The People Within Economies
the following
is a collection of reflections gleaned
over several months in my role as deputy
state treasurer for the state of
illinois a state
that has the fifth highest economic
output in our union
and reinforced by my upbringing in
poverty on the south side of chicago
and in working low-wage jobs
in my formative years as a young worker
the impact has been severe and
widespread
public health crisis short-term food
shortages
rising unemployment loan defaults
the very fabric of our society is at
peril
it has exposed issues of race and
ethnicity
of age and class inequality within our
humanity
our economy and the people within it are
not immune to these challenges
just as a pandemic has exposed the
inequities within our civic society
it is also revealing deep risk within
our local economies restaurants
are fighting for their survival schools
and other places of learning are
inaccessible
and many theaters are at risk of
permanently closing their doors
our state and local governments face
significant revenue shortfalls
as a result of reduced consumer
consumption increased unemployment
and diminished economic activity the
conclusion
our state’s revenue will fall somewhere
between 2 billion this fiscal year and
more than 8 billion
in the next several years depending on
the severity of the recession
this will inevitably impact critical
services such as our parks
our roads and our schools an engine
of the us economy small businesses are
driving on fumes
not only do they generate half of u.s
economic output
but they generate two-thirds of net new
jobs
small business is literally everybody’s
business
they are interwoven into the fabric of
our local communities
for example there is larry he’s one of
the many small businesses
that i’ve interacted with over the last
several weeks he has been
cooking up cuisine for the past 30 years
and devoting his sweat and tears
during past downturns in the past month
though
he’s had to close his doors lay off two
dozen staff
negotiate a ferment and figure out if
the government small business ratskey
plan is going to help him
the gut-wrenching decisions weigh on him
how to provide for his family how to
protect his employees
and how his business can endure in the
long term and nearly every other small
business in the us
is in the same set of shoes whether it’s
the restaurant’s truckers
the suppliers or the growers
multiplied by the thousands this helps
illustrate
how the pandemic has triggered the worst
recession in nearly a century
as the initial blows on both individuals
and small businesses
ripple out into the masses the speed and
scope of this downturn
is significantly worse than any
recession
since world war ii a recent fed survey
estimated that of families making less
than 40 000 a year i repeat
of less than 40 000 a year ladies and
gentlemen
a whopping 40 percent have said they
have someone
that has recently lost their jobs since
february
this means our citizens who are most in
need
bearing the brunt of this economic
shutdown
it has put the cost of not having a
social safety net
front and center case in point
debbie she was introduced to me by one
of my employees
she is 59 years old proud mother of four
and works at a meatpacking plant taking
that early morning drive
time and time again for the past 15
years today though
she feels ill she has a headache
fever difficulty breathing body aches
sinuses
her eyes hurt however
she’s unable to take any time off her
husband was recently laid off
these are the decisions that are being
contemplated daily
the lives lost under covet 19 and the
lives lost under an economic shutdown
these low-wage workers the backbone of
our society
they’re not working from home no they’ve
been laid off from affected industries
or they’re performing critical tasks
which means are highly more susceptible
to getting sick
yet we as a society cannot survive long
without them
in the city of chicago alone there’s
approximately 1.3 million workers
that tend to work in sectors that pay
hourly wages think
retail restaurants manufacturing
warehouses arts and entertainment just
to name a few
all together these sectors comprise
about 60
of chicago’s workforce yet these sectors
are the ones that are most at risk
do not have any paid time off and
they are more susceptible to loss of
income whether temporary or permanent
the chicago region has the fifth
highest economic and racial segregation
in the country this is probably a
statistic we’ve all heard before
but it is of critical importance now why
although many people will suffer as a
result of this pandemic
people of color are particularly
vulnerable
our response must be swift yet equitable
otherwise issues of segregation and
inequality will only be exacerbated
just as kova 19 has ravaged
african-american
and latino neighborhoods due to chronic
health disparities
job and wage losses are hitting
african american and latino families the
worst
then there is linda she’s one of my
constituents
she’s a latina store associate at a
neighborhood store
linda does not have health insurance and
now her work hours have been reduced too
she doesn’t have the luxury of having
her groceries delivered to her
no as a matter of fact she’s the one
stacking the shelves so
not only is linda more stressed than
ever financially
but now she’s at heightened risk of
contracting the virus or even worse
dying from it
not to mention the lack of
transportation and lack of child care
