How to reduce the wealth gap between Black and white Americans
-
0:01 - 0:03As last recorded
by the US Federal Government, -
0:03 - 0:09the median wealth for a white family
in the United States was 171,000 dollars -
0:09 - 0:14and the median wealth for a Black family
was just 17,000 dollars, -
0:14 - 0:19a 10x different over 150 years
after the end of slavery. -
0:19 - 0:22I think first we have to ask ourselves,
what is wealth really? -
0:22 - 0:25Well, wealth is all of your assets,
all of the things that you own, -
0:25 - 0:27minus all of your liabilities.
-
0:27 - 0:30Assets are things like your car,
your house, your savings account, -
0:30 - 0:34your checking account, your investments,
if you own other properties, -
0:35 - 0:37your business.
-
0:37 - 0:40Well, that gap, that 10x gap,
-
0:40 - 0:43is partially because for many years,
-
0:43 - 0:44decades in fact,
-
0:44 - 0:47Black Americans
were left off of that ladder -
0:47 - 0:49and didn't really have access to it.
-
0:49 - 0:51Well, why are we talking about this now?
-
0:51 - 0:56Well, in 2020, in the midst of
a global pandemic and a looming recession, -
0:56 - 0:58inequities are really laid bare
-
0:58 - 1:01across nearly every system
in the United States: -
1:01 - 1:05health care, education,
criminal justice and finance, -
1:05 - 1:09and people were moved
to take action online, in streets, -
1:09 - 1:12in meetings at work,
in corporate boardrooms. -
1:12 - 1:15And I, as a consultant, started
having conversations with clients -
1:15 - 1:17that I thought I would never have.
-
1:18 - 1:20I guess the question
that I'd been asking myself is, -
1:20 - 1:24how do we make sure that in this moment,
this results in action and progress -
1:24 - 1:28that starts to close that wealth gap
for Black versus white Americans? -
1:28 - 1:30So who am I?
-
1:30 - 1:31My name is Kedra Newsom Reeves.
-
1:31 - 1:33I am a consultant
for banking institutions, -
1:34 - 1:36hedge funds, asset managers.
-
1:36 - 1:37But before any of that,
-
1:37 - 1:41I am a Black American
who is the descendant of slaves. -
1:41 - 1:43And when we talk about the wealth gap,
-
1:43 - 1:45it's really important
to understand the history, -
1:45 - 1:48so I thought I'd tell a little story
about a family, my family, -
1:48 - 1:51and how policy intersects with wealth.
-
1:51 - 1:53So we'll start with
my great-great-grandfather. -
1:53 - 1:55He was a man named Silas Newsom,
-
1:55 - 1:58and Silas was born a slave
outside Nashville, Tennessee, -
1:58 - 2:00on Newsom Station,
-
2:00 - 2:02where he and his family
worked on a quarry. -
2:02 - 2:04He didn't own anything.
-
2:04 - 2:07He didn't own his home.
He didn't own property. -
2:07 - 2:09He didn't really even own his own body,
-
2:09 - 2:10his own labor, his children.
-
2:10 - 2:13Any of those things, all of those things,
-
2:13 - 2:16were here to create wealth
for someone else. -
2:16 - 2:19So we believe that he was a servant
-
2:19 - 2:22during the Civil War
for a Confederate general -
2:22 - 2:24who was actually fighting
to keep him enslaved, -
2:24 - 2:27so he really had no wealth,
he had no control over his life. -
2:28 - 2:31Well, at the end of slavery,
there was a policy opportunity. -
2:31 - 2:33There was a question:
-
2:33 - 2:36what do we do for
the hundreds of years of slavery -
2:36 - 2:40now that we are ending slavery
and the country is coming together? -
2:40 - 2:41And there was a choice.
-
2:41 - 2:43We could make a settlement
with the slaves, -
2:43 - 2:46or we could make a settlement
with the slave owners. -
2:46 - 2:50Well, the slaves had no power
to advocate for themselves in that moment, -
2:50 - 2:52and the country had to be united,
-
2:52 - 2:56so the federal government decided
to give that settlement to slave owners, -
2:56 - 3:01essentially giving them money
for the property that they had lost -
3:01 - 3:03at the end of the war.
