Tags: federal reserve | lacker | education | inequality

Fed's Lacker: Education Failures Add to Growing Inequality

Tuesday, 10 Feb 2015 11:13 AM

Federal Reserve Bank of Richmond President Jeffrey Lacker said failures in education of poorer and minority students are contributing to growing income inequality.

“Recent data on economic inequality and economic mobility show that inequality has increased in recent years, while mobility has either decreased or remained flat,” Lacker said on Tuesday in Raleigh, North Carolina.

“The growing disparity in the acquisition of skills, often in the form of college education, appears to play a significant role.”

Fed Chair Janet Yellen said in October she’s “greatly” concerned by the most sustained rise in U.S. wealth and income inequality since the 19th century.

The lower half of U.S. households by wealth held 1 percent of the total, according to 2013 data from the Fed Survey of Consumer Finances, while the wealthiest 5 percent held 63 percent, Yellen said at a Boston Fed conference.

Lacker, who didn’t comment on the U.S. economic outlook or monetary policy in his prepared remarks, cited “significant disparities” in high school graduation rates between white and black or Hispanic students and between students of upper-income and low-income households.

A growing share of high school graduates go on to college, while dropouts are saddled with poor job prospects, he said.

The current labor market has been hindered by a growing mismatch of workers with skills, the Richmond Fed president said.

“There is also substantial anecdotal evidence that employers are having difficulty finding workers with the right skills,” he said.

Lacker voted for the Federal Open Market Committee’s statement last month that it would be “patient” in its plans to raise interest rates, which Chair Janet Yellen said in December meant no tightening “for at least the next couple of meetings.”

The central bank described the expansion as “solid,” while cautioning that inflation could decline further “in the near term.”

The FOMC meets on March 17-18.

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Federal Reserve Bank of Richmond President Jeffrey Lacker said failures in education of poorer and minority students are contributing to growing income inequality.
federal reserve, lacker, education, inequality
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2015-13-10
Tuesday, 10 Feb 2015 11:13 AM
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