FUTURE FLUENCY The Thin Red Line

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CATRICE JACKSON What we're experiencing right now didn't just drop out of the sky. There's a legacy there, there's a history there, there's past experiences that have brought us here today. And I think it's important for leaders and stakeholders and people on boards, if they're really interested in learning about these inequalities, that they have to look at the history of how we got here.

ASHLEY MARCHAND ORME Hi, Erin!

ERIN ESSENMACHER Hi, Ashley. What are you up to?

ASHLEY MARCHAND ORME Oh, you know—the usual. I’ve fallen once again into a black hole of research on the Internet about history, policy, sociology, and economics. The gravitational pull is too strong and I’m legitimately concerned I’ve gone too deep.

ERIN ESSENMACHER So, basically another Thursday?

ASHLEY MARCHAND ORME (laughing) Yep.

ERIN ESSENMACHER What you working on today?

ASHLEY MARCHAND ORME I was interested in learning a bit more about how Jim Crow laws may have impacted communities of color in the US, from Coast to Coast. These laws limited who you were allowed to marry, your access to education, and even the kinds of jobs and economic opportunities you could tap into.

ERIN ESSENMACHER Ah, yes. I remember learning about and discussing those laws in school. The history and the scope are stunning.

ASHLEY MARCHAND ORME And even more so when you consider that these sorts of laws were in place well into the 1960s.

ERIN ESSENMACHER That kind discrimination, that lasts for hundreds of years and crosses every major area of society from education and hiring to healthcare, and housing – doesn’t change when laws do. It’s not like flipping a switch. It becomes ingrained in the culture. It also feeds the unconscious bias we discussed in episode two, and it’s a foundational element of many of the things we’ll explore across this series.

ASHLEY MARCHAND ORME Exactly. We know that making sense of the past is also key to understanding the future—including topics we’ll get into later in the series like artificial intelligence, the future of work, and how data is shaping the business landscape. And that foundation is critical context if we want to really understand challenges with the talent pipeline, a topic we’ll delve into next episode.

ERIN ESSENMACHER Luckily we know some really smart folks teed up who can shed some light on all this, including what it means for the economy and the way we do business. I’m Erin Essenmacher.

ASHLEY MARCHAND ORME And I’m Ashley Marchand Orme.

ERIN ESSENMACHER And this is Future Fluency, the podcast where we discuss the changing face of America through the lens of innovation, culture, and their impacts on business.

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ASHLEY MARCHAND ORME Today, we are talking about institutional discrimination—what it looks like historically, how that history shapes the present and what it means for business.

ERIN ESSENMACHER Ashley, I learned a lot about that history and the personal impact from your great conversation with Catrice Jackson.

ASHLEY MARCHAND ORME Yes! Catrice is an author and mental health counselor who has developed practical workshops on how to create constructive inter-racial interactions. She had great insights into how institutional discrimination provides a blueprint for the inequality we see today.

CATRICE JACKSON I host workshops all over the country. And I take those workshops from city to city. And it really is a brave space where women from all backgrounds can come into those spaces and really have a hard, straight-up no chaser, as I call, it conversation about race and racism. It's difficult sometimes, but I think that it's necessary, I think that we need to continue to have these conversations. What we're experiencing right now didn't just drop out of the sky. There's a legacy there, there's a history there, there's past experiences that have brought us here today.

There's a 300-year delay, that for 300 years due to chattel slavery and Jim Crow and slave codes and all the things that are very real—history is there, you can find that—that essentially put black people 300 years behind the curve. And so, when we look at where we are today, we have to take that into consideration, that black folks weren't able to have land, weren't able to grow crops.

One of the examples that I often use is that technically, I am the first "free” generation in my family. What I mean by that is that my mother grew up in the Jim Crow area era. So she was limited in a lot of ways. There were things that she couldn't have, she couldn't do, places she couldn't go. My grandmother talked about how she remembers holding her mother's hand who was a slave at the time.

And so, just three generations back, I can still touch the impact of chattel slavery. It was legal to say, no, you cannot build generational wealth. No, you cannot go get an education so that you can educate the next generation.

That, to me, paints a very clear picture on what systemic racism has done to black and brown folks in this country, that people of my age, 40-ish or so, we are the first free generation for a lot of black families. And so we're just now able to get the education that we need to get the jobs. We're just now able to start building that generational wealth that we can pass on to our children.

