressed that she and her husband were willing to pay more than the market rate to attract a babysitter. Why would anyone do that? Conservative orthodoxy says that people should be paid according to the market, as if the market has some magic moral power. As she spoke, however, Yellen pointed out that employers gain benefits when they pay more than the market rate. She made that point by continuing her story. Here is what she said next:

“Why a few dollars more? My husband George was an economist too – he still is – and at the time, we were both interested in the topic of ‘efficiency wages.’ Classical economics says that it’s not rational to pay a worker more than the market rate, but we hypothesized it could be. The job might be an important one, for example, and a higher wage could encourage someone to do better work. That’s a completely rational reason to pay someone more, especially if the job is some of the most intimate work there is, which is caring for children.

“Our hypothesis proved correct, at least in our own home. The advertisement led us to a babysitter who took wonderful care of Robert while George and I were at work.”

Yellen was rhetorically clever to slip economic theory into her narrative. She slyly acknowledged that she had violated economic orthodoxy. She continued, however, that paying more than the market rate helped to attract a good babysitter who proved to be loyal and caring.


And on to policy recommendations!

Yellen’s story helped her explain the need for better financing of childcare. “The free market works well in many different sectors,” she insisted, but childcare is not one of them.” She continued:

“It does not work for the caregivers. It does not work for the parents. It does not work for the kids. And because it does not work for them, it does not work for the country.”

(I love parallel language, by the way, which helps audiences see how different points link together: “It does not work for … It does not work for … It does not work for.”)

Yellen went on to cite economic figures about the number of workers who had to drop from the labor force or change jobs because they couldn’t get adequate childcare. That was good, but her story had already made that point – it was her story that helped the audience understand why financing childcare was important. She concluded, in fact, by referring back to her own story: “Indeed, looking back, I am not sure whether I would be here, in this job today, if I didn’t have an excellent babysitter 40 years ago.”

Read: Does a Speaker Always Need to Be Energetic?

Yellen has never been a dynamic speaker, but she has an extraordinary gift for being clear. She made her point sharply and precisely. It is unfortunate that critical events in Afghanistan and the coronavirus drowned out news reports of this important and dramatic speech.

Economic theory is always abstract and mathematical. Yellen’s personal story framed her economic recommendations to help the audience understand them in human terms. Good speakers tell stories. Advice to speakers: tell stories. And don’t just tell random stories: instead, tell stories like Yellen’s that help you make your point. Tell stories like Yellen’s that help you prove your point.

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Read: Janet Yellen Established Her Credibility During Her Confirmation Hearing

Read: Janet Yellen’s Speech at Jackson Hole: We Need a Stable Financial System

Read: Alexandria Ocasio-Cortez' First Congressional Speech Told a Story
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P.S. The entire Department of the Treasury report about “The Economics of Childcare Supply in the United States” is well worth reading.

Research Note: the late Professor Walter R. Fisher introduced the concept of narrative argument in a 1984 article that he published in Communication Monographs.

Image: Department of the Treasury