As we head toward the first presidential debate on Tuesday, two things are true. The U.S. economy, as measured by gross domestic product, is in decline. The second thing is that, as proven by the latest Latino Donor Collaborative U.S. Latino GDP Report, the world’s leading growth economy is right here in America. Now the question is, will Joe Biden or President Donald Trump leverage this advantage?
Even before the coronavirus struck, the economy was in trouble. Workforce growth rate has been in decline; small businesses continue to struggle, the number of people employed in manufacturing has declined; family farm bankruptcies are at an eight-year high; real wages for American workers have barely budged; and we’re even losing in the trade war as China’s trade surplus with the U.S. has grown almost 25 percent since Trump became president.
As we look ahead, we need to talk about how to catalyze our economy and return to the growth we have experienced in the past.
In contrast, some of our strongest GDP growth occurred during the Reagan years. President Ronald Reagan understood the value of encouraging investment in areas of growth and welcoming immigrants to supplement our existing workforce so we could increase goods and services production while creating more jobs. During President Bill Clinton's administration, GDP growth was even higher. Trump was not on track to match either president, even before Covid-19 hit.
So as we look ahead, we need to talk about how to catalyze our economy and return to the growth we have experienced in the past. How do we do that? By leveraging the cohort that is growing dramatically faster than all others, creating new businesses at a faster pace, employing millions of Americans, supplying the most productive labor force and leading consumption. That is the U.S. Latino cohort, which has become, right here within our own country, a world-leading economy.
The new Latino Donor Collaborative U.S. Latino GDP Report shows the U.S. Latino cohort is already equivalent to the eighth largest economy in the world. In fact, according to the report, U.S. Latino GDP is now at $2.6 trillion, an 8.7 percent growth rate from 2017 to 2018. That’s a growth rate outpacing India and China. Given its trajectory, U.S. Latino GDP is poised to surpass France, the U.K. and India — possibly within the next five years.
This unprecedented economic growth train left the station back in 2005 and has been gaining speed ever since. More and more U.S. Latinos are becoming old enough to work each year, adding to the millions already working, plus workers from previous generations are moving into higher-income roles. Meanwhile, the education rate is dramatically increasing every year, incomes are growing and driving consumption and the result is consistent GDP growth.
The good news is the economic momentum of the U.S. Latino cohort has so far been able to overcome the headwinds it has faced from anti-immigration policies and anti-Latino rhetoric. Making this growth even more remarkable is that the U.S. Latino cohort is one of the most under-capitalized cohorts in our country, and therein lies our unparalleled opportunity.
Asset management firms, CEOs, corporate boards, nonprofits, everyone responsible for managing assets for returns, investing assets for returns and allocating resources for returns should begin deploying their capital where the growth is in our economy: the U.S. Latino cohort. This is our nation’s differentiating competitive advantage versus other large, aging economies. It is illogical to not be investing in this cohort that is catalyzing growth in every part of our economy, whether they are our essential workers, entrepreneurs, business owners or professionals. They are enabling our competitiveness, providing health care, expanding our culture and improving the quality of life for all Americans in our country.
As a capitalist, it is imperative, in my opinion, that capitalism in our country move now from working for just “the few” to working for “the many.” That means making certain the U.S. Latino cohort is catalyzed even further through access and connections to capital, especially getting money into the hands of Latino-owned small businesses and entrepreneurs, as well as the hands of U.S. Latino-founded funds so they can grow and invest more knowledgeably in this cohort, while at the same time making certain that U.S. Latinos are active in the most senior positions on boards of directors and in C-suites.
While U.S. Latinos make up nearly 20 percent of our population, they make up only around 4 percent of this country’s executive ranks, and less than 3 percent of directors on Fortune 500 boards are Latino. A logical growth strategy for our country, in addition to increasing capital flow, must include increasing the number of U.S. Latinos in boardrooms and executive offices to 15 percent within the next five years.
An axiom in business is that leadership in boards must understand their customers and the markets they serve. Therefore, U.S. Latino representation on boards is key to understanding and serving this leading growth cohort. Leadership that understands its growing customer base is essential to catalyzing profitable growth, growing employee wages and increasing shareholder return.
As a capitalist, it is imperative, in my opinion, that capitalism in our country move now from working for just “the few” to working for “the many.”
The additional return on investing in this cohort should also be clear to the millions of baby boomers who are leaving the workforce yearly, and the Gen X folks following them, because it is this U.S. Latino cohort that will have the largest responsibility for paying taxes that sustain the Social Security and Medicare programs retirees are counting on.
When capital flows to where the growth is, wealth creation occurs. The more people creating wealth, the greater the growth of an economy. That’s how capitalism works in an economy, and by broadening the flow of capital to the U.S. Latino cohort and engaging U.S. Latinos at the highest levels, we as a country can catalyze the world-leading growth of this cohort even further, expanding our competitive advantage and attracting investors worldwide.
Like so many U.S. Latinos, my family roots in this country go back 500 years, well before the Mayflower landed. So this month, when I see celebrations of Hispanic Heritage Month, I personally am celebrating the United States of America, and with the latest facts and data about what the U.S. Latino cohort means for my country, this is a celebration and opportunity from which all Americans should find enjoyment and benefit.