Janet Yellen: Strong foundations - the economic futures of kids and
communities
Welcoming remarks by Ms Janet L Yellen, Chair of the Board of Governors of the Federal
Reserve System, at the 10th Biennial Federal Reserve System Community Development
Research Conference "Strong Foundations: The Economic Futures of Kids and Communities",
Washington DC, 23 March 2017.
* * *
I would like to welcome all of you and thank you for joining us to discuss a set of topics of
considerable importance to our country. This is the Federal Reserve's 10th biennial community
development research conference, dedicated as always to issues of significance to people and
communities around the country. The conference is cosponsored by, and includes substantive
contributions from, the community development offices of all 12 Federal Reserve Banks as well
as the Board of Governors. That united effort and level of commitment reflects how
consequential we consider these issues to be. This conference is intended to present and
highlight rigorous research that I am confident will inform how you think about your own work,
whether from the perspective of policymaking, community development practice, or research.
Our last conference, two years ago, explored various aspects of economic mobility, largely
among adults. This year, we gather to discuss "The Economic Futures of Kids and
Communities," and, in part, I see this topic as an extension of that earlier conversation about
mobility.
Today and tomorrow, we focus on research about the foundation or building blocks for economic
success that are laid even before young people enter the workforce and assume responsibility
for their own finances.
We will hear from leading experts on a range of issues related to how children, youths, and
young adults are shaped in ways that may ultimately affect their ability later to productively
contribute to the economy and manage their finances. We can learn from what the data and
analysis tell us, and our hope is that making use of this information will lead to more effective
programs and policies and thus better outcomes.
Considerable evidence shows that growing up poor makes it harder to succeed as an adult, and
new research by the Fed likewise shows the strong connection between the typical experiences
of poverty in childhood and economic challenges later as an adult. The data come from the
Board's latest Survey of Household Economics and Decisionmaking (SHED), which will be
1
published later this spring. In the most recent survey, we asked some of the younger
respondents-aged 25 to 39-to think about their childhoods. We asked those young adults
whether, during their childhoods, they found themselves worrying about having enough food to
eat, having a stable caregiver, or about their personal safety. About 10 percent said they regularly
worried about one or more of these concerns, and an additional 19 percent said they sometimes
worried about them.
We were then able to compare responses about their experiences in childhood to what these
young adults told us about their current circumstances. Some pretty clear patterns emerged. Of
those young adults who regularly had one or more of these childhood concerns growing up,
more than one-half say that they are currently facing challenges in getting by financially. This
fraction compares to just over one-fourth of those who said they never, or only rarely, worried
about these concerns as children that now experience this level of financial challenge. Young
adults who regularly or sometimes worried when they were children about their 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 be able to pay all of their current monthly bills in full, compared
with those who never or rarely worried about these concerns as children.
Broadly speaking, children who grow up in insecure circumstances, those often experienced in
poverty, seem disproportionately likely to experience financial insecurity as adults. This
conference is about understanding what kinds of environments and resources can best help
children meet with economic success after they reach adulthood. There has been a lot of
discussion in the aftermath of the Great Recession about how to best connect people with
steady jobs. But research presented over the next two days makes a compelling case that there
is a need to also think longer term about how to prepare people for success in the labor market.
In fact, this research underscores the value of starting young to develop basic work habits and
skills, like literacy, numeracy, and interpersonal and organizational skills. 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. Indeed, a growing body
of economic and education literature has focused on the relative efficiency of addressing
workforce development challenges through investments in early childhood development and
education compared with interventions later in life.
I believe that data, evidence, and research can help policymakers and practitioners think more
clearly about the implications for improving economic and life outcomes for everyone. To this
end, the speakers at this conference will focus on three broad issues. I would like to briefly
mention each, highlighting some of the questions that I believe can be informed by the research
that will be presented here.
First, this morning's panel will address early childhood development and education. In recent
years, medicine and social science has revealed more than we ever have known before about
which factors and experiences in childhood can make a difference later in life. However, many
questions demand further attention. A fundamental one is how positive developmental outcomes
can be promoted among those who were not born into families with socioeconomic advantages.
While we do know there are advantages to good quality early childhood education, we should
strive to better understand what kind of returns on investment this education provides and how to
maximize these returns. The answers to these questions may influence thinking about how
programs and interventions meant to assist kids and their families should be structured for
maximum effectiveness to help put kids on the road to economic success.
Second, researchers have explored the effects of neighborhoods and community conditions on
the development of young people. Some presenters at this conference will share their
understanding of how physical surroundings influence personal development. For instance, how
do the form and quality of community institutions such as schools, community centers, and
libraries play a role? What other kinds of community characteristics-such as public safety,
transportation, and environmental quality-might help or hinder general education and financial
skill development? A particularly important question is how kids' home environments affect them
in ways that matter for their future economic success. It is also critically important to ask, what
kinds of interventions have proven track records, and are these programs scalable?
Third, and finally, other presenters will explore issues around skill development of youths and
young adults, workforce outcomes, and the implications for the broader economy. They will ask
how we understand which formative experiences most affect the ability of young people to
successfully move to the next chapter in their lives, whether that means college, a job, or other
paths such as self-employment. What role does a range of programs-starting with early
childhood education all the way through youth vocational or apprenticeship training-play in
affecting job readiness? How effective are different approaches, and what are the returns on
investment? We should also pay attention to how well young people form the sorts of "soft
skills"-things like teamwork, communication, and the ability to handle conflict-that are so
valued by employers. And, for young people whose paths become difficult, such as those who
get caught up in the juvenile justice system, what effect do such experiences have on their
futures as workers and consumers, and what are the most promising approaches to foster a
course correction?
I hope that the data and other evidence presented today and tomorrow are of use to you in your
work. Community development professionals attending this conference may consider how the
design and implementation of their programs may be improved. Policymakers may look more
closely at how kids are affected-purposefully or unintentionally-by public policies. And
researchers may encounter ideas that spark new work that can shed further light on these
important topics.
I think it is important that we better understand these issues, and I applaud you for taking the time
to be here to share your knowledge and to learn. Our young people are the future, and we all
want them to have the support they need for successful and fulfilling lives. As a central banker, I
recognize the benefits to the broader economy when more people are better prepared for work
and for managing their finances. In short, ensuring that all of our kids have "strong foundations"
will help build a similarly strong foundation for the U.S. economy.
1
Board of Governors of the Federal Reserve System (forthcoming), 2016 Survey of Household Economics and
Decisionmaking (Washington: Board of Governors). Past SHED surveys are available on the Board's website
at www.federalreserve.gov/communitydev/shed.htm, which is also where the 2016 survey will be posted when
completed.
2
See note 1.