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Oct 17 2014, 4.17pm GMT


FED Chair Janet Yellen prompts the U.S to address inequality to boost economic opportunity

At the Conference on Economic Opportunity and Inequality, Federal Reserve Bank of Boston, Boston, Massachusetts, Janet Yellen, Chair of the FED, presented her views on opportunities to be sought to combat inequality and lead the US into a fairer, wealthier nation.

Her speech on ‘Perspectives on Inequality and Opportunity from the Survey of Consumer Finances’ covered key points:

  • Equality in household wealth became more level in the recession.
  • Inequality widened in recovery with slow wage and labour market growth.
  • Income and wealth inequality are near their highest levels in the past hundred years.

Yellen aimed the Conference “to focus on equality of economic opportunity and on ways to better promote it.”

Yellen’s four cornerstones to equality – “significant sources of opportunity for individuals and their families to improve their economic circumstances.”

  1. resources available for children
  2. affordable higher education
  3. business ownership
  4. inheritances

Key facts:

  • The wealthiest 5 percent of American households held 63 percent of all wealth in 2013
  • The lower half of households by wealth held just 1 percent of wealth in 2013
  • Housing accounts for a larger share of wealth for those in the bottom half of the wealth distribution; their overall wealth is affected more by changes in home prices
  • Homeowners in the bottom half of households by wealth reported 61 percent less home equity in 2013 than in 2007
  • Federal Reserve staff estimate that between 2013 and mid-2014, average home equity rose 49 percent for the lowest half of families by wealth
  • A source of wealth for many families is financial assets, including stocks, bonds, mutual funds, and private pensions - nearly two-thirds of all such assets are held by top 5 percent in 2013
  • Mobility is lower in the United States than in most other advanced countries

Opportunity for economic outcome

  • Resources available for children to enhance future earnings and other economic outcomes
  • Higher Education that families can afford as net returns for a degree are high enough that college still offers a considerable economic opportunity

Opportunities to Build Wealth through Business Ownership

Yellen pointed out, “In addition to housing and financial assets, the SCF shows that ownership of private businesses is a significant source of wealth and can be a vital source of opportunity for many households to improve their economic circumstances and position in the wealth distribution.”

  • Half of the top 5 percent of households have a share in a private business
  • The average value of these holdings is nearly $4 million.
  • Business ownership is associated with higher levels of economic mobility


Over half of the total value of inheritances went to the top 5 percent averaged at $1.1 million, and 40 percent went to households in the next 45.


Janet Yellen noted that she had only “just touched the surface of the important topic of economic opportunity” and that her specific sources of opportunity may vary across households. 

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