that she’s also confronted with
you know 61 percent of latinos and 44
of african americans recently stated in
a survey that was conducted in april
that they themselves or someone in their
household
have suffered job or wage losses as a
result of the coronavirus
outbreak compared to 38 percent of their
white counterparts
ladies and gentlemen the response to the
pandemic is being crippled
by the same issues that have impacted
many of our lives
growing income inequality the rise of
misinformation
lack of trust in institutions
the rural urban divide and hyper
partisanship
this is neither a democratic nor a
republican issue
this is neither a rural nor a urban
issue this is neither a us
nor a them issue this is an issue of
humanity
we cannot let this threat drive us apart
what we do moving forward will dictate
the forthcoming future
just like the period following the great
recession
the current economic recovery is serving
the well-to-do and the wealthy although
we’ve enacted more than three trillion
dollars
in government stimulus and more than
three trillion dollars
in monetary stimulus six trillion
altogether
the resulting recovery is benefiting
those with capital
the glaring disconnect between
the real economy of workers with jobs
and bills to pay
and the investor economy of investors
with
stocks and bonds is one of those most
stark issues of this time
we must be the change that we seek
we must use this crisis to think bigger
we must recapitalize underserved
enterprises
with flexible low-cost sources of
capital
we must foster local economies with the
structures to support them
and we must employ strategies that
promote sustainable economic activity
that is why in my role here at the
treasury
for the fifth largest state with a
academic
output similar to that of the
netherlands i propose the five
following economic systems innovations
in order
to help build the foundations necessary
to expand the recovery to broad swaths
of society
number one access to capital small
businesses
in underserved areas are a powerful
economic engine
generating wealth and creating jobs in
areas where resources are scarce
entrepreneurship is a potent tool to
help
close the long-standing wealth gap just
as covent 19
threatens to permanently shutter many
small businesses
we need to consider and adopt policies
that promote
flexible low-cost sources of capital
from nimble institutions
such as community banks credit unions
community development corporations
community development financial
institutions micro lenders
and community land trust to name a few
as such
businesses such as larry’s restaurant
will have access to capital
and not just those big businesses with
the resources and the relationships
number two publicly supported financial
institutions
just like we have food deserts we have
banking deserts we have entire
neighborhoods
that don’t have access to affordable
basic banking services
much less access to capital these
neighborhoods have been deemed
not profitable or not profitable enough
which is the reason why
state and city supported financial
institutions are a key
to bridge this gap and boosting
banking services and available capital
to people like larry
that are not being well served by
traditional financial institutions
number three employee-owned enterprises
these are businesses
that are owned and governed by their
employees they tend to share to common
characteristics
member owners invest and own these
businesses
and they share in the enterprise’s
profits
and since many of the workers are
residents of the community
they tend to employ sustainable business
practices that do not harm people like
debbie
and the profits they stay and
recirculate within the local economy
number four complementary currencies
they are a tool for community economic
empowerment
and development towards self-reliance
they help
maximize the flow of goods services and
capital within a predefined region
thereby strengthening a local economy
commonplace in the early 1900s they are
once again being recognized as a tool
for local economic development when a
individual makes a conscious commitment
to buy local they are taking an interest
in their community
and in people like linda thereby helping
create the foundations for a truly
vibrant local economy and lastly
stakeholder capitalism if there is a
positive consequence resulting from this
pandemic
it is the acceleration of the shift to
stakeholder capitalism and away from the
singular emphasis on shareholder profits
the importance of customers and
suppliers of employees and the
communities in which they operate
have brought forth stakeholder
capitalism into sharper focus
when companies do things like increased
health care benefits
hike pay for farmland workers lower
executive compensation
in order to avert layoffs and take
additional precautions to protect
their workers like linda this will
inevitably result in a more
engaged and productive workforce and a
more loyal
customer base following the recovery
on a concluding note we need to drive
towards a more
fair free just and equitable society
the work is more important than ever now
we need to work together in partnership
to rebuild our communities
and address the historical and
structural inequities
that have persisted in our society in
light
of the new and evolving challenges that
lay ahead
and if we don’t it may be the imminent
last straw
that finally breaks this great american
experiment of ours
thank you