The bridge to racial equity starts with financial health

Over the past year, I’ve had many conversations with my team about Black history. We talked about the painful truth that we still need to say that Black Lives Matter, even amid a global pandemic.

But I make it a point to open many of these conversations by citing both the injustice we’ve endured and the beauty, contributions and resiliency of our community. We shared stories of the giants who came before us – stories that inspire faith in humanity, faith in our future.

Black Americans have and will continue to play a vital role in building our country.

As someone who’s worked in financial services my whole career, I know how important financial security is for household well-being. That’s why we must get more people the tools and resources they need to manage their financial lives and get on a road to financial health and resilience.

First, though, we must take an unvarnished look at the stark and persistent disparities in wealth for Black Americans today, created largely by centuries of systemic racism. And we must have courageous conversations about being Black in America.

That requires moving beyond the ingrained perception that talking about money and race is taboo, and that financial hardship results simply from bad personal decisions. It also requires moving beyond a culture with the prevailing ideology that success comes simply from individual responsibility.

Such harmful misconceptions and stereotypes have far-reaching effects. 

As Dr. Martin Luther King Jr. once said, “It’s all right to tell a man to lift himself up by his own bootstraps, but it is a cruel jest to say to a bootless man that he ought to lift himself by his own bootstraps.”

The truth is that the American Dream – the promise of freedom, opportunity and prosperity – has not materialized for many Black Americans. Dr. King’s vision for economic justice remains unfulfilled. 

Let me share a few statistics that won’t surprise you, though it’s sobering to see them all at once:

•  Black people hold $6 of assets for every $100 owned by white people.
• The median white family has 41 times more wealth than the median Black family.
• Black women have the greatest disparity in pay – earning 58 cents for every $1 of take-home pay of a white male.
• More than 73% of white U.S. families own their homes, compared to 44% for black families, according to the U.S. Census.
• Even before the pandemic, the Black poverty rate in the U.S. was 22% – more than double the white poverty rate of 9%.

And the pandemic and economic downturn have made these numbers even worse.

Having less costs more – especially for those trying to invest in their own education. Black graduates with bachelor and associate degree carry 13% and 26% more student debt than their white peers. They also get paid less, earning 27% and 14% less for the same degrees.

These challenges make these Black graduates twice as likely to default on their student loans as their white peers. That affects their credit scores. Which affects the interest rates they pay when they borrow. Which makes it harder for them to save – for emergencies, their retirement and their children’s education.

Having less also means being disconnected from the market and financial services, which also exacerbates the racial wealth gap. Not surprisingly, many also don’t see banks as any part of the solution for them.

For some, the deep distrust in the financial system dates back to the collapse of the Freedman’s Bank in 1874, when the life savings of 60,000 customers – $3 million – vanished without a trace. But it’s more current, too. Many Black Americas don’t see bank branches in their neighborhoods. Nor do they see federal mortgages that could help them buy a home.

What it boils down to is this: financial health is a human right. Yet it has been out of reach for far too many people, particularly Black Americans. There is no easy solution, but there is plenty of evidence of what works.

We need to be intentional about driving outcomes. Our path forward must focus on helping Black Americans chart stronger pathways toward economic success and empowerment. This includes giving people the tools and resources to manage their financial lives and get on a road to financial health and resilience. It means meeting people where they are – breaking down financial health in real terms, helping them understand what good credit looks like, how to achieve and maintain it.

We need to increase access to homeownership, a critical step to building wealth. We need to unleash the power of Black entrepreneurs as drivers of economic opportunity by breaking barriers to credit and capital, and investing in CDFIs, which play a critical role in serving Black-owned businesses.

Addressing stark disparities in income and wealth doesn’t just benefit Black families and marginalized populations. It benefits our neighborhoods and our entire economy. It is our collective responsibility to address this challenge and break down structural barriers to opportunity.

We have a long journey ahead. Will you join me?