Jun 14, 2020 - Economy & Business

Dallas Fed chief says systemic racism drags down the U.S. economy

Robert Kaplan, president of the Federal Reserve Bank of Dallas, told CBS News' "Face the Nation" Sunday that systemic racism is a constraint on economic growth, and that a more "inclusive" economy with equal opportunities will lead to faster workforce growth and higher productivity.

Why it matters: Protests in major cities around the United States were ignited by the killing of George Floyd in Minneapolis, but they have expanded beyond demonstrations against police brutality to include economic and educational injustices faced by people of color.

What they're saying: "We've made a big point and have been at the Dallas Fed, and across our entire Federal Reserve system, to help improve skills training, to improve educational attainment," Kaplan said.

  • "Because we strongly believe a more inclusive economy will lead to better growth. For years, blacks and Hispanics have had an elevated level of unemployment versus whites. That started to improve dramatically in the last few years. We've now taken a step back as a result of this [coronavirus] crisis."
  • "But a more inclusive economy where everyone has opportunity will mean faster workforce growth, faster productivity growth, and we'll grow faster. And so I think we're right to focus on this and bore in on this. It's in the interest of the U.S. The fastest-growing demographic groups are blacks and Hispanics. If they don't participate equally, then we're going to grow more slowly."

The big picture: So far, more black Americans have lost their jobs than white Americans as a result of the coronavirus-driven recession.

  • The virus has also disproportionately affected black Americans, who face a higher risk of contracting and dying from the coronavirus.
  • Goldman Sachs said that based on loan data, black American business owners have not received the same level relief from the Paycheck Protection Program as other businesses, primarily because they operate in low-income, underbanked communities.

Go deeper: Chronic health conditions, inequality put people of color at higher risk for coronavirus

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