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Cascade: No. 100, Fall 2018

Opportunity for Whom? Building Wealth Through Advancing Racial Equity

America is undergoing a profound demographic shift amid rising inequality and persistent racial inequities. By 2030, the majority of workers under 25 will be people of color.1 By 2044, the majority of Americans will be people of color.2 Rising diversity is a tremendous asset — if all people can access the resources and opportunity they need to thrive. If we want to truly build wealth in communities, we must relentlessly embrace the conviction that everyone in America can and should live in communities of opportunity, where good schools, healthy environments, safe homes, quality jobs, and affordable transit provide the bedrock resources essential for realizing our full potential. The nation’s economic fate will hinge on how we respond to these changes. Therefore, equity is both a moral imperative and the path to economic prosperity. To achieve equity, however, we must move from policies and systems that extract wealth to those that intentionally build wealth for community residents.

Any discussion about wealth accumulation must include a frank conversation about race. Although most community development practitioners are well aware of the statistics, it is important to highlight the depth of this financial divide. In 2016, the poverty rate for whites was 11.6 percent, while the rate for blacks was 23.9 percent. That same year, the median income for white households was $61,349, whereas the median income for black households was $38,555. On the issue of wealth, white households had a net worth of $933,700, while black households had a net worth of just $138,200. Looking at retirement funds alone, white families on average had $157,884 in liquid savings; black families had just $25,212.3

These disparities are also evident as we look at the pathways to prosperity. One traditional means of building wealth has been homeownership. Yet in the U.S., only 42.3 percent of black families own their homes, versus 72.3 percent of white families.4 This gap is the result of government policies that reinforced discrimination, and it highlights how we cannot talk about wealth building without talking about race. This discrimination was the focus of a recently published book by Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America, that shows the brilliance of race-based policy when it’s used negatively. Redlining policies for mortgages expanded the wealth inequity we face today; wealth is often passed down through generations, but the use of redlining prevented many black households from building and keeping wealth, while white households accrued it more easily.

In order to reverse these trends and build sustainable wealth, we must become explicit about advancing racial equity as both a process and a goal. Without equity, there can be neither progress nor prosperity. The way we advance equity is by being explicit about targeting solutions to the specific needs of populations and by making systems and policy work for those populations. This is the path that will enable us to craft solutions commensurate with the scale of our nation’s problems.

Capturing the Equity Moment

When we talk about economic issues in the U.S., the preferred approach is often to discuss it in colorblind terms. Yet, racial discrimination is at the root of much of the income and wealth inequality we experience. In the community development field, sufficient progress has not been made on racial equity because we often have not had the courage to address this challenging conversation head-on. The good news: I believe we have finally arrived at a time when people are ready to address the issue explicitly — and do something about it. This new mindset holds great promise for our nation and can support the goals of building and keeping wealth in all communities.

The signs of mounting frustration and tensions have culminated in an important inflection point for our nation that I argue should be captured as the equity moment. This is about people rising up — witness movements such as We Are the 99%, Black Lives Matter, and Me Too — expressing that they are feeling left behind and not benefiting from the nation’s economic prosperity. This moment is about leaders listening to the voice, wisdom, and experience of people and acting affirmatively on their behalf. It is about institutions increasing their capacity to serve the most vulnerable and not walking back from this obligation but leaning into it.

At this important moment of action, we also are benefiting from the encouraging confluence of critical research demonstrating that equity is not just a moral imperative but also an economic imperative. We know from our work with the National Equity Atlas that equity is the superior growth model.5 Racial economic inclusion is good for families, good for communities, and good for the economy. Nationally, GDP would have been $2.5 trillion higher in 2015 if people of color had earned the same incomes as their white counterparts.6 We also know millions fewer would have lived in poverty, there would be billions more in tax revenue, and the overall Social Security deficit would be smaller. The community development sector must work to foster a new conversation about equity as an economic driver and to advance policies that build an equitable economy — one in which working-class people and people of color can access good jobs, rising standards of living, and opportunities to own and shape the new economy.

