A Message on Black History Month — Letter to Treasury Staff

February 17, 2021

Dear Colleagues,

February, as you know, is Black History month, and I wanted to send a personal reflection.

I’ve been an economist for a long time, and one of the areas where I’ve focused my attention is on the racial disparity in economic outcomes.

It was probably because I started studying economics during the Civil Rights Movement. I took my first course around 1962. I was a freshman in college, and if you looked at the economic data back then, the average Black family possessed roughly 15% the wealth of the average white family. That is more than a 6-to-1 difference, and it is stark. But perhaps it isn’t surprising: Jim Crow laws were still in effect in many places. What is surprising, however, is that it’s now more than half a century later, and that 6-to-1 number has barely budged.

Today, African Americans remain unemployed at roughly twice the rate of white Americans, and that number hasn’t much changed in fifty years either. It’s as close to a constant as you come in economic data. As I told Vice President Harris the other week, if you somehow transported my freshman economics professor to 2021 — and you only showed him the employment and the wealth numbers — he would have a hard time guessing that the country has passed the Civil Rights Act; or that we’d elected our first Black president; or our first Black Vice President.

Instead, he might actually notice signs that the country had headed in the opposite direction — especially after 2008. During the last recession, the highest white unemployment ever reached was 9.2%. But black unemployment was trapped above 10% for five years. It reached 17%, and it hit its peak earlier and recovered slower than unemployment for almost any other group.

This is what economic crises do. They hit people of color harder and longer. They push our country away from our values, towards more inequality.

Now, we are seeing it happen again: During the early days of the pandemic, African Americans were the first to lose their small businesses and their jobs, and we’ve seen early data that suggest Black workers will be the last re-hired when the economy opens back up.

Will this pandemic be yet another generational setback for people of color? That is certainly a risk. It may even be likely. But I do not think it’s a given. Not yet.

In fact, when economists look back at the data from this moment, I think there’s a chance they see that the numbers pivot the other way. Instead of this crisis doing what crises do — and driving an economic wedge further between races — we might emerge from the pandemic on track towards higher wealth and wages for everyone.

Of course, this is not going to happen by itself. It will take big, ambitious action — including by us at Treasury.

Over the past few weeks, I have been focused on measures to help communities of color. Our team, for example, has been working to provide more capital to Community Development Financial Institutions and Minority Depository Institutions. These CDFIs and MDIs are important because they serve communities that the wider financial system traditionally hasn’t served well.

But this is only a first step. On the other side of this crisis, we’re going to have to do more to break from this sad history; the fact that for fifty years, the economy hasn’t worked well for people of color. (Addressing systemic racism will be a core part of the President’s next major legislative proposal, which you’ll hear more about soon.)

It will be hard work. But I am hopeful. I know I’ve only been at Treasury a few weeks, but in that short time I’ve been so impressed with the passion and commitment of the public servants here. If there was ever a group that could help right a historic wrong like this, I am confident: it is this one.


Secretary Yellen

*These comments were also included in an opening statement to the Black Chambers of Commerce meeting on the American Rescue Plan with Vice President Kamala Harris — February 5, 2021.