Reversing America’s widening racial wealth gap: Investing in Black and other minority communities helps everyone

It’s long past time we talk about Bed-Stuy. The birthplace of icons from Jay Z to Shirley Chisolm, Bed-Stuy is the nation’s largest Black community and among our cradles of art and creativity. However, the future of a neighborhood that has for so long offered refuge and hope to Black people is now at risk.

Central Brooklyn is experiencing a mass exodus of Black New Yorkers. Over the past decade, Bed-Stuy has lost more than 22,000 Black residents while gaining 30,000 white residents. As the share of Black people in Bed-Stuy has declined by 25%, some corners of our community have seen upwards of a 445% increase in white residents. Overall, New York’s Black population has declined by 200,000 over the past two decades.

Across the country, Black families are being squeezed just to afford basic necessities and are running out of communities to thrive in. There is a “New Great Migration” of Black Americans leaving cities like Chicago and Los Angeles in favor of more affordable Southern cities. This demographic shift is yet another byproduct of a national crisis that has festered unabated for generations: the racial wealth gap.

For decades, Black Americans have been deprived of the full value of their labor, barred from pursuing a range of professions and educational opportunities; and when they have managed to acquire assets, routinely had those assets devalued, confiscated and destroyed. As a result, Black households in the U.S. have a median net worth of $24,000 compared to $188,000 for white households, resulting in an average gap of $164,000 per family. As white households gain exponential wealth compared to stagnant Black wealth, the gap continually widens.

In Brooklyn alone, the racial wealth gap is between $40 and $50 billion dollars.

A combination of public policy and private enterprise contributed to the creation of the wealth gap. Coordinated action by both is an equally critical part of the solution. Bedford Stuyvesant Restoration Corp., the nation’s first public-private community development nonprofit, has focused on improving economic mobility for local residents since it was created in 1967. Today we once again stand at the forefront of addressing the challenges facing our communities as we pioneer a new national model: reimagining our headquarters as a global hub dedicated to disrupting and narrowing the racial wealth gap.

We envision a world-class campus that attracts the resources of both the public and private sectors to concentrate on solutions for this staggering challenge. With an emphasis on attracting partners in the innovation economy—including sectors like technology, engineering, green energy, and the arts — investments in such a model will deliver high-paying jobs for residents in fields underrepresented by Black people.

Net worth, not wages, is the best indicator of economic equity. It is a measure of how long a household can withstand increased expenses or reduced income and is a resource families can tap into to pursue financial opportunities. Restoration’s wraparound services will help residents improve their overall financial health and build net worth.

As one nonprofit organization, we cannot close the racial wealth gap on our own. Bold government policies and structural change across the public and private sectors must complement and scale models like ours. Albany should deliver on Gov. Hochul’s ambitious housing proposal, and that is just one critical part of the solution. As rents and home prices skyrocket, typically only higher-income residents can take advantage of new housing. Elected officials must go all-in on policies that encourage asset-building like the Baby Bond Pilot in NYC and President Biden’s student-debt cancellation plan, which will disproportionately benefit households of color.

Today cities that are increasingly unaffordable for Black families have an opportunity to intentionally create physical, programmatic and policy ecosystems — much like the model we are proposing for Central Brooklyn — aimed at helping communities not only access good jobs but build assets and net worth.

Closing the racial wealth gap is good for the entire economy, not just for Black Americans. A study published by McKinsey & Company estimates that closing the racial wealth gap would add upwards of $1.5 trillion to the national GDP. That’s lost money that could go into tangible investments such as homes, consumer goods, and the stock market.

Black communities like Bed-Stuy are on the verge of becoming irreversibly changed. Without immediate action, the median wealth of Black families is expected to fall to zero by 2053. Such a decline would be a major indictment of our society and its complicity toward the destruction of Black livelihoods. Now is the time for leaders of the nonprofit, private, and public sectors to come together to tackle this crisis head-on. Our people can’t wait.

Pinnock is president & CEO of Bedford Stuyvesant Restoration Corp.