Earlier this month, on the centennial of the Tulsa Race Massacre, the Biden-Harris Administration unveiled their plan to build black wealth and narrow the racial wealth gap in the United States.
A history of systemic racism in the United States has contributed to the large wealth gap that people of color currently face. Systemic racism, also referred to as structural or institutional racism, is defined as “a system in which public policies, institutional practices, cultural representations, and other norms work in various, often reinforcing ways to perpetuate racial group inequity,” according to the Aspen Institute. Systemic racism is not something “a few people or institutions choose to practice.” It is ingrained in our social, economic, and political systems and has adapted over time. It identifies the parts of our history and culture that have historically privileged “whiteness” while subjecting people of color to unjust disadvantages.
Historically, systemic racism has impacted the ability of Black Americans to secure afforable housing, education, health care, and employment due to unjust biases and discrimination. A study by Citigroup found that in the past 20 years alone systemic racism has cost the U.S. a whopping $16 trillion.
The Biden-Harris Administration’s new plan will take measures to address the key issues impacting Black wealth in efforts to close the racial wealth gap and build back Black wealth.
Biden-Harris Administration to build back black wealth
In a detailed press release, the Biden-Harris Administration outlined key areas their plan will tackle. The plan will:
- Take action to address racial discrimination in the housing market, including by launching a first-of-its-kind interagency effort to address inequity in home appraisals, and conducting rulemaking to aggressively combat housing discrimination.
- Use the federal government’s purchasing power to grow federal contracting with small disadvantaged businesses by 50 percent, translating to an additional $100 billion over five years, and helping more Americans realize their entrepreneurial dreams.
Additionally, the Administration plans to create jobs and build wealth in communities of color through various initiatives that will help support small minority owned businesses including:
- A new $10 billion Community Revitalization Fund to support community-led civic infrastructure projects that create innovative shared amenities, spark new local economic activity, provide services, build community wealth, and strengthen social cohesion.
- $31 billion in small business programs that will increase access to capital for small businesses and provide mentoring, networking, and other forms of technical assistance to socially and economically disadvantaged businesses seeking to access federal contracts and participate in federal research and development investments.
- $15 billion for new grants and technical assistance to support the planning, removal, or retrofitting of existing transportation infrastructure that creates a barrier to community connectivity, including barriers to mobility, access, or economic development.
- A new Neighborhood Homes Tax Credit to attract private investment in the development and rehabilitation of affordable homes for low- and moderate-income homebuyers and homeowners.
- $5 billion for the Unlocking Possibilities Program, an innovative new grant program that awards flexible and attractive funding to jurisdictions that take steps to reduce needless barriers to producing affordable housing and expand housing choices for people with low or moderate incomes.
You might be interested: Black History Month: Steps toward dismantling systemic racism in the U.S.
Investing in Black-Owned Small Businesses
Access to capital and resources are common struggles many small business owners face, but the struggle is greater for Black small business owners who must go through the extra hurdles set in place by discriminatory racial biases.
Through two key measures the Biden-Harris Administration will work to address these disadvantages.
Using the Government’s purchasing power to drive an additional $100 billion to Small Disadvantaged Business Owners: The federal government is the largest consumer of goods in the world, buying everything from software to elevator services to financial and asset management, Federal procurement is one of our most powerful tools to advance equity and build wealth in underserved communities. And yet, just roughly 10 percent of federal agencies’ total eligible contracting dollars typically go to small disadvantaged businesses (SDB), a category under federal law for which Black-owned, Latino-owned, and other minority-owned businesses are presumed to qualify. Increasing federal spending with these businesses will help more Americans realize their entrepreneurial dreams and help narrow racial wealth gaps.
At its center is a new goal: increasing the share of contracts going to small disadvantaged businesses by 50 percent by 2026—translating to an additional $100 billion to SDBs over the 5-year period. To achieve this goal, agencies will assess every available tool to lower barriers to entry and increase opportunities for small businesses and traditionally-underserved entrepreneurs to compete for federal contracts. The impact could be historic: all told, attainment of the new goal will represent the biggest increase in SDB contracting since data was first collected more than 30 years ago.
Invest $31 Billion to Scale Up Efforts to Support Minority-Owned Small Businesses: Too many small businesses owned by people of color struggle to access loans and federal programs that can help them grow and succeed. President Biden has proposed a historic effort to tackle these persistent challenges and empower small business creation and expansion in communities of color. Specifically, the President’s American Jobs Plan will invest $30 billion in new Small Business Administration (SBA) initiatives that will reduce barriers to small business ownership and success. These initiatives will increase access to capital by establishing a new direct loan program for the smallest businesses, developing new loan products to support small manufacturers and businesses that invest in clean energy, and launching a new Small Business Investment Corporation that will make early stage equity investments in small businesses with priority for those owned by socially and economically disadvantaged individuals. The American Jobs Plan will also invest billions of dollars in SBA technical assistance programs that incubate and offer mentoring and technical assistance to 8(a) firms, reinforce the American subcontracting network to create pathways to prime contracting, encourage Fortune 500 firms to diversify their procurements, and bring more socially and economically disadvantaged businesses into federal research and development programs. These investments will also include an innovative new $1 billion grant program through the Minority Business Development Agency that will help minority-owned manufacturers access private capital.
Through these efforts, Black-owned small businesses will have greater opportunities to realize their dream and goals. There is still much work to do before the longstanding effects of systemic racism are fully eradicated, but the plan unveiled by the Biden-Harris Administration is a first step in the right direction toward building back black wealth and narrowing the racial wealth gap and achieving equality in the United States.