The US Federal Reserve chair has expressed concern about increasing wealth inequality in the US, saying the richest five percent of Americans hold 63 percent of the country’s wealth.
Janet Yellen made the remarks at the Federal Reserve Bank of Boston Economic Conference on Inequality of Economic Opportunity on Friday.
According to her, those at the very top have made significant income gains while the majority of Americans are living a stagnant life.
“The wealthiest 5 percent of American households held 54 percent of all wealth reported in the 1989 survey. Their share rose to 61 percent in 2010 and reached 63 percent in 2013,” she said.
Yellen added, “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 percent of wealth in 1989 and only 36 percent in 2013.”
She suggested increased education and encouraging small businesses as two solutions to tackle the problem.
The Fed chair went on to say that the lower half of households by wealth held only three percent of wealth in 1989 and just one percent last year.
She said that income and wealth inequality are at their highest levels since the 19th century.
She added that the rift has seen its most sustained rise over the last decades and it has even widened during US economic recovery in recent years. “The distribution of income and wealth in the United States has been widening more or less steadily for several decades, to a greater extent than in most advanced countries.”
According to a study by Harvard University, the growing income inequality in the US between the richest Americans and the middle and lower classes is “unsustainable” and may worsen.
The study, released last month by the Harvard Business School and titled “An Economy Doing Half its Job”, highlighted problems with the widening US wealth gap, education system, transport infrastructure, and the effectiveness of the political system.
The study said that while large US companies were recovering their competitiveness internationally, workers continue to struggle for better pay and benefits.