Category Archives: Diversity

Building Black Wealth Insights Study – U.S. Bank

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The racial wealth gap constrains the U.S. economy as a whole, resulting in $1-1.5 trillion in lost economic output and a 4-6% drag on America’s GDP.

The racial wealth gap in America is not just a ‘Black problem.’ It’s a problem that effects all Americans and is an ‘all of us’ challenge to remedy, according to U.S. Bank. “Extreme disparities and their persistent harm reach into every American’s future. We can all be energized by the opportunity to provide the tools of financial prosperity for Black families and other historically disadvantaged members of the American fabric because those benefits will be felt throughout our entire country. By working to close the racial wealth gap, we’re creating economic prosperity – more jobs, economic vitality – it’s better for business, for families and for communities. The racial wealth gap must be closed if we are to achieve our full potential as a nation,” says Greg Cunningham, SEVP, Chief Diversity Officer U.S. Bank

Building wealth and achieving financial security is a primary aspiration for most, but many communities, especially the African American community, face distinct systematic challenges in reaching these goals. And, the financial industry has an important role to play in eliminating the barriers and closing the racial wealth gap.

While everyone has a unique definition of financial security, it’s often defined as having peace of mind that their income is enough to cover both expected and unforeseen expenses.

U.S. Bank’s Building Black Wealth Insights Study attempts to understanding the needs, goals and challenges of the Black community. This research highlights many steps the financial industry must pursue to better serve the Black community, according to Gunjan Kedia, Vice Chairman, U.S. Bank Wealth Management and Investment Services.

In the United States, Black households hold significantly less wealth than white households, and over the last several decades, that gap continued to grow.2 While there has been some improvement, the net wealth of the average Black family today is less than 15 percent of that of a white family.1

The overall conclusion is that more work needs to be done to narrow the wealth gap; in fact, a 2018 analysis published by the Federal Reserve Bank of Minneapolis posited, “no progress has been made in reducing income and wealth inequalities between Black and white households over the past 70 years.”3

Also, according to the Q2 2021 Bureau of Labor Statistics report, the median weekly earnings for Black men were $877, or 78.7 percent of the median for white men ($1,115).4

It may come as no surprise, then, that our survey found Black affluent respondents feel they are at a disadvantage compared to rest of the population. Nearly twice as many Black affluent individuals as Hispanic individuals in the survey stated they had been treated differently by the financial services industry due to their race – and nearly four times as many compared to Asian and white individuals.

Despite these barriers, we found that Black affluent individuals are more likely than non-Black (white, Hispanic and Asian) affluent respondents to:

  • Have clearly defined financial goals.
  • Have a strong financial plan that helps guide their decisions.
  • Believe they are better at managing their finances than their parents.
  • Be more comfortable discussing money matters freely with friends and family.

U.S. financial institutions must acknowledge that they played a historical role in creating and sustaining present and persistent gaps in wealth by race and ethnicity. According to the Federal Reserve’s 2019 report, there is an 8:1 gap in wealth between white and Black families, and a 5:1 gap in wealth between white and Hispanic families.1 Financial institutions must not only acknowledges this history, but be willing to leverage the unique skills and expertise of its they possess to build wealth in African American communities and help close those gaps.

U.S. financial institutions must make a commitment to address this persistent racial wealth gap.

To help build wealth, banks and financial institutions must reduce actual and perceived barriers to their services, and redefine how they intend to serve the special needs of racially diverse communities. They must make a commitment to support businesses owned by people of color, help individuals and communities of color advance economically, and enhance career opportunities for employees and prospective employees

It must start by banks and financial institutions listening to and learning from their diverse customers and communities. “We are starting with the Black community, because that is where the wealth gap is greatest. We’ll continue to listen and learn in order to take steps to support lasting change,” explains Mark Jordahl, President U.S. Bank Wealth Management.

