In 2020, Living Cities launched the “Closing the Gaps” Network, paired with a cohort of cities participating in a “Year of Reckoning” initiative. This foundational year brought together leadership in six cities–Austin, Albuquerque, Memphis, Minneapolis, St. Paul, and Rochester–to interrogate how racism has shaped their cities, to organize together to implement policies and practices that would build wealth for BIPOC residents in their cities.
All of this began before the U.S. experienced its initial COVID-19 shutdown, unearthing a multitude of racial health and financial inequities as a result, and before the murder of George Floyd prompted a global movement for racial justice. Little did we know that 2020 would end up being quite the “year of reckoning,” indeed.
Little did we know that 2020 would end up being quite the “year of reckoning,” indeed.
While supporting the Year of Reckoning cities through navigating a challenging year–with healing justice tools and deep relationship building–we also grew their anti-racist organizing capacity to push for policies and practices that would support BIPOC wealth building in their cities. The “Year of Reckoning” experience included an extended Undoing Racism workshop hosted by the People’s Institute for Survival and Beyond. During this workshop, cohort members built relationships with one another, interrogated their relationships to community, expanded their capacity for power-analysis, and built a deeper understanding of their roles as gatekeepers. We also shared tools to support them in their internal organizing for racial equity. Our hypothesis is: if cohort members have higher racial equity competencies, then they will enact more policies that support communities of color.
Supported with anti-racist organizing tools, relationships, and a shared analysis, these cities are now working together to address racial inequities in BIPOC wealth in their cities. We have identified entrepreneurship and homeownership as two wealth building strategies to focus on, as both support wealth-building across generations and contain significant barriers to access.
Homeownership
For many US households, homeownership is a primary mechanism for achieving financial stability and building wealth. A home is often a family’s largest asset; Black and Hispanic households, in particular, are less likely to have diverse assets and are more likely to rely on homeownership as a primary means of building wealth. Homeownership offers an opportunity to build significantly more wealth than is possible when renting. For instance, Black homeowners have a median net worth of $113,300, but Black renters have a median net worth of $1,830 (these figures are $164,800 and $5,800 for Hispanic homeowners and renters). But households of color have lower homeownership rates than white households.
These disparities reflect economic inequities that are rooted in historical and systemic racism. Centuries of both legal and covert racism created the country’s racial wealth disparities. From our research with the Urban Institute, we that know the white homeownership rate is 72%, which is 30 percentage points higher than the Black homeownership rate (42%), 24 percentage points higher than the Hispanic homeownership rate (48%), 19 percentage points higher than the Native homeownership rate (53%), and 12 percentage points higher than the Asian homeownership rate (60%).
Entrepreneurship
Throughout the first year of the pandemic, the number of active business owners fell by 22%. While the overall decline is noteworthy, differences among business closure rates across racial and ethnic groups are even more striking. Black businesses experienced the most acute decline, with a 41% drop. Hispanic business owners fell by 32% and Asian business owners dropped by 26%. In contrast, the number of white business owners fell by 17%. Our research with the Urban Institute highlights data from the US Census Bureau’s Annual Business Survey, revealing that Black and Hispanic/Latino-owned businesses make up only about 2 and 6% of all businesses, respectively, whereas white-owned businesses make up more than 80%.
Entrepreneurship, and the development of healthy businesses, is a mechanism for promoting economic growth, job creation and wealth building for people of color and an opportunity for local government leaders to build an environment that enables communities of color to survive, grow and thrive.
These two strategies aren’t the only two ways to build wealth for BIPOC communities, but they are a good place for cities to begin to address racial disparities in wealth. Because cities have played a significant role in preventing families of color from owning homes and building businesses, they play a critical role in addressing the ways that their current policies and practices are exacerbating the racial wealth gap.
We’re supporting leaders in cities doing exactly that by continuing to build on their racial equity analysis
We’re supporting leaders in cities doing exactly that by continuing to build on their racial equity analysis, while offering technical assistance, funding and other resources to ensure they are equipped to take on whatever challenges they encounter. And because we know that we can’t do it alone, and community input and design is essential to making this work successful, we supported cities with gathering community feedback on barriers they have experienced.
Each of our Year of Reckoning cities was provided with a needs assessment, a specialized report informed by each city’s residents and community partners, to identify what the barriers and needs are in each city to BIPOC homeownership and entrepreneurship. The needs assessments used a historical lens to identify racist policy decisions that created these gaps in each city and posed community solutions on how to address them. The process of connecting with partners and impacted BIPOC residents for input and recommendations also laid the foundation for ongoing community relationships with the cities. Together, these inputs informed the cities’ workplans which are focused on leveraging strategies to close gaps in BIPOC homeownership and entrepreneurship.
The workplan strategies include community land trust partnerships; business incubators and support for stronger business ecosystem supports; development of city land to expand the stock of affordable homes meeting the needs of Native and Black residents; intentional cultivation of BIPOC general contractors through city development projects; and support for new models of co-ownership of businesses and homes by BIPOC young adults. The cities are committed to implementing the strategies throughout the next few years.
This work takes time, and Living Cities is committed to working in partnership with city leaders as they implement their strategies to close racial wealth gaps. We also look forward to continuing to provide the opportunity and space for them to learn from each other as they go. Follow along with us as we share updates about their progress and lessons along the way!
