- At the 2024 Women for Women Summit, Charleston, South Carolina
… [Today], I want to discuss the critical role of startups, entrepreneurship, and new businesses in driving our economy. As a Federal Reserve policymaker, I have witnessed firsthand the transformative impact of entrepreneurial ventures on economic growth. I also want to share my journey, highlighting the hurdles I faced along the way.
My Journey
Growing up in Milledgeville shaped my perspectives. My mother was a pioneering figure in academia as the first tenured African American faculty member at Georgia College and State University, while my father contributed to our community as a chaplain. My family’s experience during the Civil Rights Movement instilled in me the values of resilience and hope for a better future.
Although I initially pursued physics and philosophy at Spelman College in Atlanta, my encounter with a British economist during a trek up Mount Kilimanjaro ignited my passion for economics. Eventually, I earned a Ph.D. in economics from the University of California, Berkeley. The path has been challenging, especially for women in the field, where they represented only 34 percent of economics bachelor’s degrees and 36 percent of Ph.D.’s awarded in 2022.
Education was of utmost importance in my family, viewed as a means to fulfill the promises of the Civil Rights Movement. A focus on STEM (science, technology, engineering, and mathematics) allowed me to understand the critical need for mathematical and analytical skills in economics.
Research shows that girls, particularly Black girls, are often under-recommended for Advanced Placement calculus, limiting their access to STEM opportunities. My mentors provided essential support, guiding me through my academic journey and encouraging me to empower future generations by mentoring aspiring economists.
Throughout my career, I held various academic and policy roles before my appointment to the Federal Reserve Board. As the first African American woman on the board, I focus on our dual mandate: promoting maximum employment and maintaining stable prices.
The Crucial Role of Entrepreneurs
My experiences as an economist have exposed me to many innovators and entrepreneurs, especially women, who significantly contribute to our economic landscape. Understanding the connection between entrepreneurship and our dual mandate offers insights into job creation and economic resilience.
For many, entrepreneurship is not just a career choice; it is a primary means of engaging with the labor market. Moreover, new businesses are key drivers of job growth, creating about 15 percent of annual gross job creation while representing only a fraction of all employer firms. The enduring success of these businesses generates long-term employment opportunities that counterbalance closures.
Innovative entrepreneurs introduce groundbreaking products and processes, contributing to long-term productivity growth. Ensuring equitable access to entrepreneurship is vital for all groups, particularly for historically underrepresented communities.
Evidence suggests that investors often undervalue startups founded by minorities, which hampers diversity in innovation. A fair assessment of these enterprises could enhance local economies and broaden the spectrum of ideas in the marketplace.
Aligning with the Dual Mandate
Self-employment and entrepreneurial ventures play a vital role in achieving our employment goals at the Federal Reserve. The recent surge in new business formations since the pandemic epitomizes the resilience and adaptability of American entrepreneurs. New business applications soared to record levels, indicating an undeniable response to shifting economic needs.
This trend shows that, while some entrepreneurs may stem from job losses, the majority are driven by opportunities rather than necessity. The growth in new business creation has resulted in significant job creation, a remarkable trend we hadn’t seen since the Global Financial Crisis.
The dramatic shifts in industry patterns, including a growth in tech and online retail, signify changing consumer preferences catalyzed by the pandemic. This adaptability underscores the essential role of entrepreneurs in navigating economic adjustments.
While future productivity impacts remain to be seen, the ingenuity and determination of entrepreneurs in our economy have been remarkable. The entrepreneurial surge plays a crucial role in addressing the challenges posed by economic changes.
Conclusion
I am thankful for the contributions of entrepreneurs in meeting our employment goals. Their efforts are invaluable in fostering economic growth and alleviating inflationary pressures. On a personal note, my fondness for South Carolina stems from cherished memories of family trips and local attractions, which continue to inspire my journey today.