Community development practitioners and our allies must advocate for fair inclusion — a society in which all can participate, prosper, and reach their full potential. This is what we mean by equity. Ensuring equal access across the racial divide is the only way to ensure equity for all. Lifting up the most vulnerable often ends up benefiting all. This is not a zero-sum game. An investment in one group can cascade out and up and be a substantial investment in the broader well-being of a nation whose policies and practices create an equitable economy, a healthy community of opportunity, and a just society.

We call this the curb-cut effect. First documented as the response to the advocacy of people in wheelchairs, these sidewalk indentations turned out to benefit many: those pulling suitcases on wheels, those pushing babies and young children in strollers, bikers, workers with large racks making deliveries, and many others. The curb-cut effect is a vibrant illustration of how laws and programs designed to benefit vulnerable groups, such as the disabled or people of color, often end up benefiting all. That creation underscores a foundational belief: We are one nation; we rise or fall together.

Achieving Opportunity

By taking advantage of the equity moment, our nation will be well positioned to both promote equity and create wealth in communities. However, our approach to these issues must reflect some critical changes in order to truly have an impact.

Clarity of Purpose and Population

The most fundamental thing that community development leaders must do is center their work on an explicit population. What we have learned throughout the years is that without clearly defining the population we wish to serve, we run the risk of advancing neighborhood revitalization while promoting the displacement of longtime residents. Although place-based efforts have their merits, without also intentionally and explicitly focusing on the specific people being served, we will never truly realize the promise of equity.

An example of this challenge can be explored through the emerging Opportunity Zones program. The 2017 federal tax bill contained a provision that allows states to designate certain high poverty rate census tracts as Opportunity Zones and to incentivize private investment into these zones through tax breaks. As this policy is still being formed, now is the time to ask critical questions: Who is this investment going to benefit? Will this effort help to build wealth in communities by moving people into living wage jobs? Or will it benefit investors who will — once again — extract wealth from these zones? The emerging Opportunity Zones program doesn’t yet use metrics to make sure residents in the designated communities directly benefit from those investments. If the program focuses only on place without also targeting the most vulnerable people in that place, we run the risk of exacerbating market forces contributing to gentrification and displacement.

I applaud the program in theory, but I don’t know what the Opportunity Zones program is going to achieve unless we are clear about for whom we want opportunity. In fact, let’s take back the word “opportunity.” We have already defined it in all the equitable development literature out there. As far back as the 1990s and early 2000s, PolicyLink and others defined what equitable development looks like: programs and policies that ensure residents in all communities in a region have the opportunity to participate in and benefit from economic growth and activity. The question now is whether policymakers will use this knowledge about equitable development to implement Opportunity Zones in a way that actually helps Americans living in or near poverty.

When we are explicit about our goals and the populations we are attempting to serve, our results are more targeted and can be more effective. A good example of people banding together and fighting for themselves while focusing on an explicit population is what happened in Oakland, CA, where the tech sector boom had pushed up demand for and the cost of housing. The people in Oakland organized to put renter protections on the ballot to try to stem the tide of folks getting priced out of the very city that they’d created. The population that needed help was concisely defined: rent-burdened households in Oakland. The goal was concisely defined: protecting existing residents from gentrification. When the people organize, they can do powerful things like passing tenant protections and establishing co-ops to buy land and control it. But achieving these types of results requires leading with discipline.

Leading with Discipline

What does it mean to lead with discipline? After identifying the population, we need to develop a plan that takes into account the lessons those in the community development field have learned in the last 20 or 30 years. This plan should be clear in defining the problem, the strategy, and the goal, while also being flexible enough to allow for adaptation and continuous learning.

