March 30, 2021
Remarks as given to the plenary session of the U.S. Hispanic Chamber of Commerce Virtual legislative Summit
Thank you, Alice, for the very kind introduction. And thank you all for having me.
I’ve been an economist for a long time, and one area where I’ve focused my attention is on the disparity in economic outcomes — especially when it comes to race and ethnicity.
It’s probably because I began studying the subject during the Civil Rights Movement. I took my first economics course around 1963. I was a freshman in college.
Since then, our country has endured at least five major economic crises. There was the oil crisis and stagflation in the ’70s, the double-dip recession of the early ’80s, the burst of the dot-com bubble, and, of course, the Great Recession beginning in ’08.
Each of these crises was very different, but they all shared at least one significant characteristic: They all hit Latino-Americans disproportionately hard.
In fact, if you take the Hispanic unemployment rate over the past 50 years and superimpose it on top of the national average, what you see are two lines that roughly move in tandem — except the Hispanic unemployment rate is always above the national average. And when there is a crisis, both rates spike, but the Hispanic rate spikes much higher.
Economic crises generally do this: They take pre-existing inequalities — and make them even more unequal. To me, it’s one of the most pernicious effects of a struggling economy, and it’s something the President and I wanted to prevent from happening again.
After all, the fifth crisis — the one I haven’t mentioned yet — is the current one; it’s the pandemic.
If someone tried to design an economic crisis that would unduly target the Hispanic community, they’d probably come up with something that looks a lot like COVID-19.
The five sectors the pandemic was most likely to slow or shut down accounted for 50 percent of revenues for Latino-owned businesses. They accounted for 65 percent of all Latino employment.
As this organization knows far better than I do, there was immense pain, and it cascaded down into higher rates of joblessness; into more Hispanic families late on their mortgages and their rent; into hunger: One-in-five Latino households still say they don’t have enough food to eat.
When I took office, I looked at economic data like these, and I worried that many of these families would be haunted by the COVID economy long after the health emergency was over.
We know that when the foundations of someone’s life collapse — when they lose a small business or the ability to eat dinner every night — it can weigh them down permanently; their ability to earn is forever lowered. It’s a phenomenon called “economic scarring,” and I worried this would happen on a mass scale.
That’s why the President and I had been so insistent that we deliver more relief… and now we are.
On March 11, the President signed the American Rescue Plan into law. It’s easily the most ambitious relief package since the Great Depression, and it includes a slate of programs that will help people make it to the other side of this pandemic. There’s funding to immunize people, to help people with their rent and mortgages, and to send $1,400-dollar checks to most families in the country.
There are a lot of very tired Treasury employees who’ve spent much of the last 19 days (and nights) figuring out how to get this money out the door — and doing so in a way that prioritizes the people who need it the most. We’ve been very focused on that — and not just for programs in this rescue plan, but for all the pandemic relief programs that existed previously.
The Paycheck Protection Program is probably the one you’re most familiar with. PPP was supposed to be an early lifeline, but because of issues with the program’s design, the first rounds often didn’t reach the smallest businesses, which are disproportionately Hispanic-owned. We’re addressing that now and tweaking how we implement the program. It’s allowing us to reach millions more microbusinesses and entrepreneurs especially in rural and low-income areas.
With the passage of the rescue plan, we will thankfully avoid economic scarring on a mass scale. At the end of the day, it will probably still be true that the pandemic economy followed the historic trend — and hit the Hispanic community harder than many other groups. But when we look back at the data, I don’t believe the effects will be as long-lasting as they would’ve otherwise. I think people will be ready to bounce back.
In fact, I expect we’ll be back at full employment by next year, and if history is any guide, Hispanic-owned businesses will drive a large portion of the recovery. From 2007 to 2012 — years that roughly track the Great Recession and the immediate rebound — the number of Latino-owned businesses grew by 3.3%. It doesn’t sound like much until you see that, during the same period, Non-Latino owned businesses declined by 3.6%. And after 2012, the number of new Latino-owned business grew at more than twice the national average.
I want you to know: I am confident Hispanic entrepreneurs can lead us out of a crisis again. I know Hispanic workers can power our recovery — potentially in an even bigger way than a decade ago — so long as we remove some of the longstanding barriers that have been in your way.
When it comes to the Hispanic community, there is such a frustrating irony in the historic data: On the one hand, this community outperforms in the creation of new businesses. On the other, you have less access to capital to create and grow them in the first place. One study looked at national banks and their loan approval rates for white- and Latino-owned firms. The approval rate for Latino-owned companies was 60% lower — and that’s even when controlling for how the business was performing.
We know that Latinos — and especially Latinas — are overrepresented in the ranks of essential workers, the people who have kept our country afloat this past year. But we also know that support has not been returned in kind. Before the pandemic, Latinas accounted for 17 percent of the women in the labor force. Since the pandemic began, they’ve accounted for 27 percent of women who’ve left it. I believe a major cause is the burden of childcare.
We need to unwind this frustrating irony. We need to give you the support you need.
We have begun to do some of this. The American Rescue Plan, for example, includes funding so essential workers can pay for childcare. And at Treasury, we’re gearing up to inject $12 billion dollars into Community Development Financial Institutions and Minority Depository Institutions. It’s more money than has flowed through these programs since their creation in the ’90s, and I think it will make a meaningful difference in the ability Latino-owned firms to access capital.
But this is just a start, and I need your help. I think this speech probably demonstrated that we have access to some very detailed economic data at Treasury, but there’s no replacement for the deep, personal knowledge you have. You know what it feels like to open shop and scale up in you communities. We need to understand that, too.
Good policymaking requires that we understand the humanity beneath the data, and I’m hoping you can help us there. I’ve been holding virtual roundtables with all sorts of business-related groups since taking office. It’s something my team and I are going to continue to do. Please come. Tell us your challenges; tell us where we can do better; how we can clarify guidance or provide technical assistance.
If work together, then I am confident that when someone looks back at the economic data around the pandemic, they won’t simply conclude that Hispanic workers and businesses were the victims of the 2020 economy. They’ll see that they were builders of a better one in 2021 and beyond.