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KENAN INSIGHTS Black Economic Futures July 29, 2020 | kenaninstitute.unc.edu/insights

Given the declining power of education to improve economic can-American economic success and break down Black social outcomes for African-Americans, persistent racial wealth gaps structures. Across the South, the de facto segregation of the and the disproportionate health and economic impacts of the antebellum Reconstruction years was not sufficiently punitive COVID-19 pandemic, the economic outlook for African-Ameri- for Southern white power structures. Black communities were cans does not look promising. constantly under threat from vigilante violence as well as from state and local government intervention—often because of the But is it inevitable that COVID-19 will further entrench the dev- success of their local economies. Black economic and political astating economic trends of the past 30 years? Or will the kill- power was seen as a threat by Southern whites.1 ings of George Floyd, Ahmaud Arbery, Breonna Taylor, Elijah Even desegregation and urban McClain and so many others Is it inevitable that COVID-19 will renewal, which, in theory, should force a fundamental reckoning further entrench the devastating have benefitted Black commu- of American apartheid? If this nities, instead became oppor- economic trends of the past 30 years? moment in history is the har- tunities to shutter Black schools binger of fundamental change, and institutions, erode the Black then Black activists, business professional class, disadvantage leaders, academics and policymakers all have key roles to play Black businesses and destroy community infrastructure. For in re-envisioning Black economic futures. example, the construction of Highway 147 in Durham, North Carolina during the 1960s devastated the Hayti neighborhood, Understanding the Radicalized Economic displacing 500 African-American-owned businesses.2 Similarly, History of the U.S. Is Critical Tulsa, Oklahoma’s prosperous Black Wall Street, which was rebuilt after the devastation of a 1921 race massacre, was ulti- To generate a radically different economic future for Black mately destroyed in 1970 by a federally-funded highway project. communities, businesses, economies and people, some under- standing of the economic history of the United States is neces- So what can be done to repair the long-standing damage of sary. Since the issuance of the Emancipation Proclamation, a racial economic inequality and chart a fundamentally different common feature of government-sponsored segregation and 1 See Hammond et al. (2019); Solomon et al. (2019) desegregation has been an explicit intent to disadvantage Afri- 2 See Ehrsam (2010)

Median Income by Educational Attainment and Race Median Family Net Worth Black Economic Futures | kenaninstitute.unc.edu/insights

Firm Ownership by Race and Employee Size

0 to 9 10 to 99 100 to 499 500+ Employees Employees Employees Employees Total American Indian and Alaska 0.37% 0.08% 0.00% 0.00% 0.45% Native Asian 8.24% 1.85% 0.06% 0.94% 10.15% Black or African American 1.86% 0.38% 0.03% 0.00% 2.26% Native Hawaiian and Other 0.10% 0.02% 0.00% 0.00% 0.13% Pacific Islander White 69.07% 16.87% 1.08% 0.14% 87.02%

path for the United States? Since March 2020, a number of di- by Booker T. Washington as “the counties where the black peo- verse organizations and individuals - from activists to prominent ple outnumber the white,” that stretches from southern Virginia Black scholars to public corporations - have advocated for both through eastern North Carolina and across the Deep South.3 policy prescriptions and market-based solutions to address In his essay, Johnson outlines a comprehensive approach to America’s racial divide from all angles. “inclusive and equitable development in the region,” including increased opportunities for Black-owned businesses through Corporations Respond to Calls for Racial diversified supply chains and more financial tools for commu- Equality nity development. A policy designed to address generational racial wealth disparities is championed by Ohio State University Some major firms have gone well beyond declarations that Professor Darrick Hamilton. Hamilton suggests the implemen- “Black Lives Matter” by announcing plans to use their busi- tation of “baby bonds,” or a race-neutral, tiered program by the ness-to-business relationships to create new opportunities federal government that would provide investment funds to all for Black-owned businesses. For example, private equity firm children born in the U.S.4 SoftBank announced a new $100 million Opportunity Fund for investment in companies run by people of color. Responding Reparations for Descendants of Slaves to Aurora James’ 15 Percent Pledge, cosmetics retailer Sepho- Since the abolishment of slavery, there have been successive ra has dedicated 15 percent of its inventory to Black-owned calls for Black reparations (e.g., William Tecumseh Sherman, in businesses. Vista Equity Partners CEO Robert F. Smith has chal- Official Records of the American Civil War5, Series 1, Volume 47, lenged large corporations to invest two percent of their annual Part 2, 60-62;)6 The Commission to Study and Develop Repa- net income in Black businesses, and the NC IDEA Foundation ration Proposals for African-Americans Act, reintroduced into has committed to increasing startup funding for Black entre- Congress every year since 1989, is receiving renewed attention.7 preneurs. Other corporations and foundations, from Nike to Proponents of reparations argue that the U.S. government the Ford Foundation, have also made pledges, although not all owes compensation to the descendants of enslaved Africans explicitly target economic or business parity. for centuries of free labor. Contemporary scholars have extend- ed the argument to include the economic impact of decades Bold Solutions Re-emerge of racially discriminatory policies and their knock-on effects, such as the Homestead Act, which excluded African-Americans America’s historical attempts to disenfranchise African-Amer- from acquiring free land granted to more than a million white icans have resulted in the disproportionate health, economic families.8 Jim Crow laws suppressed African-American wages, and policing impacts being experienced today by many Black home values and economic activity; “redlining” by the Federal communities and individuals. But it is also from this context Housing Administration intentionally prevented Blacks from that some of the boldest ideas for the future have gained new momentum. 3 Johnson et al. (2020), Booker (1901) 4 Lowrey (2020) The Black Belt and Baby Bonds 5 Official Records of the American Civil War Series 1, Volume 47, UNC Kenan-Flagler Business School professor Jim Johnson Part 2, 60-62 6 See Coates (2014) recently proposed a place-based federal policy solution that fo- 7 See Martin (2020) cuses on the Black Belt in the American South, defined in 1900 8 See Merritt (2016) and Frymer (2017)