ASHLEY MARCHAND ORME Erin, what Catrice is saying there about the black community’s barriers to building generational wealth relates back to the business environment in a few ways. Think about the impact of stifling wealth creation for an entire people group. Wealth creation gives you access to resources like better education, and better education can help sharpen your skills so you can stand out in a pool of job applicants...which then impacts your ability to get the next job and the next…this all gets to the talent pipeline, which—as I mentioned—we’ll discuss in more detail next episode

ERIN ESSENMACHER Yes, and wealth creation also impacts the ability to purchase housing and property that can increase in value significantly over time, thereby creating the kind of income that can also serve as a financial cushion to weather difficulties like economic downturns, and creates wealth that you pass down to your kids. And while education and housing are just two facets of the discussion on wealth and access to resources, they’re really important because they are foundational tools for success in this country.

ASHLEY MARCHAND ORME Right. I spoke recently with Richard Rothstein, a historian and a Distinguished Fellow at the Economic Policy Institute. Richard wrote a book called, : A Forgotten History of How Our Government Segregated America. Richard is also a Senior Fellow at the UC-Berkeley School of Law's Haas Institute. He’s done quite a bit of research on how governmental policies actually did—and still do—impact the black community. Here’s Richard, in his own words, describing his book:

RICHARD ROTHSTEIN The book demolishes the notion of de facto segregation. What the book shows is that the primary reason of that we have segregated neighborhoods everywhere in this country is because very powerful federal, state, and local government policies were explicitly designed on a racial basis to keep blacks and whites separate in where they live. It goes through policy, after policy, after policy that the federal state and local governments followed to ensure that African-Americans and whites could not live near one another in any metropolitan area of this country.

ERIN ESSENMACHER That is really disturbing. So what Richard is saying there is that much of the segregation we saw in the last century—and that lingers still today—is by design and our laws were the blueprint.

ASHLEY MARCHAND ORME Exactly. We’re going to spend the bulk of our time today hearing from Richard. His work lays out in clear terms how racism—when reinforced by rules—regulations and laws literally becomes institutionalized. Hence the term institutional racism.

ERIN ESSENMACHER We’re going to dive in depth into the specifics of housing policy and how it at the root of everything from income inequality to unconscious bias that drives our attitudes around race. The way that Richard came to this work is, in and of itself, a powerful example of the ripple effects of housing policy.

ASHLEY MARCHAND ORME Yes! He started with a focus on education, and that led him to housing. His experience shows how policies in one area, like real estate, can impact health care and education, and then make major ripples across society and the economy.

RICHARD ROTHSTEIN I had been the education columnist of the Times for a while. I wrote on education policy for the Economic Policy Institute. I came to understand that the most powerful reason that we have an achievement gap between African-American and white children, was not because they weren't motivated, it wasn't because schools weren't trying hard enough, or the kids weren't tested often enough, or because the schools weren't held accountable. The primary reason was that the most disadvantaged children in this country were being concentrated in single schools, where their social and economic problems overwhelmed the ability of schools to address them, where those problems directly caused lower achievement.

For example, I wrote a column I remember once about asthma, well African-American children in urban neighborhoods have asthma at four times the rate of white middle class children. If they have asthma, they're likely to be wheezing at night, they might come to school drowsy and sleepless. And I tried to explain if you had two groups of children who were equal in every respect, except one group was coming to school sleepier than the other, that that group is going to have lower average achievement, no matter how accountable the schools were and how often the children were tested. I showed that when you take children with those problems—whether it's asthma, or lead poisoning, or homelessness, or stress from parental economic insecurity, or poorly educated parents—the notion that we can address the achievement gap without dealing with those problems, was false. So I became concerned with our schools being segregated and the reality is that today in the , schools are more segregated than they have been at any time since the Brown versus Board of Education decision began to be implemented, more segregated today, and the reason they're more segregated is the neighborhoods in which they're located are segregated.

ERIN ESSENMACHER That connection Richard is making between housing, education, and the opportunity for achievement is significant.

ASHLEY MARCHAND ORME And on top of some of the housing policies that have led to segregated communities and schools, there have also been studies conducted on discrepancies in how children are treated in schools. The US Department of Education’s Office for Civil Rights published a study in 2014 on discipline in public schools. The study found that while black children make up just 18 percent of the preschool population, they also make up almost half of preschool suspensions. Looking at all groups of school aged children, the study found that schools are three times more likely to suspend black students than white students for similar offenses.

ERIN ESSENMACHER And we know from our conversations around bias, that if you have a perception that a certain group of kids is less motivated, then you may look at an individual child from that group and see a “behavior problem” even before the kid opens their mouth. It reminds me of what Richard said that folks make assumptions that certain kids don’t do as well on a test because they are less motivated, when the root causes are actually different and deeper. Oftentimes, they have nothing to do with an individual child and everything to with disparities driven by economics and rooted in things like discriminatory housing policy. This goes back to what we were discussing earlier, about how even if policies change, discrimination can linger.

