Janet Yellen says income inequality threatens American values
Fed chair highlights 'difficult question' of how to tackle growing wealth gap
Federal Reserve Chair Janet Yellen said Friday that the last several decades have seen the most sustained rise in income inequality in a century.
In a speech to a Boston conference on economic opportunity, Yellen said this problem is of great concern to her and she pointed to increased education and ownership of small businesses as two ways to deal with the problem.
"I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity- Fed chair Janet Yellen
"It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority," Yellen said in her remarks to a conference on economic opportunity sponsored by the Federal Reserve Bank of Boston.
Yellen said the wealthiest five per cent of Americans hold two-thirds of all assets, and that while there have been significant gains at the top of the spectrum, things have been stagnant for the majority.
"I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity," she said.
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But she said she did not plan to offer solutions to these "contentious questions" but instead used her remarks to describe the landscape of inequality as it exists today.
She did talk about such factors as early childhood education, affordable higher education, business ownership and inheritances as "building blocks" that could be used by Americans to boost wealth.
"In focusing on these four building blocks, I do not mean to suggest that they account for all economic opportunity, but I do believe they are all significant sources opportunity for individuals and their families to improve their economic circumstances," Yellen said.
In her Boston speech, Yellen made no comments on the current state of the economy or on the future course of interest rates.
The Fed next meets on Oct. 28-29 and many economists believe the recent financial market turbulence and downgrades to economic prospects around the globe increase the likelihood that the central bank will not start raising its key short-term interest rate until next summer. That rate has been at a record low near zero since December 2008.