Despite the historical and current barriers faced by Black individuals, there are abundant opportunities by banks and financial institutions to cl,ose the wealth gap. And,
there is still much that industry leaders can do to support Black affluent individuals – and Black individuals at all economic levels. A few thought starters, according to U.S. Bank, are:

  • Advisor training – Ensure employees at all levels are trained to recognize their own individual biases and to treat all individuals with fairness – whether they’re greeting someone at a bank counter or considering approval for a loan product.
  • Advisor awareness – Acknowledge that working with a financial advisor may be uncomfortable for someone doing it for the first time or someone who has had a prior negative encounter. Consider how words and actions can impact an experience and commit to training client-facing advisors to enhance the client experience, especially for those from different backgrounds.
  • Diverse advisors – Know that representation matters. Expand hiring and retention efforts to ensure diversity doesn’t just occur at entry-level positions, but through all levels of client-facing roles and leadership.
  • Tailored advice – As with any customer, avoid making assumptions about financial goals and ensure financial planning advice takes into consideration the priorities of the individual or family. Examples may include ensuring current lifestyle needs are met, helping the next generation and leaving a legacy. Make real estatepart of the conversation and ensure fair mortgage lending.

https://www.usbank.com/dam/documents/pdf/wealth-management/perspectives/building-black-wealth.pdf

References:

  1. https://www.usbank.com/dam/documents/pdf/wealth-management/perspectives/building-black-wealth.pdf

Systemic Racism and Unconscious Bias in America

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“I look to a day when people will not be judged by the color of their skin, but by the content of their character.” Reverend Dr. Martin Luther King, Jr., “I have a dream speech”

Over the past centuries, Americans have permitted systemic racism and unconscious bias to affect how an entire race and class of people are mistreated – by the justice system, by the penal system, by the social welfare system, by the education system, by the financial system, and the list goes on – because of the color of their skin, stated Chamath Palihapitiya, founder and CEO of Social Capital. In no reasonable, moral worldview is this acceptable.

The salient point is that equality, for all Americans, is an essential pillar of the US democracy and its capitalist economy…not a discretionary feature that can be arbitrarily turned off and turned on based on the whim of public and private leaders.

Conversely, we, as a nation, can’t fix what we don’t acknowledge and we need to acknowledge that systemic racism and unconscious bias have happened and continues to happen, and begin the hard work of finding solutions.

One solution

“We can’t solve problems by using the same kind of thinking we used when we created them.” Albert Einstein

In the past eighteen months since George Floyd murder at the knee of law enforcement, many private sector companies are embracing their role in creating more equitable workplaces, addressing societal racial inequality and even donating to causes working to end racism. Robert F. Smith, Founder, CEO and Chairman of Vista Capital, argues that if we want to see lasting, meaningful change, the private sector’s efforts to address structural racism, we need the private sector to step up and deploy “permanent capital” — meaning investments and commitments that are scalable and focused on the long-term. 

Specifically, companies should designate 2% of their yearly earnings to closing racial opportunity gaps, diversifying their boards and pension managers, making higher education more affordable, and addressing disparities that they’re uniquely qualified to help solve.

For example, telecommunications companies have a “special responsibility to end connectivity deserts” where one in three Black households have no broadband internet or computer access, according to Smith.

Health care companies can work to address racial health inequities, and software companies can make affordable tools to help Black sole proprietors and small business owners better handle payroll and customer acquisition. 

“It is all too easy to let the urgency of a moment fade away with little to show for it,” Smith said. “Let’s meet this moment. We have the tools, the technologies and the access to capital to do it. All we need is the willpower to see this through.” 

References:

  1. https://www.socialcapital.com/annual-letters/2020
  2. https://www.washingtonpost.com/opinions/2020/07/15/how-companies-can-make-practical-commitments-achieve-economic-justice/

Making the American Dream Available to Every American – CEO Newel Brands

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How can we make the American dream available not just to a select few Americans, but to every American?

