By Andrea Shalal
(Reuters) – Reversing a significant rise in inequality in the United States over the last four decades is essential to boosting overall economic growth, Deputy Treasury Secretary Wally Adeyemo will tell top business leaders in New York City on Monday.
Adeyemo, in remarks prepared for an Economic Club of New York luncheon, said President Joe Biden’s economic policies had helped the U.S. economy weather the COVID-19 pandemic and Russia’s invasion of Ukraine better than any other advanced economy, with lower rates of inflation.
He said the administration remained focused on driving down inflation and was using targeted investments to “unlock the unrealized potential of our economy” by revitalizing communities in rural areas and communities of color that had been “left behind or left out for too long.”
Adeyemo, who also worked at Treasury under former President Barack Obama during the depths of the 2008-2009 recession, noted that average annual wages for the top 0.1% of earners grew more than 16 times faster than the bottom 90% from 1979-2021.
“Despite the clear economic benefits, opportunity is too often concentrated in too few zip codes,” he said, adding that boosting investments in rural areas – home to one in five Americans – “is essential to our economic growth.”
The rapid U.S. recovery after COVID showed that targeted economic action could unlock supply constraints, prevent economic scarring, and combat longstanding disparities, he said.
He said rising educational attainment drove productivity growth in the second half of the 20th century, with greater opportunities for women and Black men to take skilled jobs accounting for up to 40% of U.S. GDP growth from 1960 to 2010.
He said the administration was leveraging huge investments – including $20 billion in rural health care programs through Biden’s American Rescue Plan and $13 billion in rural clean-energy incentives under the Inflation Reduction Act (IRA) to help rural areas, which historically had higher unemployment, lower labor force participation, and lower wages.
The funds were working, he said, noting that a gap in unemployment, which has averaged 20% higher in rural areas before the pandemic, had been eliminated and wages were rising.
The administration is also investing about $75 billion to expand rural broadband access, which should help address the rural divide, with 22% of Americans in rural areas lacking access to adequate broadband, versus 6% of Americans overall.
Early data showed that nearly two-thirds of investments in IRA-related sectors are in counties with above-average poverty rates, 80% are in counties with lower college graduation rates than the national average, and almost 90% are in counties with below-average weekly wages, Adeyemo said.
(Reporting by Andrea Shalal; Editing by Chizu Nomiyama)