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Janet Yellen says income inequality hurting U.S. economy

Income and wealth inequality appear to be at their highest levels in a century, Federal Reserve Chairwoman Janet Yellen said.

By Frances Burns
Janet Yellen says income inequality hurting U.S. economy
Federal Reserve Board Chairwoman Janet Yellen. UPI/Kevin Dietsch | License Photo

BOSTON, Oct. 17 (UPI) -- Janet Yellen, chairwoman of the Federal Reserve, suggested Friday that greater investment in education is needed to reduce economic inequality in the United States.

Yellen gave the keynote address at a conference in Boston sponsored by the Boston Fed on economic mobility and inequality. She said increasing inequality "greatly concerns" her.

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"The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression," Yellen said.

"By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then."

Yellen said recent decades have been marked by "significant income and wealth gains for those at the very top and stagnant living standards for the majority." This hurts social and economic mobility, she added.

Yellen added there are four "building blocks" to increase opportunity for those with smaller incomes and fewer assets.

"Two of those are so significant that you might call them 'cornerstones' of opportunity, and you will not be surprised to hear that both are largely related to education," she said. "The first of these cornerstones I would describe more fully as 'resources available to children in their most formative years.' The second is higher education that students and their families can afford."

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Yellen described the other building blocks as business ownership and inheritance. While those in the upper income brackets tend to benefit the most, she said, they can also play a significant role for those below that level.

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