African Americans don’t feel fully part of the fabric of America society because systemic racism, discrimination and economic/social injustice have been barriers that have effectively denied people of color their full rights and privileges of American citizenship. Blacks and people of color have had to fight and to demand for decades for their inalienable civil and human rights and privileges, which are accorded freely to the majority, to become full citizens in America.

“As Americans, we need to proactively address aspects of our society in which discrimination and racism are systemic and root them out,” Ravi Saligram, Newel Brand’s President and CEO wrote. “We need to open our hearts and truly believe that every one of us is equal, not succumb to tawdry stereotypes or allow the insidious hand of unconscious bias to seep deep into our souls.”

Saligram wrote in a letter to Newel Brand’s team members entitled “Embracing Our Humanity” that “his hope [is that] this tragedy will galvanize Americans—black, brown, white, Democrat, Independent, Republican, male, female or however one identifies—to come together to acknowledge and reject racism and discrimination of any kind. As Americans, we need to proactively address aspects of our society in which discrimination and racism are systemic and root them out. We need to open our hearts and truly believe that every one of us is equal, not succumb to tawdry stereotypes or allow the insidious hand of unconscious bias to seep deep into our souls.”

Social scientists say crises like COVID-19 and the murder of George Floyd are “focusing events,” events that recalibrates public policy and cultural norms. It often takes a crisis or tragedy to get society to wake up, look in the mirror, face up to uncomfortable truths and find a better way forward.

We require new and innovative thinking and actions in America to solve deep rooted societal problems of systematic racism and economic inequality, to repair the economic devastation caused by the pandemic and to heal and bring spiritual peace (free of the burdens of uncertainty, fear and anxiety) to the country and the world.  

“It would be tragic if the narrative that the general public remembers is property damage and violent acts instead of focusing on the real issues at hand, namely justice, equality and ending systemic discrimination,” Saligram wrote. “We cannot revert to the old normal of ‘Us versus Them’ and perpetuate senseless killings of people of color.”

References:

  1. https://www.marketwatch.com/story/i-can-be-a-three-time-ceo-because-ive-never-been-infected-by-systemic-racism-newell-chief-executive-vows-to-level-the-playing-field-for-black-employees-11603123364
  2. https://www.marketwatch.com/story/back-to-normal-we-can-do-better-here-are-the-best-new-ideas-in-money-11601997311?mod=bniim
  3. https://www.newellbrands.com/embracing-our-humanity
  4. https://www.cgg.org/index.cfm/library/article/id/273/the-fruit-of-spirit-peace.htm

The Economic Cost of Black Inequality in the U.S. | Citigroup

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Racism stymies national economic growth and is bad financially for business

“We’re in the midst of a national reckoning on race, and words are not enough.  We need awareness, education and action that drive results.”  Mark Mason, Chief Financial Officer of Citigroup

Citigroup research found that if the U.S. could instantly end the most severe forms of economic discrimination against African Americans, it could give the economy a $5 trillion boost to gross domestic product (GDP) over the next five years.

Racial inequalities shaved about $16 trillion from U.S. GDP

During the past 20 years, race-based inequalities shaved about $16 trillion from GDP, Citigroup estimated in a CLOSING THE RACIAL INEQUALITY GAPS: The Economic Cost of Black Inequality in the U.S. study. Citigroup said it “studied the costs of lost wages, fewer opportunities for higher education and less access to home and small-business loans” for African Americans.

“What this report underscores is that this tariff is levied on us all and, particularly in the U.S., that cost has a real and tangible impact on our country’s economic output,” Citigroup Vice Chairman Raymond J. McGuire said in the report. “We have a responsibility and an opportunity to confront this longstanding societal ill.”

Furthermore, today in the midst of the COVID-19 pandemic, Black, Latin, and Native Americans have been hospitalized for COVID-19 at a disproportionately high rate, a direct result of what the Centers for Disease Control and Prevention has identified as “long-standing systemic health and social inequities.” Blacks and People of Color are also bearing a disproportionate share of the pandemic’s economic devastation.

