Economic equity is not a zero-sum game. If Hispanics and Latinos were fully and equitably included in the US economy, the gains for society as a whole could be enormous. In fact, closing the gender gaps and gaps for all races and ethnicities in employment, education and income could generate annual GDP gains of billions of dollars.
Unfortunately, the existing gaps are quite wide. The typical wealth scores for Hispanics and Latinos remain low and lag far behind their non-Hispanic white counterparts. Before the Covid-19 pandemic, Hispanic and Latino families had only $ 38,000 in median wealth. This equates to 21 cents for every dollar of white family wealth.
Hispanic and Latino income, GDP, and consumption growth were extraordinarily strong before the pandemic, but they were not strong enough to significantly reduce the wealth gap. This is important because families with little or no wealth are much more likely to experience financial, food and housing insecurity and to be unable to withstand unexpected negative events, such as job loss or loss of life. health problems. These circumstances materialized for many families during the Covid-19-induced recession. Millions of people lost their jobs, and Hispanics and Latinos had the highest unemployment rate, which reached 18.9% in April 2020.
Improving wealth outcomes is therefore essential for resilience, prosperity and self-actualization. More importantly, greater wealth could give Hispanics and Latinos the power to make choices that many people take for granted, like getting an education or moving to a place with better opportunities.
The pandemic has exposed many inequalities and has also shown the benefits of education. Highly educated workers were much more likely to work from home and less likely to have lost their jobs.
Hispanics and Latinos have the lowest levels of education of any race or ethnicity in the United States; they were also the least likely to telecommute, and many risked their health and that of their families by continuing to work locally.
However, education alone is not the answer to economic inequity. Hispanic and Latino families whose highest level of education was a bachelor’s degree had less median wealth in 2019 than non-Hispanic white families whose highest level of education was a high school diploma. This glaring disparity makes it clear that more education is not the silver bullet to achieving equity.
Wealth is not just the result of individual choices such as obtaining a college degree. Factors beyond a person’s control, such as the economic situation of our parents, our race and ethnicity, and even our year of birth, continue to have an important influence.
In light of these barriers, how then to achieve economic equity?
We have at our disposal a variety of innovative and evidence-based tools. Solutions such as baby bonds and the 401 (K) IDS make it possible to build wealth from an early age. Business and community leaders and policy makers can tackle discrimination in hiring, pay and promotions and support families by offering a wider range of benefits to more employees, including paid leave. Making child care more affordable and accessible could also have a positive impact.
Individually, everyone can learn more about the causes and consequences of these discrepancies. We can all be explicit in naming discrimination as a barrier and use our voices to advance solutions. A thriving Hispanic and Latino economy contributes to a thriving US economy. Far from being a zero-sum game, fairness can lead to vast economic prosperity.
I certainly intend to do my part; are you there?
—By Ana Hernández Kent, Senior Researcher at the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. The views here are his and do not necessarily reflect the official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.
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