Yellen says problems of childhood poverty linger
Less-educated middle-age US whites dying younger than others
WASHINGTON, March 23, (AP): A new Federal Reserve survey has found that children who grew up in poverty were twice as likely to struggle with financial challenges later in life, Fed Chair Janet Yellen said Thursday.
The survey showed that more than half of young people age 25 to 39 who reported that as children they worried over things like having enough food were currently facing financial challenges, Yellen said. That was double the number with financial troubles who did not face such concerns as children.
Yellen told a Fed conference on community development that the findings underscored the need to provide children with the resources they need to achieve financial success later in life.
In her speech, Yellen made no comments on the current state of the economy or interest rates.
In the survey, which the Fed will publish later this spring, Yellen said there was a clear connection between childhood struggles and financial problems later in life.
“Young adults who regularly or sometimes worried when they were children about care, safety or having enough to eat are also less likely to be employed, less likely to have consistent income month-to-month and less likely to pay all of their current monthly bills in full, compared with those who never or rarely worried about these concerns as children,” Yellen said.
Yellen said the research to be presented at the Fed’s two-day conference made a compelling case for the need to prepare people starting at an early age for success in the labor market.
“This research underscores the value of starting young to develop basic work habits and skills,” she said. “These habits and skills help prepare people for work, help them enter the labor market sooner, meet with more success over time and be in a position to develop the more specialized skills and obtain the academic credentials that are strongly correlated with higher and steadier earnings.”
Yellen said a growing body of research showed that greater success was being achieved by addressing workforce development in early childhood education compared to spending on job training later in life.
“Ensuring that all of our kids have ‘strong foundations’ will help build a similarly strong foundation for the US economy,” Yellen said.
Also: WASHINGTON:
Middle-age white Americans with limited education are increasingly dying younger, on average, than other middle-age US adults, a trend driven by their dwindling economic opportunities, research by two Princeton University economists has found.
The economists, Anne Case and Angus Deaton, argue in a paper released Thursday that the loss of steady middle-income jobs for those with high school degrees or less has triggered broad problems for this group. They are more likely than their college-educated counterparts, for example, to be unemployed, unmarried or afflicted with poor health.
“This is a story of the collapse of the white working class,” Deaton said in an interview. “The labor market has very much turned against them.”
Those dynamics helped fuel the rise of President Donald Trump, who won widespread support among whites with only a high school degree. Yet Deaton said his policies are unlikely to reverse these trends, particularly the health care legislation now before the House that Trump is championing. That bill would lead to higher premiums for older Americans, the Congressional Budget Office has found.
“The policies that you see, seem almost perfectly designed to hurt the very people who voted for him,” Deaton said.
Case and Deaton’s paper, issued by the Brookings Institution, follows up on research they released in 2015 that first documented a sharp increase in mortality among middle-aged whites.
Since 1999, white men and women ages 45 through 54 have endured a sharp increase in “deaths of despair,” Case and Deaton found in their earlier work. These include suicides, drug overdoses, and alcohol-related deaths such as liver failure.
In the paper released Thursday, Case and Deaton draw a clearer relationship between rising death rates and changes in the job market since the 1970s. They find that men without college degrees are less likely to receive rising incomes over time, a trend “consistent with men moving to lower and lower skilled jobs.”
Other research has found that Americans with only high school degrees are less likely to get married or purchase a home and more likely to get divorced if they do marry.
“It’s not just their careers that have gone down the tubes, but their marriage prospects, their ability to raise children,” said Deaton, who won the Nobel prize in economics in 2015 for his long-standing work on solutions to poverty. “That’s the kind of thing that can lead people to despair.”
It’s not entirely clear why these trends have affected whites much more than they have AfricanAmericans or Hispanics, whose death rates are improving.
Case and Deaton note that many Hispanics are “markedly better off” than parents or grandparents who were born abroad, enabling a greater sense of optimism. African-Americans, they add, may have become more resilient to economic challenges given their long-standing disadvantages in the job market.