Citigroup believes that they, as a major U.S. financial institution, “have a responsibility to address complex societal questions” and “to address current events and to frame them with an economic lens in order to highlight the real costs of longstanding discrimination against minority groups, especially against Black people and particularly in the U.S.”

Four key racial gaps for Blacks

The analysis in the report shows that if four key racial gaps for Blacks —wages, education, housing, and investment — were closed 20 years ago, $16 trillion
could have been added to the U.S. economy. And if the gaps are closed today, $5 trillion can be added to U.S. GDP over the next five years.  The Citi study assessed that:

  • Closing the Black racial wage gap 20 years ago might have provided an additional $2.7 trillion in income available for consumption and investment.
  • Improving access to housing credit might have added an additional 770,000 Black homeowners over the last 20 years, with combined sales and expenditures adding another $218 billion to GDP over that time.
  • Facilitating increased access to higher education (college, graduate, and vocational schools) for Black students might have bolstered lifetime incomes that in aggregate sums to $90 to $113 billion.
  • Providing fair and equitable lending to Black entrepreneurs might have resulted in the creation of an additional $13 trillion in business revenue over the last 20 years. This could have been used for investments in labor, technology, capital equipment, and structures and 6.1 million jobs might have been created per year.

Closing the wage, housing, education, and business investment racial gaps can help narrow the wealth gap, which is significant for facilitating homeownership, business, and job creation, plus establishing a pipeline for intergenerational wealth accumulation.

It’s hoped that Citigroup’s study brings perspective that collectively Americans can find substantive and sustainable opportunities to address the racial inequality gaps identified in the research.

References:

  1. https://www.americanbanker.com/articles/citigroup-vows-to-become-antiracist-review-internal-policies‘
  2. https://ir.citi.com/NvIUklHPilz14Hwd3oxqZBLMn1_XPqo5FrxsZD0x6hhil84ZxaxEuJUWmak51UHvYk75VKeHCMI%3D

Wells Fargo’s CEO believes there is a Limited Pool of Black Executive Talent

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“The more things change, the more they stay the same.”  Alphonse Karr

What a classic example demonstrated by a major U.S. financial institution of the quote “the more things change, the more they stay the same”.  The saying is a reference to situations where there appears to be a meaningful change, but many underlying fundamentals are still the same.

Recently, Charlie Scharf, Wells Fargo’s CEO, wrote in a June memo to employees, “While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of Black to recruit from,” according to Reuters. Scharf also repeated this claim in a Zoom meeting over the summer, exasperating Black employees.

According to the Washington Post, less than 5 percent of those holding senior executive positions at Wells Fargo in 2018, a year before Scharf became chief executive officer, were Black.

Committing to diversity and inclusion shouldn’t just be a marketing ploy; it should just be who you are.

Like Wells Fargo, many corporations have released marketing statements committing to change and to the elimination of structural racism and racial inequality. But, they have not released comprehensive data on the racial diversity of their employees and in leadership positions to the public. Regrettably, we must assume that many CEOs harbor similar shortsighted beliefs, and they continue to embrace the excuse that there exist a paucity of Black executive talent in America.

“We value and promote diversity and inclusion in every aspect of our business and at every level of our organization” Wells Fargo’s Diversity and Inclusion Policy

Although Scharf apologized profusely for his bonehead remarks and commented that his remarks reflected his “own unconscious bias”, we must asks whether his beliefs, which one must assume is also the company’s mindset, have actually changed.

“The point isn’t to get people to accept that they have biases, but to get them to see [for themselves] that those biases have negative consequences for others.” — Theresa McHenry, HR Director at Microsoft UK

“Wells Fargo is badly broken in multiple ways and that starts at the top,” Senator Elizabeth Warren commented. “Its CEO has an unfathomable blind spot about how and why this giant bank fails to hire, promote, and fairly compensate Black talent.”

Consequently, it’s difficult to argue against Senator Warren’s point. Since, the primary benefit of hiring from a racially and gender diverse talent pool is that it immediately expands the depth of the pool and increases your chances of hiring the best executive talent.