ASHLEY MARCHAND ORME Right. Richard and I dug a bit deeper there, and he shared an example of housing policy, directly worked to feed those negative stereotypes:

RICHARD ROTHSTEIN After World War II, most working class families were living in urban areas at the time. We weren't a suburban nation at the time. The federal government began a policy to suburbanize the entire white population into single-family homes in all-white suburbs. Levittown is probably the most famous of them. 17,000 homes east of New York City. Another one that maybe they've heard of is little boxes on the hillside made of ticky-tacky and they all look the same, a song that was written by Malvina Reynolds about a suburb almost as large as Levittown, south of San Francisco.

A builder like Levitt or the builder of those little boxes south of San Francisco, his name was Henry Doelger, those builders could never have assembled a capital to build subdivisions that large. No bank would be crazy enough to lend the money to do so because we weren't a suburban nation. Nobody even thought that people might want to live out in the suburbs in single-family homes.

The only way that Levittown could be built, and the only way that West Lake, could be built, was when the builders, Levitt and Doelger, went to the Federal Housing Administration, submitting their plans for the developments that included the layout of the subdivisions, the materials they would use, and a commitment never to sell a home to an African-American. The Federal Housing Administration even required them to place a clause in the deed of every home, prohibiting resell to African-Americans or rental to African-Americans.

Once those commitments had been made, the Federal Housing Administration or The Veterans Administration guaranteed them bank loans so that they could proceed with the developments. Whites were moved out of cities. They could pay less. White families, returning war veterans could pay less with a VA or FHA mortgage in Levittown or one of these other suburbs, pay less monthly than they had been paying for rent in public housing in the central city. So it was an enormous incentive for them to move.

On this basis the entire country was suburbanized.

ERIN ESSENMACHER Wow. That’s a lot to take in.

ASHLEY MARCHAND ORME Right?

ERIN ESSENMACHER Essentially the suburbs as we know them today started specifically as a way to separate white and black families.

ASHLEY MARCHAND ORME Richard explained how this segregation fed income inequality and, in part, prevented black families from being able to own property and build wealth like Catrice talked about at the beginning of the show.

RICHARD ROTHSTEIN The federal government locked African-Americans into overcrowded neighborhoods in urban areas, and denied them, for example, FHA mortgages even in their own neighborhoods. That's when the term “redline” comes from. The federal government drew maps of urban areas, colored the areas red where African-Americans were living, and didn't issue mortgages to families who lived in those red zones. Those neighborhoods became poorer, and poorer. Soon in the 1950s, industry left those very neighborhoods, moved to the suburbs and to rural areas because it no longer needed to be located near deep water ports, or near railroad terminals to get parts and ship final products. That further made the African-Americans living in these neighborhoods poorer and poorer because they no longer had access to jobs. In order to afford housing, they frequently subdivided their homes, overcrowded them, boarded up relatives with them. Life moved out of homes into the streets.

Any time we have a social situation, a structure that was created by various social forces, they create stereotypes, and people who are not sophisticated about understanding how those structures were created can have misunderstandings of the characteristics of the people who either suffer or benefit from those stereotypes.

Well, white families looked at these neighborhoods, slums, and then concluded that African-Americans were slum dwellers, and that if African-Americans moved into their neighborhoods, their neighborhoods would become slums as well. They didn't understand that the slum conditions, the overcrowded conditions, the poverty, was a creation of government policy. So the stereotypes were created and reinforced prejudices that already existed, making our problems much worse.

ERIN ESSENMACHER Based on Richard’s research, you can draw a straight line from government-sanctioned housing policy to the lingering prejudice we see today.

ASHLEY MARCHAND ORME And we know from our previous conversations that bias comes from perceptions we have but oftentimes are not conscious of or don’t question.

ERIN ESSENMACHER Richard’s insight there helps to connect the dots between our policies and our bias.

ASHLEY MARCHAND ORME Speaking of connecting the dots, Richard and I also talked about this wealth gap. Not just what it means when we think about participation in the US economy, but how it provides fuel for the bias that leads to the racial and political polarization that we see infecting society.