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owning homes.9 And de facto implementation of the G.I. Bill The desire for a collective economy has persisted within Black denied many African-Americans access to a college education.10 America despite decades of state and federal intervention. Nearly all of these examples are still affecting Black Americans However, the social movement for Black justice has galvanized today. Scholars have provided detailed enumerations of the interest in efforts among African-Americans to “buy Black,” debt and plans for how national reparations might be executed “bank Black,” and recycle wealth within African-American (e.g., direct payments, baby bonds, college tuition, commercial communities. While the total value of Black-owned firms is grants, etc.). Most recently, Duke professor William “Sandy” Dar- small and Black firms are being disproportionately devastated ity makes a case for direct payments as the primary mechanism by COVID-19,14 they are receiving renewed interest.15 Scholars to distribute total reparations on the order of $10 trillion.11 The Julian Agyeman and Kofi Boone also suggest that “an expanded call for reparations gained popular currency during the 2019 concept of the ‘Black commons’—based on shared economic, presidential primary season, and they continue to pervade cultural and digital resources as well as land—could act as one national discussions (e.g., Asheville, NC).12 means of redress…encouraging economic development and creating communal wealth.”16 Black aspirations for a collective economy At the opposite end of the ideological spectrum from repara- Whatever approaches are taken, this moment in history affords tions are movements to build a collective Black economy that an unprecedented opportunity to take stock of racial economic eschews federal intervention. Most historic Black towns and disparities in the U.S and work together to re-envision Black settlements founded by formerly enslaved people were rooted economic futures. in the dream of a life and economy safe from government tyranny and vigilante violence. These places, as well as historic Black commercial districts, also proved successful in creating wealth and a Black middle class.13

9 See Aaronson et al. (2019) 14 See Fairlie (2020) 10 See Katznelson (2006) 15 .eg., #BuyBlack30Challenge, #BlackOutDay2020, Beyonce’s new 11 See Darity & Mullen (2020) collaboration with BlackOwnedEverything.co; https://theundefeated. 12 See Burgess, (2020) com/features/buy-black-movement-gains-international-attention/ 13 See Slocum (2019) and Our Mission 16 See Agyeman & Boone (2020)

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Mark Little Nikitra Bailey, Executive Vice Race, Old Age Vulnerabilities A Strategic Response to the UNC Kenan Institute President, Center for Responsible Coronavirus Pandemic for the [email protected] Lending Find More Research at African American Working Poor 919.962.1041 kenaninstitute.unc.edu/research Ajenai Clemmons, Political Why America Needs High-Skilled Science Ph.D. Candidate, Duke Immigrants University The COVID-19 Pandemic and Majestic Lane, Deputy Chief of Small Business Employment Staff and Chief Equity Officer, City of Pittsburgh Institute Insights: Enhancing the Lives of Black Communities Karla Slocum, Director, Institute of African American Research; Can I Ever Retire?: The Effects of Thomas Willis Lambeth Distin- COVID-19 on Financial Security guished Chair in Public Policy, UNC College of Arts and More Kenan Insights at Sciences kenaninstitute.unc.edu/insights

REFERENCES

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