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Biden-Harris Administration unveils plan to build black wealth and narrow racial divide 

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. 

Adam Schultz, Public domain, via Wikimedia Commons

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.

Attitudes and policies that undermine equal access are the root of the racial gaps plaguing U.S. society (Source: Citi Research).

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. 

Photo by Clay Banks on Unsplash

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. 

systemic racism

Black History Month: Steps toward dismantling systemic racism in the U.S. 

Today, a House Judiciary subcommittee is hosting a hearing to discuss the H.R. 40 bill which seeks to create a commission that would explore reparations for Black Americans who have faced disproportionate disadvantages due to long lasting systemic racism. If passed, this would be a major step toward dismantling systemic racism in the U.S. 

The effects of systemic racism 

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. 

Black Lives Matter

Photo by Clay Banks on Unsplash

Since the protests from last summer following the murder of George Floyd, the Black Lives Matter movement has brought many issues surrounding racism in the U.S. to the forefront of national conversation. One of the biggest topics in the fight for racial equality is that of systemic racism and dismantling systemic racism in the U.S. 

Systemic racism is present in all systems and institutions and prevents or makes it more challenging for people of color to participate in society and in the economy. Some areas where systemic racism is prevalent include the criminal justice system, employment, housing, health care, politics and education. The COVID-19 pandemic has revealed some of the ways in which systemic racism in healthcare, employment, and housing has impacted people of color who suffer from disproportionate rates of infection and hospitalization. 

homeless

Black Americans make up nearly half of the homeless population. (Photo by Nathan Dumlao on Unsplash)

Black Americans face greater, disproportionate disadvantages due to historic practices of racism and discrimination within these systems that have evolved over time. One example of this is the, now illegal, practice of redlining. 

Redlining refers to the system used by banks and the real estate industry in the 20th century to determine which neighborhoods would get loans to buy homes, and neighborhoods where people of color lived — outlined in red ink — were deemed the riskiest to invest in.

This practice made it nearly impossible for people of color to obtain loans and was a form of segregation which kept people of color living in poor, low-income, often urban areas while white people were able to afford homes in the suburbs. 

Redlining was banned in 1968, however the areas that were once deemed “dangerous” or “hazardous” by the federal Home Owners’ Loan Corp are still more likely to be home to lower-income, minority residents to this day. Black Americans also make up nearly half of the homeless population today, despite making up only 13% of the population. These disproportionate numbers reflect the impact of systemic racism and shows how old systems of discrimination can become ingrained in our society and have lasting effects long after those practices have been banned. 

Steps toward dismantling racism in the U.S.

To properly dismantle systemic racism, change must be made across the board and all institutions must consciously reflect how they may be contributing to the discrimination of people of color or hindering their advancement in society. 

To address the issue moving forward, NAACP President Derrick Johnson outlined three key steps: First, we must “acknowledge that racism actually exists.” Second, we must get involved with organizations that are fighting it. And third, we must elect leaders and policy makers who won’t reinforce or support structurally racist policies. 

“Racism is not a partisan issue, and we need to stop making it a partisan issue,” Johnson said. “It’s a question of morality.”

systemic racism

Photo by Clay Banks on Unsplash

President Biden has pledged to address the issue of systemic racism in his Executive Order On Advancing Racial Equity last month where he stated that, 

“By advancing equity across the Federal Government, we can create opportunities for the improvement of communities that have been historically underserved, which benefits everyone.  For example, an analysis shows that closing racial gaps in wages, housing credit, lending opportunities, and access to higher education would amount to an additional $5 trillion in gross domestic product in the American economy over the next 5 years.” 

Additionally, in his Proclamation on National Black History Month, 2021, President Biden reiterated these sentiments stating: 

“we are also launching a first-ever whole‑government-approach to advancing racial justice and equity across our Administration –- in health care, education, housing, our economy, our justice system, and in our electoral process.  We do so not only because it is the right thing to do, but because it is the smart thing to do, benefiting all of us in this Nation.

We do so because the soul of our Nation will be troubled as long as systemic racism is allowed to persist.  It is corrosive.  It is destructive.  It is costly.  We are not just morally deprived because of systemic racism, we are also less prosperous, less successful, and less secure as a Nation.”

You might be interested: How systemic racism is costing the U.S. trillions

Another step Congress is taking toward dismantling systemic racism in the U.S. is the possibility of granting reparations to the families of formerly enslaved African Americans. After the Civil War, reparations were promised to formerly enslaved families, but the promise was never fulfilled. Now, Congress is taking another look at the H.R. 40, the “Commission to Study and Develop Reparation Proposals for African Americans Act.” 