RICHARD ROTHSTEIN The houses were relatively inexpensive. They cost eight or 9,000 dollars apiece. Today those homes sell for not $100,000, but $300-, $400,000, $500,000, some places more. The white families who were subsidized by the federal government in this way to move out of cities and into all white suburbs gained over the next few generations wealth from the appreciation in the value of their homes, $300-, $400-, $500,000 in wealth, they used it to send their children to college, they used it to finance emergencies, whether it was temporary unemployment or maybe a medical emergency. They used it to subsidize their own retirements, and they used it to bequeath wealth to their own children. As a result, we have an enormous wealth gap in this country today by race. African-American incomes today are about 60 percent of white incomes. You'd think that with a 60 percent income ratio you'd have roughly a 60 percent wealth ratio, but in fact, African-American wealth is only on average about 10 percent of white wealth, and that enormous disparity, between a 60 percent income ratio and a 10 percent wealth ratio, is entirely attributed both to unconstitutional federal housing policy that was practiced in the mid-20th century, and we've never remedied [it].

The wealth gap is an important, if not the most important determinant of inequality between the races today. It also determines, as I suggested earlier, the achievement gap in schools when we concentrate the most disadvantaged children in single neighborhoods. It determines in large part the health disparities. African-Americans have shorter life expectancies, greater rates of heart disease because so many of the live in less-healthy neighborhoods. It's responsible in large part for the outrageous criminal justice system that incarcerates so many young African-American men who would not be incarcerated if they weren't being concentrated in single neighborhoods, without opportunity, without access to jobs in the formal economy. And I think that the segregation that we created also determines, in good part, the very dangerous political polarization in this country today that's a threat to our democracy. If so many African-Americans and whites live so far from each other and continue to live so far from each other, it's inconceivable that they will develop the kind of empathy for each other, the kind of understanding of each other life experiences that's essential to the formation of a common national identity.

ERIN ESSENMACHER So, Richard is saying that if we continue to live apart from each other, we can’t form the kinds of relationships and interactions that foster understanding and empathy, which in turn makes it easier to see people who we might actually have a lot in common with as “other.”

ASHLEY MARCHAND ORME Yes, and that lack of understanding is not just a threat to our democracy.

ERIN ESSENMACHER No small thing…

ASHLEY MARCHAND ORME Right? And it also lays the groundwork for other things we’ll be talking across this series, like why it’s so difficult to talk about race at work or how blind spots around diversity inhibit innovation.

ERIN ESSENMACHER I want to go back that tie-in between education and housing, especially since we know access to education has such a profound impact on a person’s future employment prospects.

ASHLEY MARCHAND ORME Richard’s research here is illuminating.

RICHARD ROTHSTEIN In 2007 I read a Supreme Court decision that evaluated a very token desegregation plan that the school districts of Louisville, Kentucky and Seattle, Washington had.

They said it was unconstitutional. They said it was impermissible for the school districts to try to explicitly redress racial segregation. Chief Justice John Roberts wrote the opinion. He said that the schools in Louisville, Kentucky and Seattle are segregated because the neighborhoods in which they're located are segregated. Well, he was right about that, that this is why the schools in Louisville and Seattle are segregated. But he said, "The schools in Louisville and Seattle are segregated because the neighborhoods in which they're located are segregated, and those neighborhoods." He said, "Are segregated de facto, without government responsibility, and therefore it's all a private action, a private result. Government has nothing to do with it and government has no responsibility or authority to remedy it."

ERIN ESSENMACHER So basically the Supreme Court is making decisions based on the idea that segregation was self-imposed and therefore shouldn’t be the responsibility to remedy it. Except, we know from red line laws, that the government was the original architect of that segregation.

ASHLEY MARCHAND ORME Exactly. And Richard shared a story involving one of the school districts in the court case, which took place just 50 years earlier that shows in heartbreaking detail how the law functioned to reinforce whites-only neighborhoods.

RICHARD ROTHSTEIN There was a suburb called Shively where there was a white home owner living in a single-family home and he had an African-American friend who was living in the center city of Louisville. The African- American friend was a Decorated Navy Veteran, he had a wife and child, decent income, good job, wanted to move his family to a single-family home but nobody would sell him one. So the white homeowner in this suburb of Shively bought a second home in the suburb and resold it to his African- American friend. When the African-American friend moved in, an angry mob of whites surrounded the home, protected by the police, the whites threw rocks through the windows. The police somehow couldn't identify a perpetrator. They dynamited and firebombed the home, and the police somehow still couldn't identify who was responsible. Nobody was arrested, except at the end of the riot, the white home owner was arrested, trialed, convicted and jailed with a 15-year jail sentence for sedition, for having sold a home to an African-American in a white neighborhood.

I remembered this decision, having read the supreme court decision in 2007, and I said to myself, this doesn't sound to be me much like de facto segregation, if the criminal justice system is being used to enforce racial boundaries in this way. I began to investigate it further, and one of the policies I discovered was that there were hundreds, and hundreds, and hundreds of cases in the mid-20th century where police protected mob violence, drove African-Americans out of homes they had legitimately purchased in white neighborhoods. Every one of these where it was police-protected was a violation of the 14th Amendment. That has never been remedied.