-
3:03 - 3:06And not their physical property,
not their homes, but people, -
3:06 - 3:11the slaves that had provided
free labor for years and decades. -
3:11 - 3:14So Silas, at the end of the Civil War,
-
3:14 - 3:15had no wealth.
-
3:15 - 3:18He was free but had no wealth.
-
3:18 - 3:19He became a sharecropper.
-
3:19 - 3:21My great-grandfather Silas was born
-
3:21 - 3:23a number of years
after the end of slavery, -
3:23 - 3:25and he was drafted to serve in World War I
-
3:25 - 3:28along with 350,000
other Black American soldiers -
3:28 - 3:30in segregated units.
-
3:30 - 3:31He served in the war.
-
3:31 - 3:33When he came back to the United States,
-
3:34 - 3:37at the end of the war,
there was very anti-Black sentiment. -
3:37 - 3:40The economy was compressing,
there were a lot of stressors, -
3:40 - 3:45and Black people could not get land,
they could not get loans for homes, -
3:45 - 3:49they really could not acquire any credit
to build wealth over time, -
3:49 - 3:52so he also became a farmer.
-
3:52 - 3:55And he had a son, also named Silas --
-
3:55 - 3:57there are a lot of Silases in my family --
-
3:57 - 3:59my grandfather.
-
3:59 - 4:02My grandfather Silas was also a soldier
and fought in World War II. -
4:03 - 4:04After World War II,
-
4:04 - 4:07the US Federal Government
passed the GI Bill, -
4:07 - 4:09which provided support for veterans.
-
4:09 - 4:11And the bill provided
for building of hospitals, -
4:12 - 4:13student loans
-
4:13 - 4:19and, most importantly for wealth-building,
low-interest home mortgages for veterans. -
4:19 - 4:21In the years following the war,
-
4:21 - 4:25the GI Bill accounted for
four billion dollars of funding -
4:25 - 4:27to nine million veterans.
-
4:27 - 4:30But Black veterans
largely did not benefit. -
4:31 - 4:35So Silas, my grandfather,
came back to Nashville, Tennessee, -
4:35 - 4:38and he married my grandmother,
whose name is Cinderella. -
4:38 - 4:40Yes, my grandmother's name was Cinderella.
-
4:40 - 4:43And they had eight children.
-
4:43 - 4:44But they never bought a home.
-
4:44 - 4:46And the highlight of their housing journey
-
4:46 - 4:49was moving into
a new public housing project -
4:49 - 4:51with their children
-
4:51 - 4:53and paying rent for that housing project,
-
4:53 - 4:57which in terms of the quality of housing
was fantastic for them and a step up, -
4:57 - 5:00but did not allow them to build wealth.
-
5:00 - 5:02My father, another soldier,
-
5:02 - 5:05a 20-year veteran
of the United States Marines, -
5:05 - 5:07bought his first home in his early 50s,
-
5:07 - 5:12but it took four generations
for our family to move into homeownership -
5:12 - 5:16and begin to build ownership
and equity in a home. -
5:17 - 5:20That's one family's story,
and I skipped a lot of things -
5:20 - 5:24that happened between
the end of slavery and today: -
5:24 - 5:29redlining, housing discrimination
before the Fair Housing Act in the 1970s, -
5:29 - 5:32the really important role
that Black-owned banks played -
5:32 - 5:33in building Black communities,
-
5:34 - 5:37the Savings and Loan Crisis of the 1980s,
-
5:37 - 5:39which crushed a lot of Black banks,
-
5:39 - 5:41and the subprime crisis in 2008,
-
5:41 - 5:45which stripped a lot of Black
and brown homeowners of their homes. -
5:45 - 5:47There's a lot of history there,
-
5:47 - 5:51but that story tells you a bit
about how we get to this 10x gap -
5:51 - 5:52where we are today.