The bill has been introduced in every legislative session since 1989, and since the last time a hearing was held on H.R. 40 in 2019, it has garnered the support of 170 members of Congress and 300 organizations, including the U.S. Conference of Mayors, NAACP and ACLU. However, in the three decades since the bill was first introduced, it has yet to reach the House floor for a vote. 

Today, a House Judiciary subcommittee is hosting a hearing to discuss the H.R. 40 bill.

If passed, H.R. 40 seeks to establish a commission to study “and consider a national apology and proposal for reparations for the institution of slavery, its subsequent de jure and de facto racial and economic discrimination against African Americans, and the impact of these forces on living African Americans, to make recommendations to the Congress on appropriate remedies, and for other purposes,” according to H.R. 40’s text.

systemic racism

How systemic racism is costing the U.S. trillions

Systemic racism has cost the U.S. a whopping $16 trillion, A new study by Citigroup released last week finds out. That’s right, the U.S. could have been $16 trillion richer if it not for racial inequality which has economically impacted Black Americans for over the past 20 years.

systemic racism

Photo by Clay Banks on Unsplash

Systemic racism is costing the U.S. trillions

In recent months we as a society have become much more aware of the injustices that Black Americans face in our country. The Black Lives Matter movement has brought many of the issues caused by systemic racism to the fore with recent protests and rallies pushing back against these injustices and crimes against Black Americans. From the killing of innocent unarmed Black men and women such as George Floyd and Breonna Taylor, and the mass incarceration of people of color (POC) to economic inequality such as POC receiving lower wages from their white co-workers, recent months have shone a light on the effects of systemic racism in the U.S.

When people talk of racism, many white people will claim it’s a thing of the past. “Racism is over,” they’ll say. “It ended long ago,” as if the Civil Right movement was centuries ago and not merely 70 years, with many who fought in the movement still alive today. The system wants you to forget. They want you to believe that it “was so long ago, but we’re past that now” so you won’t go take a closer look at the issue and the world around you today.

But a closer look reveals that racism is far from over and its effects have deep and lasting consequences for Black Americans and their quality of life.

The effects of systemic racism on Black Americans

The future if we close the economic gap today (Source: Citi Research)

“The 400 years of enslavement of Black populations in the Americas has residual effects that persist to this day despite tomes of legislation providing equal access to various aspects of American life under the law,” says the study conducted by Citigroup. “Attitudes and policies undermining equal access are at the root of the racial gaps plaguing U.S. society.”

Citigroup’s study attempts to quantify the economic impact of systemic racism. Its findings have estimated that:

  • Black workers have lost $113 billion in potential wages over the past two decades because they could not get a college degree.
  • The housing market has lost $218 billion in sales because Black applicants could not get home loans.
  • And about $13 trillion in business revenue never flowed into the economy because Black entrepreneurs could not access bank loans.

If we were to close the gap of economic inequality due to systemic racism and discrimination, then the U.S. could have close to $5 trillion in gross domestic product over the next five years, the study indicates.

What can we do to close the economic gap?

Since systemic racism is a huge part of the issue, the first step to closing the gap of economic inequality is to address factors of systemic racism. Incarceration rates among Black Americans, voter suppression efforts and conscious bias in hiring all play a role in hindering the U.S. from making strides in closing this gap, Citigroup said.

systemic racism

Attitudes and policies that undermine equal access are the root of the racial gaps plaguing U.S. society (Source: Citi Research).

Our efforts need to be directed toward dismantling these systems and biases that are limiting and oppressing Black Americans. One way to do this is to put pressure on government officials to implement change such as promote financial inclusion, implement tax reform and housing incentives, invest in wealth building, invest in protections against discrimination, provide guaranteed wages and implement salary history bans.

On a corporate level, we need to urge corporations to support diversity and inclusion initiatives from the top, address racial gaps in hiring, retention, and firing, recruit more Black board members and dismantle structural barriers to hiring black talent.

economic inequality

A path toward equality (Source: Citi Research)

Citigroup has taken initiative and said they will be directing $1 billion toward helping to close the racial wealth gap, investing $550 million over the next three years in encouraging home-ownership for people of color, and another 50 million will go toward capital investments for Black entrepreneurs.

On a personal level, we as individuals can utilize our political power by voting in the upcoming 2020 election and putting leaders in power who will prioritize issues of equality. It is our duty as citizens and members of a society to look out for those in our communities.

How we can close the gap of racial inequality (Source: Citi Research)

A society is a community first and foremost and members of a productive and just society cannot only think of their individual selves but they must think of every member. If members of a society are not being treated fairly and given the same equal rights and opportunities, than the entire society will suffer.

The economic inequality caused by centuries of systemic racism has cost the U.S. trillions of dollars and severely impacted the livelihood of Black Americans. If we come together as a country and fight for rights of our fellow citizens, then we all will prosper