ASHLEY MARCHAND ORME Erin, by this point in the interview, I had what I can only describe as this unspoken desperation to hear how we can solve for some of these issues.

ERIN ESSENMACHER I can understand why you’d feel like that. One way is by having hard conversations like this one where we work understand our history as context for how to do better. And understanding that if racism is rooted in the structure, we need to focus on structural change. If your house is not built on a solid foundation and it starts to collapse, you don’t swap out the drapes—you get down on the foundation and figure out how to make it stronger.

ASHLEY MARCHAND ORME Richard had some powerful ideas about how to address those foundational causes of institutional racism. And one big surprise—it involves rethinking some of the policies we have pointed to for decades as the solution.

RICHARD ROTHSTEIN We have a number of policies today for low income families that helps to support their housing. They typically reinforce segregation. The biggest one that we have for low-income families is something called low-income housing tax credit. It's a tax credit issued by the US Treasury Department to states for distribution to developers of low income housing. Developers build most of their low-income housing in already low-income neighborhoods, reinforcing their segregation. They do it because land is cheaper there, they do it because there's no community opposition to building housing that's affordable in already low-income neighborhoods. They do it because it's easy to rent. You can put a sign in the window and lots of low-income people will walk by seeing a for-rent sign. We can very easily modify that policy to require a share, a larger share of those developments to be placed in high-opportunity communities where families had access to jobs, and opportunity, and healthy air, and supermarkets that sold fresh food, and schools that had higher achievement. So that would be a policy that would be easy to remedy.

The same thing is true of another policy that maybe your listeners are more familiar with, and that's the Section 8 Voucher Program. It's a subsidy to families, low income families so that they can afford to rent apartments that are otherwise unaffordable to them at median rents in their community, but those vouchers also reinforce segregation because in almost everywhere in the country, there are few exceptions, but almost everywhere in the country landlords in middle class communities refuse to accept Section 8 Vouchers. This is not considered a violation of the Fair Housing Act. It's the only kind of discrimination that's permitted under the Fair Housing Act. You can't discriminate in a basis of religion or race, explicitly, or disability, of family size, but you can discriminate against somebody who has a Section 8 Voucher, and these people are disproportionately minority. So it's a form of discrimination that reinforces segregation.

ASHLEY MARCHAND ORME Erin, given the focus of our series, I asked specifically if there were steps board members and other business leaders could take to address some of the issues Richard discussed.

RICHARD ROTHSTEIN Business leaders are citizens, they mold public opinion in their community, they're influential, they live in communities so they can take leadership in creating the kind of political pressure that's needed for the policies to redress segregation. I think the main thing that's true of all of us, business leaders or otherwise, is that we have an obligation as American citizens under the constitution to redress this civil rights violation.

ERIN ESSENMACHER I love a good call to action. And Richard has made a compelling case for why it takes all of us—especially those who have the social and political capital to understand and address the consequences of historically discriminatory policies. It reminds of what Howard Ross said about addressing unconscious bias: don’t have to feel guilty that you have it, just work to understand and fix it.

ASHLEY MARCHAND ORME And one way that business leaders can be part of that “fix” is by understanding this context as they are creating hiring and personnel policies.

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ERIN ESSENMACHER And that’s exactly why this has helped set the stage for what we’ll be talking about next episode: the talent pipeline.

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HOPE TAITZ Boards talk about the competition they know. It’s the competition you don’t know…

SKIP SPRIGGS The pipeline’s not very encouraging. And so even though corporations are talking about diversity inclusion, I think that the better conversation is diversity inclusion disaggregated. You have to talk about each affected group, and what kind of progress each group is making.

ASHLEY MARCHAND ORME Oh, that’s going to be a good conversation.

ERIN ESSENMACHER I think so.

ASHLEY MARCHAND ORME Well, for NACD and Future Fluency, I’m Ashley Marchand Orme.

ERIN ESSENMACHER And I’m Erin Essenmacher. Thanks for listening.

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ASHLEY MARCHAND ORME For guest bios, more resources, and a link to this episode’s transcript, check out the show notes or the episode page at www.NACDonline.org/podcast.

ERIN ESSENMACHER Future Fluency is produced and edited by Bruno Falcon with production support from Kerri Sheehan. Special thanks to Jeannette Woods. Future Fluency is a production of National Association of Corporate Directors. For more information on NACD or to become a member, please visit www.NACDonline.org.