The kinds of "yarns" that Sandburg tells are what are more commonly known as tall tales. These are stories that purposefully exaggerated, and Sandburg uses them to continue to inject optimism into his exultation about the resilience of the common folk. The tales cover a wide range, from the familiar story of Paul Bunyan to the less familiar story of the man who drove a herd of bees "across the Rocky Mountains and the Desert and didn't lose a bee."
Besides of optimism of the unconquerable feats in these tall tales, there is also humor in these yarns. The "the man so tall he must climb a ladder to shave himself" is clearly ridiculous, and makes the audience smile. If the purpose of Sandburg's is to raise the spirits of a public worn down by the the conditions of the Depression, than humor is a useful device.
Finally, by using tales that cover all areas of the country and that touch upon familiar, Sandburg is better able to reach his target audience - the American worker. “We are the greatest city, the greatest people. Nothing like us ever was.” Sandburg doesn't hesitate to criticize in his poem, but overall he is offering support in a time of hardship.