In the past, many programs created to lift Americans out of economic despair left Black Americans behind. For example, Black American enrollment in the 1930s Civilian Conservation Corps (CCC), a New Deal jobless program, was capped at 10 percent. This quota reflected the racial profile of the national population at the time but ignored the fact that Black Americans faced disproportionately worse economic situations than whites. CCC camps in some Southern states outright denied Black Americans, arguing that they were needed to “tend fields”.9 As a consequence, Black Americans were excluded from most of the major provisions of New Deal policy that stabilized white American communities.
To combat the legacy of unemployment that has haunted Black Americans, the Biden-Harris administration must implement transformative Black employment programs.
- Employing the American Jobs Plan, The Biden-Harris administration must institute a new $10 billion CCC program focused on the Black Belt and Great Migration Enclaves, as specified in the ADOS Matrix, which explicitly targets Black American residents and assigns them to initiatives under the American Jobs Plan. Implementing unemployment “strike teams” that recruit and solicit enrollment of Black Americans in these programs would ensure race-neutral policy does not result in exclusion akin to the original New Deal programs. Participating employers should receive tax credit for employing workers who reside in communities which have been excluded or harmed by policy.
- Establish a federal jobs program that imposes a living wage that is based on location and is tied to inflation. Applicants should be targeted using the ADOS Matrix.
- In California, over 4,400 prisoners helped the state battle wildfires for approximately $2 per day.10 To end the legacy of slave labor in the U.S, a living wage based on the location of the conviction must be imposed for prison labor programs.
- For at least a century, the federal government has hired Black Americans at higher rates than the private sector.11 Today, nearly 1 in 5 Black workers are employed in the public sector.11 These jobs provide income stability and economic security in retirement.12 The Biden-Harris administration must increase the number of Black workers in the public sector by creating an employment program that targets recruits using the ADOS Matrix.
Banking & Capital
Access to capital is important for the economic growth and development of any community. In the past, that access was denied to Black Americans through explicit discriminatory practices and is now sustained through colorblindness and race-neutral policy enforcement.
In 1865, Congress chartered The Freedman’s Savings and Trust to administer financial programs to the formerly enslaved after the Civil War. The goal of the bank was to, as Frederick Douglass put it, “Foster lessons of sobriety, wisdom, and economy, and to show them how to rise in the world.” The bank was overseen by white members of Congress but was nevertheless festered with corruption and risky investments made with depositor’s savings. Ultimately, the bank failed in 1874 and was swallowed by the forces that undermined Reconstruction. Remaining were 61,144 depositors with losses of nearly $3 million.13 The newly freed had been betrayed by white, greedy bankers and failed by congressional oversight.
Negative outcomes for Black Americans in banking have displayed an unwavering endurance. A Northwestern University study found that discrimination and racial disparities in the mortgage market have remained unchanged since the late 1970’s.14 According to the Board of Governors Report on Economic Well-Being, 46% of Black Americans are underbanked or unbanked. When applying for loans, Black Americans are rejected at higher rates than others or charged higher interest rates when approved, regardless of credit and income.15 In 2016, 28.4% of black firms reported that their profits were negatively impacted due to lack of access to capital, compared to only 10.1% of white firms.16 In addition, 22.6% of black firms reported that the cost of capital had negative impacts on their profits, compared to 10.6% of white firms.16
The Community Reinvestment Act (CRA) was introduced in 1977, in the wake of civil rights legislation secured by Black Americans, to ensure Black Americans were afforded access to capital and to correct market failures experienced during Jim Crow. As a means to enforce the CRA, regulators audit banking institutions and issue CRA credits, or points, when banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and services that would benefit low & moderate income (LMI) individuals within a designated assessment area. Bank auditors evaluate loans by the number, amount, and distribution across income and geographic classifications—race is excluded. Using the same factors, auditors also issue credits based on how LMI suppliers are included in supporting a bank’s business operations. These credits are then used to issue each bank a performance rating, which are taken into consideration when banks apply for charters, branches, mergers, and acquisitions, etc. This race-neutral policy was originally intended to penalize discriminatory practices and encourage the inclusion of Black Americans in the banking system. Yet, Black Americans remain undercapitalized, face discrimination, and the racial wealth gap persists.17
Colorblind policy making has sustained or expanded disparities created by racism. President Lyndon B. Johnson’s remarks on June 4, 1965, at Howard University’s commencement embody the attitude that should shape policy intended to uplift and heal Black Americans:
“You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say, ‘You are free to compete with all the others,’ and still justly believe that you have been completely fair. Thus, it is not enough just to open the gates of opportunity. All our citizens must have the ability to walk through those gates.” 18
According to the signer of The Civil Rights Act of 1964 and Voting Rights Act of 1965, Lyndon B. Johnson, America has not been fair to Black Americans, more specifically ADOS. In order to fulfill these rights, policy makers must explicitly prioritize race and lineage by doing the following:
- The Biden-Harris administration must refocus the CRA by enforcing policy that explicitly details race & ethnicity and directs financial institutions to invest in Black American wealth creation. Additionally, the CRA should annually audit and mandate the access that Black American suppliers have to depository institutions. Lastly, banks which do not meet regulatory lending standards should be met with sanctions that include fines and loss of FDIC insurance.
- The Biden-Harris administration must direct Congress to establish a $1 billion pilot regional commission, with the power to cultivate economic development in the Black Belt and Great Migration Enclaves, which explicitly targets Black American workers and suppliers. The commission will support economic growth by providing the consulting, investment, and workforce development that rural and urban Black households need. This commission should receive annual funding and be a part of the mandatory spending budget. In addition, a member of ADOS Advocacy Foundation is to be appointed to the commission. This will ensure that the commission’s goals and objectives remain in line with the mission of uplifting ADOS.
- The Federal Reserve Bank of Minneapolis’ Center for Indian Country Development serves as an example of the kind of targeted research that can be produced by a federally funded center dedicated to ADOS economic research. The Center for Indian Country Development produces academic research for reservations, but also hosts educational events that inform the public on the history and current needs of Native Americans. The Biden-Harris administration must direct the Federal Reserve Board of Governors to establish an ADOS Center for Policy Development in Washington, D.C. Establishing a research center for ADOS through the Federal Reserve System can arm state & local advocacy with disaggregated reports focused on ADOS issues. The research center must also create an outlet for Black economists who have faced barriers in the economics profession.19