The Color of Wealth: Race, Economic Mobility and the Future of America

Each year at the Color of Wealth Summit we convene hundreds of leading policymakers, business leaders, entrepreneurs, academics, the media and public in dialogue about the racial wealth gap and solutions to close it (The average African-American and Latino household owns six and seven cents for every dollar in wealth of the typical white family).

Our theme this year is The Inclusion Revolution: Race, Economic Mobility and the Future of America.

In cities and towns across America, the United States of America--the richest nation on earth--continues to experience deep racial, ethnic, and class disparities in health, education, and economic well-being.

From Baltimore to Detroit and Flint to Ferguson, the basic human needs of entire groups of similarly situated people--often bound together within a segregated geographical location--go unmet.

Meanwhile officials responsible for addressing concerns are either overwhelmed, unprepared, or worse - unconcerned - complicit in maintaining a system that works best for too few and leaves too many without the resources and opportunities that make a better life possible.

Thanks to innovative research from Raj Chetty and his colleagues, we've recently seen quantifiable evidence that the city, neighborhood, even block significantly impacts a person's opportunities in life.

Every year spent in a poor neighborhood decreases a child's chances of going to college, increases the chances of becoming a single parent and decreases expected earnings as an adult.

Disgracefully, the number of Americans living in poor neighborhoods--places often cut off from decent jobs, schools and other opportunities--has nearly doubled since 2000.

The problem has been particularly acute in communities of color. More than one in four poor African Americans and nearly one in six poor Latinos live in high-poverty neighborhoods, compared to just one in 13 poor whites.

As I've written in these pages before it's not an accident that these communities have less wealth and cash on hand. Discriminatory governmental policies largely excluded people of color from the formal economy until the latter half of 20th century and some continue to permit market discrimination today. These same excluded populations are growing, and will become America's majority populations in a few short decades.

With the changing racial and ethnic makeup of the nation shifting dramatically, it is imperative that we address the dilemma of demography even as we address the dilemma of disinvestment: how to develop a vibrant economy with the dramatic growth of the nation's most economically vulnerable households?

It is not a hypothetical question, which is why the ideas and solutions discussed at the Color of Wealth Summit are so important.

We focused this year on three foundational elements for developing a more inclusive, diverse, and dynamic economy:

• Banking on Business to Close the Racial Wealth Gap: Strengthening Entrepreneurship in Communities of Color;

• Financial Inclusion, Innovation, and Access featuring policies and ideas to bring vulnerable populations into the financial mainstream; and

• Equity-Centered Development: Inclusive Strategies for Building and Improving Low-Income Communities.

Data show that entrepreneurship can be the path by which people of color can generate wealth and close the gap - but we need systems in place that encourage entrepreneurship and boost the success of minority-owned firms.

One major impediment to people of color looking to start and grow their own firms is lack of family wealth.

Most entrepreneurs use family wealth, especially home equity, as initial capital. But people of color as a whole have very little wealth to begin with, so we need policies that help both entrepreneurs who are just starting a business and those who want to grow.

Our report "The Color of Entrepreneurship: Why the Racial Gap among Firms Costs the U.S. Billions," which we released yesterday, tells us that closing the racial gap in business ownership would add 9 million jobs, $300 billion in worker income, and 1 million businesses to the U.S. economy.

Clearly, supporting entrepreneurship is critical. So, too, is increasing financial inclusion which, as the Department of Treasury notes, "enhances the ability to smooth consumption, manage life's risks, and take advantage of economic opportunities such as starting or growing a small business...[AND] has a direct bearing on national economic growth rates and is inter-related to the issues of financial stability, integrity, and protection."

Speaking of stability, integrity, and protection: gentrification; a phenomenon we know well in D.C. and in communities nationwide through which long-time residents are priced out of neighborhoods in which they've lived, often for generations. Can neighborhoods be revitalized without gentrifying? Is it possible to develop more diverse, inclusive communities?

At the end of the day, that's what we're all focused on at the Color of Wealth Summit and for many of us in our work and life generally: inclusion.

It's why our theme this year is The Inclusion Revolution, which places the value of diversity and inclusion at the center of our democracy and seeks to reinforce it through the economic, political, cultural, and social systems that shape our nation.

Closing the racial wealth gap means building wealth for all so that we all can contribute to driving the U.S economic engine into the future of the world. It also means creating a more inclusive economy and society.

Doing so will require multi-sector, multi-level action - for-profits, nonprofits, federal, state, and local governments, activists, and advocates working together - knowing America's diversity is our promise, not our problem, and the basis of our strength and prosperity.