Janet Yellen Decries Widening Income Inequality

Extrait de: Janet Yellen Decries Widening Income Inequality, By Pedro Nicolaci da Costa, The Wall Street Journal, Oct. 17, 2014

Central Bank Chief Says Wealth Disparity Could Be Impeding Economic Mobility

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BOSTON—Federal Reserve Chairwoman Janet Yellen said rising inequality of wealth and income in the U.S. was impeding the economic mobility at the heart of American values.

“The extent and continuing increase in inequality in the United States greatly concern me,” Ms. Yellen said to a conference on economic opportunity and inequality sponsored by the Federal Reserve Bank of Boston. “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.”

Quotes From Janet Yellen on Income and Wealth Inequality

Federal Reserve Chairwoman Janet Yellen has earned a reputation for being a stickler for detail and preparation. It was no different Friday when she delivered a speech on economic opportunity and inequality.

Ms. Yellen offered extensive evidence of increasing income and wealth inequality, offering a number of figures to support her case, including lots of data from Fed’s triennial Survey of Consumer Finances. The report began in 1989, and was most recently conducted in 2013 and published last month.

Here are five statistical snapshots Ms. Yellen offered to put the inequality trend in perspective:

1 “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.”

2 “After adjusting for inflation, the average income of the top 5% of households grew by 38% from 1989 to 2013. By comparison, the average real income of the other 95% of households grew less than 10%.

3 “The distribution of wealth is even more unequal than that of income. …The wealthiest 5% of American households held 54% of all wealth reported in the 1989 survey. Their share rose to 61% in 2010 and reached 63% in 2013.

By contrast, the rest of those in the top half of the wealth distribution families that in 2013 had a net worth between $81,000 and $1.9 million held 43% of wealth in 1989 and only 36% in 2013.

4The lower half of households by wealth held just 3% of wealth in 1989 and only 1% in 2013.”

5 “The average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013. About one-fourth of these families reported zero wealth or negative net worth, and a significant fraction of those said they were ‘underwater’ on their home mortgages, owing more than the value of the home. This $11,000 average is 50% lower than the average wealth of the lower half of families in 1989, adjusted for inflation.”


She noted that the disparity in wealth and income in the U.S. has grown wider for several decades, pausing during the recession and resuming its rise during the recovery as the stock market rebounded but the job market remained weak.

In addition, recent gains in home prices haven’t “fully restored the housing wealth lost by the large majority of households for which it is their primary asset,” she said.

The lower half of U.S. households ranked by wealth held just 1% of total wealth last year, down from 3% in 1989, Ms. Yellen said.

“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,” she said.

Ms. Yellen didn’t address Fed critics’ arguments that the central banks’ bond buys and zero-interest-rate policies have contributed to inequality by bolstering prices of assets such as stocks, which are primarily held by wealthier Americans.

The Fed counters its policies are aimed at boosting the overall economy, and thus helps lower-income Americans who are more likely to have high levels of debt.

Ms. Yellen didn’t address two topics more typical of a Fed chief’s speech, the outlook for the U.S. economy or interest rates. It marked her first speech as chairwoman focused exclusively on inequality.

“I think she broke new ground in terms of a Fed chair looking at such a serious socioeconomic issue with that degree of rigor,” said Karim Basta, chief economist at III Associates, an investment adviser, who attended the conference.

Inequality has generated increasing discussion since the financial crisis and recession. The Occupy Wall Street movement highlighted the issue in 2011, and it gained renewed attention this year with debates over economist Thomas Piketty’s best-selling book, “Capital in the Twenty-First Century.”