References:

  1. https://www.businessinsider.com/aoc-sherrod-brown-criticize-wells-fargo-ceo-scharf-black-talent-2020-9
  2. https://www.msn.com/en-us/news/politics/wells-fargo-ceo-issues-apology-after-saying-there-was-a-limited-pool-of-black-talent/ar-BB19mize?ocid=uxbndlbing

Corporate Boardroom Equality and Inclusion

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America needs better inclusion and diversity in its corporate boardroom.

Addressing racial and gender disparity in the corporate boardroom has become a marketing priority in the past several months and less of a firm commitment to action for boardroom chairmen and chief executive officers, especially amid the global protests against racial injustice and inequality. Effectively, the numbers suggest that much work is needed to level the playing field.

Yet, many corporations claim to support diversity and inclusion, but the numbers simply do not add up. Recently, former AT&T CEO Randall Stephenson spoke passionately on CNBC about the lack of inclusion and equality within corporate American. Yet, the company he ran for 13 years and its board of directors he currently leads as executive chairman reflects that lack of inclusion with only one person of color board member. Furthermore, instead of walking the talk, his appointed successor at AT&T was a non-diverse male.

“A board that better reflects all the communities it serves is in the interest of all stakeholders.” Brad Gerstner, founder and CEO of Altimeter Capital and a founding member of The Board Challenge.

Black leaders are underrepresented in America’s public and private boardrooms. Approximately 66% of Fortune 500 company board members are white men and 18% of members are white women, while only 9% of members are Black men and women, according to a report by the Alliance for Board Diversity and Deloitte.

Research by Black Enterprise found that 187 S&P 500 companies did not have a Black board member in 2019, a 2-percentage point improvement from the prior year. Furthermore, recent data for Fortune 500 boards indicates that white men hold 66% of board seats and white women make up 18%, but only 9% of board seats are held by African Americans (men and women), according to online talent marketplace theBoardlist, which is a founding member of The Board Challenge.

The lack of inclusion and ‘doing the right thing’ is not going to passively happen. Leaders and companies must step up to take courageous action to advance equality and inclusion. For example, the moment a S&P 500 company drops or refuses to engage a vendor or contractor because they lack gender and racial diversity will prove transformative in our society.

Additionally, every U.S. company is encouraged to take The Board Challenge which represent a pledge seeking “to enhance representation in the boardroom by asking companies to retain or add a Black director to their board”. The Board Challenge is asking all boards without a Black director to add a Black director in the next 12 months.

“Diversity does matter when it comes to results.” Arnold Donald, President and CEO of Carnival Corp.

True and full racial representation at the board level is in the best interest of companies, employees, customers and communities and helps to advance and support a more equitable society. According to recent research, people of color in leadership position means better performance and returns:

  • Diverse boards of directors are 43% more likely than non-diverse boards to achieve financial performance above the national industry median for companies in the top quartile versus bottom quartile, according to McKinsey & Company’s Delivering Through Diversity 2018 report.
  • More than nine in 10 directors (94%) agree that board diversity brings unique perspectives to the boardroom, according to PwC’s 2019 Annual Corporate Directors Survey. Additionally, 87% said board diversity enhances board performance and 76% said it enhances company performance.

“One objection we hear is whether companies can find the kind of diverse board talent they are looking for. It is 2020 – it is not a pipeline problem, it is a perspective problem,” said Guy Primus, CEO of Valence and co-founder of The Board Challenge.

References:

  1. https://www.nasdaq.com/articles/nasdaq-continues-commitment-to-equality-by-becoming-a-signatory-of-the-board-challenge
  2. https://www.prnewswire.com/news-releases/the-board-challenge-launches-pledge-for-us-boards-of-directors-to-add-a-black-director-within-one-year-301126074.html
  3. https://www.blackenterprise.com/power-in-the-boardroom-corporate-governance/