Treasury Secretary Janet Yellen claimed on Martin Luther King Jr. Day that the United States economy has “never worked fairly” for black Americans.
Yellen — speaking at the National Action Network’s Annual King Day Breakfast — interpreted the civil rights leader’s famous declaration that the Founding Fathers signed “a promissory note to which every American was to fall heir” to mean that “economic injustice was bound up in the larger injustice he fought against.”
“From Reconstruction, to Jim Crow, to the present day, our economy has never worked fairly for black Americans — or, really, for any American of color,” Yellen asserted. “Well, since taking office last January, our administration has tried to change that; to ensure that neither the figurative bank of justice — nor any literal economic institution — fails to work for people of color.”
“It has been a year of action, especially at the Treasury Department. We’ve completed Treasury’s first equity review, looking across the Department and asking: Where are our operations not as inclusive as they should be?” she continued. “We’ve brought on the most diverse leadership team in Treasury’s history and hired the Department’s first ever counselor on racial equity.”
“And then there’s Treasury’s pandemic response. We knew that the communities hurt most by COVID were often communities of color, and so as we began implementing relief bills like the American Rescue Plan, we did so with equity in mind.”
After highlighting other efforts from the Biden administration — such as the Treasury Department injecting $9 billion into Community Development Financial Institutions and Minority Depository Institutions — Yellen said that “there is still much more work Treasury needs to do to narrow the racial wealth divide.”
Meanwhile, the Biden administration has presided over record-high inflation — which is hitting communities of color, low-income families, and rural households hard.
Economists from Penn Wharton Budget Model — a project of the University of Pennsylvania’s Wharton School that evaluates public policy proposals — found that inflation trends require the typical American household to spend around $3,500 more in 2021 to achieve the same level of consumption as in previous years.
Kent Smetters, who leads the project, told CNBC that wealthy households would need to spend a lower proportion of their income than low-income and middle-income households to maintain their living standards — adding that supply chain bottlenecks are worsening the disparity.
“What they happen to be buying has been hit harder by the supply crunch,” Smetters said of poor households. “It’s broader-based than in the past.”
Chris Wimer, who co-directs Columbia University’s Center on Poverty & Social Policy, expressed concern over the same phenomenon to CNBC. “They’re essentially looking to stretch a dollar most days. It’s going to lead to difficult choices between putting gas in the car or paying for your kids’ child care or putting food on the table.”
Last week, the Bureau of Labor Statistics reported that consumer prices have risen by 7% over the previous year — the highest rate in roughly four decades. Likewise, “real average hourly earnings” — which weigh the effect of inflation — decreased by 2.4% from December 2020 to December 2021, slashing the purchasing power of American consumers.
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