-
5:53 - 5:57Now, certainly, as we think
about the size of that gap, -
5:57 - 6:02it is critical for the Federal Government
to take a number of actions. -
6:02 - 6:05That said, financial institutions
play a really important role -
6:05 - 6:09in providing access to credit,
access to capital, -
6:09 - 6:11to build communities
-
6:11 - 6:13and allow Black communities to thrive.
-
6:14 - 6:16We have to be clear;
-
6:16 - 6:21managing 17,000 dollars better
does not get us there. -
6:21 - 6:24Better education does not get us there.
-
6:24 - 6:27Access to credit and capital are critical.
-
6:27 - 6:30So I want to talk
about four solutions today -
6:30 - 6:34that financial institutions can contribute
to start to close the wealth gap. -
6:35 - 6:38Number one is getting
more people on the ladder, -
6:38 - 6:39getting more people banked.
-
6:41 - 6:43We know today that
about half of Black Americans -
6:43 - 6:45are un- or underbanked.
-
6:45 - 6:48Unbanked means that
you don't have a banking account. -
6:48 - 6:51Underbanked means
that you have a bank account -
6:51 - 6:56but you use alternative services
for check-cashing or payday lending -
6:56 - 6:57or paying bills.
-
6:57 - 7:00And that's not just expensive
from a transaction perspective -
7:00 - 7:02in terms of the fees that you pay,
-
7:02 - 7:06it's also expensive in terms of the time
that you commit to paying a bill. -
7:06 - 7:09Think about how you pay
your utility bill today. -
7:09 - 7:11It probably comes
out of your checking account. -
7:11 - 7:13You don't even think about it.
-
7:13 - 7:15You set it up in advance,
and it's automatic. -
7:15 - 7:16Well, if you're unbanked,
-
7:16 - 7:19you are probably going
to get a money order somewhere, -
7:19 - 7:20physically, a piece of paper.
-
7:20 - 7:23You then travel to City Hall or your DMV
-
7:23 - 7:25to pay that bill.
-
7:25 - 7:28About 40 percent of people
who are unbanked -
7:28 - 7:32say they are unbanked because they think
they don't have the minimum amount -
7:32 - 7:34to really maintain a checking account.
-
7:34 - 7:36Well, that's just not true.
-
7:36 - 7:37In the last several years,
-
7:37 - 7:40credit unions, community banks
and major banking institutions -
7:40 - 7:45have created low-cost, no-minimum
checking and savings account products -
7:45 - 7:49specifically made for this population.
-
7:49 - 7:51So we have an issue with awareness.
-
7:51 - 7:54Banks, community partners and others
-
7:54 - 7:57have to work together to increase
the awareness of these products -
7:57 - 7:59in communities that need them,
-
7:59 - 8:01so that we can start to reduce
the number of people -
8:01 - 8:03who are un- and underbanked
-
8:03 - 8:06and get them on the ladder
that we talked about earlier. -
8:06 - 8:09The challenge is about 28 percent
of Black and Latinx families -
8:09 - 8:10are credit-invisible,
-
8:10 - 8:14which means that you have
a thin credit file or no credit file. -
8:14 - 8:17And the way that credit works
and creditworthiness assessments work -
8:17 - 8:20is to say, if you can prove
-
8:20 - 8:23that you have paid credit back
consistently previously, -
8:23 - 8:24then I can lend you more credit.
-
8:24 - 8:27It's kind of a chicken
or an egg situation. -
8:27 - 8:31The interesting thing is that banks
and financial technology companies -
8:31 - 8:34have really innovated in recent years
to use alternative data -- -
8:34 - 8:36cable bills,
-
8:36 - 8:37utility bills,
-
8:37 - 8:39rent payments, etc. --
-
8:39 - 8:42to show that you're able
to consistently make payments. -
8:44 - 8:47The additional challenge on this one,
unlike the last one, -
8:47 - 8:49which was more about awareness,
-
8:49 - 8:54is that you need to have
regulatory support to do these things. -
8:54 - 8:55You need to prove to regulators
-
8:55 - 8:58that you are able
to fairly use alternative data -
8:58 - 9:01to lend credit to marginalized groups.