Results-based accountability is one such framework, which allows practitioners to move in a disciplined way from talk to action. Results-based accountability forces us to be explicit about how we want to define progress. The indicator, or measure of progress, is the thing around which leaders should organize contributions. There are other strategies, such as Six Sigma, that are similarly effective. Whatever leaders choose, those check-and-balance structures should be integrated into the work in such a way that the framework just runs in the background. That frees up people to focus on working toward the goal that brought them together in the first place.

Promise Neighborhoods, which PolicyLink has provided services to, are an example of the importance of disciplined leadership. One of the most important elements of designing Promise Neighborhoods was listening to the wisdom from the research about what works, marrying that with the professional judgment of practitioners who had been doing this work a long time, and then measuring results in a strong framework. With Promise Neighborhoods, that framework enabled us to scale up and eventually effect real policy change. PolicyLink built partnerships with local leaders in over 60 communities across the U.S., which led to significant improvements in educational and developmental outcomes for over 300,000 children. This helped to attract public and private investments exceeding $1 billion, and eventually, Promise Neighborhoods became a permanent federal program through the Every Student Succeeds Act.

With Promise Neighborhoods, we did not just take a large investment and spend it down over the next five years to run a program. The plan was to use that investment to leverage and align the right partners locally to build a cradle-to-career pipeline, as well as to do the systems and policy work necessary to help kids have a pathway out of poverty. With Promise Neighborhoods, we chose to lead differently. We chose not to be mediocre. We had to be willing to create a culture of accountability, a culture of being accountable for advancing equity and being clear that we are here to help as many of the 15 million children living in poverty in America as possible.7

Conclusions

I am excited to be in community development work right now because of the legacy of what those before me have built. I can take up this work because people have contributed in such significant ways to the science, to the practice, and to being models of leadership. What you hear me describing is what I’ve learned from them, as well as what I’ve learned from observing and being in the field and in this struggle for over 20 years. The work for our generation is population-level impact. The work for our generation is to win on equity now. The work for our generation is to lead with courage, to lead with our truth and with discipline, and to be unwavering in our expectation that we will achieve results.

For PolicyLink, our job as an organization with deep roots in the community development field is to bring the voice, wisdom, and experience of community members into the room to frame the work on equity, justice, and fair inclusion. We do this through being on the ground, providing technical assistance, and through thought leadership. We provide technical assistance in service of getting those systems and policy wins and to help raise partners’ capacity to deliver. We aim to inspire folks to think about doing work that is at a scale that’s worthy of this moment. We also provide tools to advocates and citizens so that they can take up the fight themselves.

What I’m telling others to do is what I’m also telling myself I have to do. I have to be willing to put the results for the population that I’m choosing to service front and center. I have to be willing to talk about race, class, gender, and other intersectional identities. I have to be willing to talk about who is being left behind. And I have to be willing to create a culture of accountability for the things that I say I care about. And I have to ask: Opportunity for whom? Let’s hold ourselves accountable for creating a more just and fair society.

  • * The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
  • 1 Sarah Treuhaft, Angela Glover Blackwell, Manuel Pastor, “America’s Tomorrow: Equity is the Superior Growth Model,” PolicyLink, available at www.policylink.org/sites/default/files/summit_framing_web_2012110.pdf
  • 2 Policy Link’s National Equity Atlas is a comprehensive data resource to track, measure, and make the case for inclusive growth. See nationalequityatlas.org
  • 3 Poverty rates and median income data are from the U.S. Census Bureau,American Community Survey, 2016. Wealth data are from the Federal Reserve Board, Survey of Consumer Finances. Retirement funds data are from Urban Institute calculations of Survey of Consumer Finances.
  • 4 Census Bureau, Current Population Survey/Housing Vacancy Survey, 2017 data.
  • 5 See nationalequityatlas.org
  • 6 Treuhaft, “America’s Tomorrow.”
  • 7 National Center for Children in Poverty, “Child Poverty,” available at www.nccp.org/topics/childpoverty.html