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Company executives are speaking out on racism and injustice.
Speaking up
The wealth gap between Black and white Americans is a primary force in racial inequality and social injustice. Here’s how to address it.
The color of wealth
In this edition:
Company chiefs join outrage at police killings of African-Americans
Financial Times (paywall)
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Company chiefs join outrage at police killings of African-Americans
A quick briefing in five—
or a fifty-minute deeper dive
Origins
The sources of the racial wealth gap are long-standing.
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The case for accelerating financial inclusion in Black communities
The case for accelerating financial inclusion in Black communities
Article
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Company chiefs join outrage at police killings of African-Americans
Company chiefs join outrage at police killings of African-Americans
The divide
Racial economic inequality is visible in the wide gap in wealth between Black and white American families.
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The pandemic effect
Meanwhile, nearly 40 percent of Black Americans live in counties at highest risk of health and economic disruption from the coronavirus crisis.
COVID-19: Investing in Black lives and livelihoods
COVID-19: Investing in Black lives and livelihoods
Article
This year is on course to be the hottest
COVID-19: Investing in Black lives and livelihoods
COVID-19: Investing in Black lives and livelihoods
Article
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From exclusion …
A lack of access to (and the higher cost of) financial services, such as basic checking and savings accounts, perpetuates the racial wealth gap.
The economic impact of closing the racial wealth gap
The economic impact of closing the racial wealth gap
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—Paul Polman, former CEO of Unilever
[Business leaders] must take a lead role, not just because the injustice of race has corroded any semblance of a civil society, but because we must create a just and equitable economy.”
“
200
150
100
50
0
1992
1995
1998
2001
2004
2007
2010
2013
2016
Median family wealth by ethnicity/race, 1992–2016, $ thousand (2016 dollars)
White
Black
US recessions
1850
2020
2013–present
The Affordable Care Act’s expanded Medicaid coverage is unavailable to the >50% of all Black Americans who live in states that declined to expand Medicaid coverage.
1969–present
Welfare reform worsens the racial wealth gap through overtly exclusionary policies, the stigmatization of Black poverty, and, since the mid-’90s, the shifting of responsibility from the federal government to a state-centered model.
1935
The Social Security Act, a safety net for workers, excludes occupations mainly filled by people of color. The National Labor Relations Act permits unions to exclude them from collective bargaining.
1934
The National Housing Act puts “redlining” into practice, excluding Black homeowners from mortgages and keeping them from owning properties in desirable neighborhoods.
1921
Riots by white residents destroy “Black Wall Street”—a vibrant community of Black-owned businesses in Tulsa, Oklahoma.
1881
Insurance companies practice explicit discrimination by declaring that Black customers’ policies are worth 1/3 of the value of equivalent policies held by white customers.
1874
Corrupt management leads to the collapse of the Freedman’s Savings and Trust, causing widespread loss of trust in banks in the Black community.
The case for accelerating financial inclusion in Black communities
The case for accelerating financial inclusion in Black communities
Article
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566
244 of the
high-risk counties
are home to 39% of
all Black Americans
US counties at highest risk of disruption from the pandemic
60
27
28
Black
neighborhoods
White
neighborhoods
Nonwhite-majority counties
41
White-majority counties
Black families are overcharged and underserved
Share of paycheck that must be kept deposited to avoid fee or account closure, %
Financial institutions per 100,000 people
... to inclusion
Closing the racial wealth gap requires cross-sector solutions to make the financial system more inclusive of Black families.
The case for accelerating financial inclusion in Black communities
The case for accelerating financial inclusion in Black communities
Report
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Governments can reward financial institutions for expanding the geographic reach of their branches into Black communities.
Banks can revise their approach to affordable banking—eg, allowing opening deposits of <$25, offering free access to online/mobile services, and/or limiting overdraft fees.
By increasing racial diversity in its organizations, the financial-services sector could bring Black perspectives to new financial products and services, and to investment decisions in specific communities.
New approaches to predicting creditworthiness (like RevolutionCredit’s) can combine
big data with behavioral economics to benefit borrowers of color, who are more likely to have credit histories damaged by predatory
first lending experiences.
Companies in every sector can combat financial stress (a major cause of lost productivity at work) through employee policies encouraging saving habits and by addressing short-term stress (eg, through early-wage access).
Geography
Credit
Employers
Affordability
Diversity
RevolutionCredit’s)
The economic impact of closing the racial wealth gap
The economic impact of closing the racial wealth gap
Report
The economic impact of closing the racial wealth gap
The economic impact of closing the racial wealth gap
Report
Dive deeper
A timeline of financial-inclusion challenges for Black Americans