#BensTake: 5 Elements for Creating Inclusive Economies

#BensTake: 5 Elements for Creating Inclusive Economies

A group of Living Cities member institutions recently came together to collectively explore the biggest barriers to inclusive economic growth. We determined that 5 key elements must be central to any efforts to close racial income and wealth gaps and ensure that all people are economically secure.

By many measures, the nation’s economy is not creating on-ramps of opportunity, or broadly shared prosperity, at the pace and on the scale we need. For example, as has been widely reported, incomes for middle-wage workers have remained stagnant and those of low-wage workers have actually declined over the past three decades. This has been felt most acutely by people of color; as income inequality has increased, the wage gap between Whites and people of color has also widened.

The election season and its outcomes offered many reminders of deep and widely felt frustration, economic anxiety and mistrust. It exposed inequality within many regions of the country but also a growing sense that inequality between regions has become extreme and entrenched. Some regions today — especially tech-savvy urban ones — have a competitive base of different types of industries that is relatively diversified and rich in innovation. This way, as some industries decline, others continue to expand and thrive maintaining a healthy balance. Other regions are clawing their way back to regain those traits. But a third, large group of regions continues to lag, producing little growth and too few good jobs.

Historically, growth-oriented efforts have not been strong on racial equity, while equity-oriented efforts have not grappled effectively with underlying drivers of…economic growth and employment.

Each type of region faces important challenges when it comes to equity or inclusion—and the challenge of linking inclusion to growth. Historically, growth-oriented efforts have not been strong on equity, especially racial equity, while equity-oriented efforts have, for the most part, not grappled effectively with underlying drivers of competitiveness, export strength, industry cycles, and other determinants of economic growth and employment on a regional scale.

A new, emerging generation of efforts aims to address this gap. But there are big unanswered questions about the role and approach that existing or new institutions could and should adopt. Answering those questions will require defining theories of change, and understanding the challenges posed by political and institutional barriers, institutional and structural racism, market barriers, replicability, scalability and more.

In December 2016, a group of 12 Living Cities’ member institutions agreed to come together collectively to explore this body of work. They set out to understand the state of the field and to identify the biggest barriers to inclusive economic growth. They mapped each institution’s current efforts to address these issues, reviewed existing research, and connected with other leaders who are grappling with these questions. Ultimately, the task force arrived at five fundamental elements that we’ll need to address head-on if we hope to close racial gaps in income and wealth and ensure that all people are economically secure:

  1. Racial equity — There was remarkable consensus around the need to articulate racial equity as a central component of any effort we undertake. It’s become all too clear that race-neutral efforts have not achieved the results we’re after. The task force felt strongly that we must intentionally combat racism and address structural barriers that restrict the ability of people of color to fully participate in and benefit from economic growth. Too often, growth-oriented efforts headed by private sector companies and economic development agencies have not taken a stance on equity. Equity-oriented efforts, on the other hand, have been seen as solely the responsibility of non-profits and foundations. We know that these conversations are intrinsically linked. Without adopting this clear and explicit focus, systemic racism will continue to undermine more broadly focused inclusion efforts.
  2. Market orientation – Companies are increasingly seeing inclusion not just as a strand of their work, but as a business imperative for their future competitiveness. This focus presents us with huge opportunity to build bridges with business champions who are already making equitable practices around hiring and procurement their “new normal.” Supporting these early adopters will help shift these practices from a small circle of leaders to the mainstream, and tap into market forces to more sustainably promote inclusion at scale.
  3. Narrative shift — Powerful and predominant mental models about the disconnect between business interests and equity present a major barrier to sustainable progress. There is clear need to disruptive these harmful narratives, and instead reinforce the realities of mutual interdependence—that equity and growth must go hand in hand.
  4. Regional focus — With the focus squarely on creating systems-level economic change, the region—rather than the neighborhood or even city—must be the nexus for action. The region is the “laborshed”—an area that spans beyond the boundaries of any one city where workers live and commute from. Focusing on regions allows us to identify actors and leverage points that aren’t visible when you’re constrained by political boundaries. A regional focus shouldn’t be viewed as regions versus other levels of geography—such as neighborhoods—nor does every actor involved need to be a regional actor. But efforts to achieve population-level results must reflect the dynamics of the market, which is regional. This isn’t a simple or easy proposition; regional efforts have been tried and failed many times before. It’s critical that we must build on hard-learned lessons and grapple with how to do this more effectively.
  5. Collective action — The recognition that led us to the creation of this task force must permeate any solutions we develop: meaningful change on this issue will require the combined resources and leverage of all of our institutions.

In the coming months, I’ll share more about each of these elements and ways that members of the task force are already embedding them in their work. I’m excited by the incredible amount of work the group has taken on in past months, and enthusiastic about the progress to come. At this critical moment and in the current political and economic climate, that often-quoted adage feels more relevant than ever: “If not now, when; if not us, who?”

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