Fed Chair Janet Yellen Discusses Continuing Wealth Inequality in the United States

As discussed by John Cassidy in The New Yorker, Janet Yellen's opening remarks to a conference in Boston were entirely devoted to outlining inequalities in the United States. As Yellen stated, "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. 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."

While the Great Recession had a sharp impact on top incomes as a result of the declining stock market, those inequalities since then have resumed widening, with 2013 inequality levels at nearly those of peaking pre-recession times. As Cassidy writes, "Turning to wealth, which includes financial assets, real estate, and durable goods, such as cars, Yellen noted that the pattern was the same—except the increase in inequality had been even more stark. In 1989, the richest five per cent owned fifty-four per cent of over-all wealth. By 2010, that figure had risen to sixty-one per cent. And by 2013, it had reached sixty-three per cent."

In addition to touching on the net worth (debts, and mortgage debts subtracted from the summed value of all assets a family owns) of top Americans, Yellen discussed how "[i]n 2013, the average net worth of the sixty-two million households in the bottom half of the distribution was eleven thousand dollars."

Yellen went on to describe how the entrepreneurial spirit of America leads to people founding their own businesses, and moving up the income distribution, is also in trouble, "it appears that it has become harder to start and build businesses... The pace of new business creation has gradually declined over the past couple of decades... [and] may well threaten what I believe likely has been a significant source of economic opportunity for many families below the very top in income and wealth."