-
9:01 - 9:04What we need to see is,
from the Federal Government -
9:04 - 9:05and the banking industry,
-
9:05 - 9:08to come together
to create innovation sandboxes -
9:08 - 9:11to start to use alternative data
to expand to marginalized groups. -
9:12 - 9:14Well, what about communities?
-
9:14 - 9:17Without community wealth,
-
9:17 - 9:19individual wealth, in a way,
is on an island. -
9:19 - 9:22And if you go into most
major cities in the United States -
9:22 - 9:24to most communities of color,
-
9:24 - 9:27what you'll find
is underinvested communities. -
9:27 - 9:30For every economic crisis,
these communities have suffered severely. -
9:30 - 9:34For every economic boom,
they have not benefited. -
9:34 - 9:37And so what we're seeing
in a number of cities across the country, -
9:37 - 9:39and I'll use Chicago as an example,
-
9:39 - 9:42is the partnerships occurring
-
9:42 - 9:45between banking institutions,
-
9:45 - 9:46philanthropists,
-
9:46 - 9:48the city and community leaders
-
9:48 - 9:51to invest hundreds of millions of dollars
-
9:51 - 9:53to build community resources
-
9:53 - 9:56and communities that have
historically been disinvested. -
9:56 - 9:59Lastly, we've got to talk about business,
-
9:59 - 10:01and not just small businesses.
-
10:01 - 10:05Now, when you have individual stability
and a banking institution, -
10:05 - 10:09and you have access to credit,
and when you have community wealth, -
10:09 - 10:12those are all fantastic things,
but we need also job creation. -
10:13 - 10:15Take all of the new tech companies,
-
10:15 - 10:18and I say "new" because now
they're not so new, -
10:18 - 10:20but take Facebook, Google, Amazon.
-
10:20 - 10:24At some point, all of those companies
were sole proprietorships -
10:24 - 10:26with one employee
-
10:26 - 10:27or a few employees
-
10:27 - 10:30that were building a technology
that was not yet proven. -
10:31 - 10:34What those companies received early on
-
10:34 - 10:37was venture capital money.
-
10:37 - 10:39And when you look
at venture capital today, -
10:39 - 10:43only one percent of venture capital funds
go to Black founders. -
10:43 - 10:46So if Black entrepreneurs
are largely shut out of those networks -
10:46 - 10:47they're not able to grow,
-
10:47 - 10:49and the only way for that to change
-
10:49 - 10:52is from within the industry itself.
-
10:52 - 10:56In this generation, we must not only
be talking about thriving businesses -
10:56 - 10:58in Black communities.
-
10:58 - 11:02We must also be talking
about seeing more Black-owned -
11:02 - 11:04and founded businesses going public.
-
11:05 - 11:07Those are just four solutions.
-
11:07 - 11:09There's many other things
that can and should be done -
11:10 - 11:11to close the wealth gap.
-
11:11 - 11:13This gap is not new.
-
11:13 - 11:19It was born and perpetuated
by federal policy, social constructs -
11:19 - 11:21and business practice over time,
-
11:21 - 11:23and all of those things need to change
-
11:23 - 11:25to start to close the gap.
-
11:25 - 11:28Financial institutions
play a really critical role -
11:28 - 11:30at the individual level,
at the community level -
11:30 - 11:31and at the business level.
-
11:32 - 11:35It's important to our families,
it's important to our communities -
11:35 - 11:37and it's important to our economy.
-
11:37 - 11:40Instead of talking about
how the gap continues to grow, -
11:40 - 11:42let's begin to close the gap now.
-
11:42 - 11:44Thank you.
- Title:
- How to reduce the wealth gap between Black and white Americans
- Speaker:
- Kedra Newsom Reeves
- Description:
-
The racial wealth gap in the United States is shocking: white families have a median wealth nearly 10 times greater than that of Black families. How did we get here, and how can we stop the gap from growing? Wealth equity strategist Kedra Newsom Reeves provides a short history on the origins and perpetuation of racial wealth inequality in the US -- and outlines four ways financial institutions can expand opportunity for Black individuals, families, entrepreneurs and communities.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 11:57
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Joanna Pietrulewicz edited English subtitles for How to reduce the wealth gap between Black and white Americans | ||
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