http://www.nytimes.com/2014/10/18/business/yellen-warns-of-inequality-threat.html 2014-10-17 15:50:37 Yellen Warns of Inequality Threat At a speech in Boston, the Federal Reserve chairwoman said she feared growing disparities in income and wealth were choking Americans’ ability to advance. === BOSTON — Janet L. Yellen, the Federal Reserve chairwoman, said Friday that she was concerned about the growing inequality of wealth and income in the United States, and that chances for people to advance economically appeared to be diminishing. “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,” Ms. Yellen said. Speaking at a conference on inequality organized by the Federal Reserve Bank of Boston, Ms. Yellen described four sources of economic opportunity: the means to raise children, access to education, owning a small business and inheritance. She said recent Fed research showed that those building blocks were increasingly distributed unequally. The share of wealth held by the lower half of households fell to 1 percent in 2013, from 3 percent in 1989, according to the Fed’s triennial Survey of Consumer Finances, a survey of 6,000 households. Government programs offset some of that inequality, but Ms. Yellen noted that public funding for early education had not increased since the recession, while the cost of higher education continued to rise. “I fear the large and growing burden of paying for it may make it harder for many young people to take advantage of the opportunity higher education offers,” she said. Similarly, she noted that the decline in small-business creation suggests that it has become harder for people to build wealth through entrepreneurial risks, threatening “what I believe likely has been a significant source of economic opportunity.” Inheritances were the somewhat surprising bright spot in her bleak picture. Ms. Yellen said that wealth gains from inheritances were less concentrated than overall wealth. Large numbers of less affluent families continued to receive windfalls. The average age for receiving an inheritance is 40, the Fed found, a stage of life when people are often assessing their ability to pay for children’s education or to start a business. Ms. Yellen noted that inequality can contribute to economic growth by serving as an incentive. But, she said, it can also make things worse. She pointed to a relationship she described as the “Great Gatsby curve,” that in advanced economies with greater inequality, there is also less opportunity for intergenerational mobility. And mobility, she said, “is lower in the United States than in most other advanced countries.”