Charlotte’s racial wealth gap is wide. Approaches to narrow it are varied
It’s been almost 10 years since a study from Harvard researcher Raj Chetty shocked Charlotte by naming our region 50th out of 50 when it comes to economic mobility. That means a child born poor here was less likely to rise out of poverty to the top of the income ladder than anywhere else in the country.
With Chetty coming to speak at UNC Charlotte next week, we’re taking a look at some of the issues around economic mobility that Charlotte’s still confronting — and what solutions might show promise. WFAE is partnering with UNC Charlotte on the event and will livestream Chetty’s talk Tuesday, Nov. 14, starting at 6:15 p.m.
Here’s a statistic that drives home the result of generations of discrimination: The median net worth of white households in the U.S. is about 10 times that of Black households and 8 times of Latino households.
That’s from a recent UNC Charlotte study, which points out Charlotte’s gap is similar.
“It’s felt most acutely in some of these neighborhoods and households that have experienced this ongoing displacement and disruption to where they live, to what they've developed to their social network, social fabrics,” the study’s co-author Sydney Idzikowski said.
For example, families whose homes in Brooklyn, a thriving Black neighborhood in uptown, were demolished in the 1960s as part of urban renewal.
Many Black families were locked out of homeownership, the biggest source of wealth-building for most American families. The legacy of redlining starting in the 1930s is apparent today in many of the low-income neighborhoods bordering uptown. Appraisers for the federal government marked all Black neighborhoods in Charlotte as “hazardous” for loans, despite their prosperity.
The racial wealth gap isn’t just a historical or present-day problem. It’s a challenge for future generations’ economic mobility, because how much wealth you have — and can pass down — directly impacts your children's, even grandchildren’s, chances of prosperity.
Is Charlotte’s racial wealth gap widening or narrowing now?
“It may be not progressing as fast as it needs to, but that does take time,” said Harvey Gantt who was elected Charlotte’s first Black mayor in 1983. “On the scale of jobs coming in and the ability to fill those jobs with a diverse workforce, I think that we're getting better, much better than it was 20 years ago, 15 years, maybe even 10 years ago."
Fifteen years ago, the U.S. was in the midst of the Great Recession. Charlotte, as a banking center, felt that intensely. Black and Latino families took a big hit, and they didn’t recover as quickly as white families. But during the COVID-19 pandemic, national data show the racial wealth gap actually decreased slightly.
“Many homeowners, particularly Black and brown people, who now were able to take advantage of stimulus funds to pay down debt, and that allowed them to see their home equity appreciate in value,” said Alphonso Ogbuehi, dean of Johnson C. Smith University’s School of Business.
The average wealth of Black and Latino households stands at about $300,000 now and white households at nearly $1.3 million, according to the Federal Reserve.
Recent local data on household wealth is hard to come by. But from J’Tanya Adams' perspective as the head of Historic West End Partners, the racial wealth gap has widened in recent years, due to inflation, a housing market that has changed drastically and salaries that haven’t kept up.
Property values have risen most steeply in Charlotte’s rapidly changing, low-income neighborhoods. Rising property values may increase homeowners' equity, but it also drives up rents and puts homeownership out of the reach of many. The homeownership rate in Mecklenburg County has steadily declined since 2008.
Adams thinks back to her childhood, growing up in Brookhill Village off South Tryon where neighbors supported each other.
“What a lot of families and communities and cultures are going to have to learn to do is to work together like they did in the '60s and before,” said Adams.
Efforts to close Charlotte’s racial wealth gap
The Chetty study in 2014 fueled a push to increase economic mobility and narrow the racial wealth gap. Protests in the wake of the police killings of Keith Scott and George Floyd in 2016 and 2020 added to the momentum. The Mayor’s Racial Equity Initiative, a $250 million public-private investment to remove barriers to opportunity, was born from that.
Malcomb Coley, the initiative’s co-chair and Charlotte managing partner at the accounting firm EY, says it’s going to take a communitywide effort to begin to narrow Charlotte’s racial wealth gap in part by helping people grow and start businesses.
“I tell people all the time the best form of capital is revenues,” said Coley. “I think just creating companies in those marginalized communities at market rate and also providing them the mentorship that they need to grow smaller businesses to bigger businesses.”
Banks are funding grants, like the $20 million Beyond Open program, and training for small minority-owned businesses. The city has invested several million in home down-payment assistance through the city’s House Charlotte program. Those types of investments have been shown to make a difference. But Adams points out they had a bigger impact prior to interest rates and housing prices going up.
Mayor Vi Lyles says there are a lot of different approaches to try to close the gap — especially along what the city has designated Corridors of Opportunity, six low-income areas with large populations of people of color.
“We're really taking a solid look at what would make a difference there. So when we talk about how do we lend money, and how do we create opportunity, and how do we make and ensure that people are successful, I think we're hitting on all of those,” said Lyles.
Communities shaping their own solutions
Communities dealing firsthand with the impacts of racism are coming up with their own solutions — and attracting outside dollars, both public and private, to help craft and fund their ideas.
“We're developing an economic mobility strategy with our cooperative food market, which is focused on creating job opportunities in the corridor and access to fresh produce,” said Sharika Comfort, the director of the West Boulevard Neighborhood Coalition.
Residents can purchase shares that may someday yield dividends. The city and county are contributing nearly $5 million to help build the market.
Since years of discrimination formed the racial wealth gap, Comfort says, it’s going to take many approaches — and many years — to help narrow it.
Other proposals advocates point to that might help close the racial wealth gap include:
- Baby Bonds: Savings accounts established at birth that can grow, with federal guarantees, and can be seeded with money from local, state or the federal government.
- Employee Ownership Conversions: Owners about to retire can transition businesses to worker-owned cooperatives or employee stock ownership plans to allow employees to build assets and prevent the closure of businesses.
- Universal Retirement Accounts: Federally-regulated retirement plans that automatically enroll workers with an option to opt out.
- Postal Banking: Post offices would offer banking services, including loans at affordable rates, to provide access to neighborhoods that have few or no financial services.