Fed chair: Poverty leaves scars
WASHINGTON — 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 such as 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.
Connection: 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 also are 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 U.S. economy,” Yellen said.