Mark Vitner, Senior Economist at Wells Fargo, joined Cheddar News' Closing Bell to talk about the essential role of the AAPI community in the U.S. workforce, as a key driver of small business growth and labor force participation.

Closing Bell

Wells Fargo Report Highlights Important Role of AAPI Community in U.S. Economy

as part of our continuing coverage of asian american and pacific islander heritage month. We wanted to shine a light on the key role the api community plays in the U. S. Economy and its workforce. Wells Fargo recent released a special report highlighted the community's increasing contributions to the economy. So joining us now is Mark Vitner, senior economist at Wells Fargo and Mark, what were some of the big takeaways from this report? Well, the the A. I. P. Ap I. Community is large. It's it's growing rapidly and it's a very large contributor to the U. S. Economy. We we we've seen stronger population growth, stronger labor force growth. Um A. P. I owned businesses um in in larger proportion than the general population. And and we've seen and and while that that caused a little bit of difficulty during the pandemic because there's some outside exposure outside exposure to the hospitality industry and retailing, particularly in urban areas. By and large, A. P. I owned businesses have have outperformed the broader community of small businesses. Now this community is on track to become the largest immigrant group in the U. S. So what does that tell us about the our economic future here in the US. Well, uh it in in a country that has seen slower population growth the last few years, the api community has been an outlier. We've seen very strong population growth both through immigration which has remained very strong. It is shifting somewhat um it shifted somewhat away from china and more towards central Asia. But um but we've also seen higher birth rates of of A. P. I. Immigrants into the U. S. And so both of those have added added to growth now the asian labor force participation rate averaged 63.8% in 2021 above the national average. So how important is labor force participation to fueling the economy? Well, you know, labor force participation has been a big issue in the US where we we've we've been slower to come back from the pandemic and in the asian american and pacific islander community that we've had much stronger labor force participation rate. It's been 2% points stronger than the overall rate. And if you look at labor force growth over the last 10 years, it's accounted for about 46% of of labor force growth over the over that 10 year period. Now May is also small business month. So how does the community, how does this community contribute to small businesses here? In the US? Well, the Api community is about 8% of the population. They account for about 10% of small businesses. The greatest, the largest number of those businesses are hotels and hospitality and retail trade, but they really run the gamut, there's like an outsized exposure to technology. Um Outside of Hawaii some of the greatest concentrations are in the san Francisco Bay area. But but really you you any any place you go in the United States, you see that the api community is having a increasing impact on small business in that community. And you find you find you find communities large api communities are growing a kpi communities and virtually every mid sized city are larger across the country. So how does small business ownership helped grow the U. S. Economy? Well, small businesses account for the bulk of all the that job growth. I mean that's where most job growth comes from. It's a it's somewhat hidden in that some small businesses grow so fast, they become large businesses. But but most job growth comes from from small businesses and it's basically the backbone of our of our economy. So what are the biggest roadblocks? I'm sure there is still some roadblocks that the community is facing when it comes to business or the economy? Well, many of these small businesses are family owned businesses and and that that creates a number of challenges because you have to get up and running, you have to raise capital. And as with most immigrant communities when you, when you first arrived, you know, you've got to establish credit in order to to raise that capital. And so it takes time. And uh many of the small businesses are actually single person or they don't have anyone on the payroll, which means they're a family business. So they may have more people working there and they often start very small. And um and you know, once they become more established, they grow and get access to the credit and they continue to grow. But that that most small businesses face challenge of those early growth face challenges in those early growth growth years. Do you think this trend is going to continue? We're gonna see this participation and his business continued to grow over the years. I think so mainly because the api community is so broad based and that, you know, it's not any single country. I mean basically, um you know, we've got the pacific islands you've got and then we've got Japan china and then we're going all the way into central europe, which is where we're central Asia, which is where we're seeing most of the uh most of the population growth today India and Pakistan. Are they are the largest um senators of folks to the U. S. But I would imagine that they have the numbers from Afghanistan are probably going to increase tremendously when we get next year's numbers. So um that that creates an enormous opportunity. But it also creates challenges because there's every subsequent wave of immigrants. Um you've got a large group that are they're starting off that are that are starting off with very little capital. All right, Mark Vitner, senior economist at Wells Fargo. Mark, thank you for breaking that down and thank you for sharing the results from that study