Reimagining the Economy

Why eliminating racial inequities is key for the post-COVID-19 economy

David Brancaccio and Candace Manriquez Wrenn Jun 4, 2020
Heard on: Marketplace Morning Report
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"There's built-in inequality in the systems that we use to distribute resources to build wealth," Andre M. Perry says. Jason Redmond/AFP via Getty Images
Reimagining the Economy

Why eliminating racial inequities is key for the post-COVID-19 economy

David Brancaccio and Candace Manriquez Wrenn Jun 4, 2020
"There's built-in inequality in the systems that we use to distribute resources to build wealth," Andre M. Perry says. Jason Redmond/AFP via Getty Images
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Racial economic disparities are front and center in the United States right now, as protesters take to the streets to call for equal justice for Black people, and the coronavirus continues to kill disproportionate numbers of people who are Black and brown.

The “Marketplace Morning Report” has been talking to experts on how we should “reimagine” the economy after COVID-19. Narrowing racial economic disparities will be imperative going forward, says Andre M. Perry, a fellow in the Metropolitan Policy Program at Brookings Institution and author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.”

Perry spoke with “Marketplace Morning Report” host David Brancaccio. The following is an edited transcript of their conversation.

David Brancaccio: Even before anyone knew this term COVID-19, and despite what the White House had emphasized was the best job market for Black people on record, there were enormous disparities.

Andre M. Perry: Oh, man. The best job market in U.S. history for Blacks meant that Blacks — the unemployment rates were twice that of the white rate. Homeownership has plummeted to levels that were recorded before the Fair Housing Act was implemented in the 1960s. Going back to normal would be disastrous for Black Americans. And we are certainly not in a position to wave any victory flags. And, after COVID, which certainly exposed the structural racism undergirding these economic outcomes, it shows that racism is a big problem, a drag in the market that limits the economic mobility of Black people.

Brancaccio: And with COVID you see it play out. I mean, the government says, as one of its ways to stimulate the economy in the face of the virus, go down to your local bank and get a loan that will be funded by the [Small Business Administration], but these old patterns of discrimination in lending reared their ugly head.

Perry: Yeah. When they announced that the Treasury would be distributing funds to banks, my first reaction was like, “No, don’t they realize the negative relationship mainstream banks have with Black folk?” And we should not be surprised that 95% of Black business owners did not receive the Payroll Protection loan that was in the the CARES Act. So we don’t necessarily need to see “white-only” signs in a policy to know they exist. That’s just a reflection that there’s built-in inequality in the systems that we use to distribute resources to build wealth. And so, if we’re going to stay within the confines of inequality, we’re never going to see systemic change.

Andre M. Perry (Courtesy of Perry)

Brancaccio: I mean, back to the period after Reconstruction and the notorious presidency of Andrew Johnson, what are some of the things that happened then that reverberate even today?

Perry: Remember that a lot of the social distancing that we talk about today has actually occurred for years. That many Black communities were “quarantined” to prevent the spread of disease and the falling of property values of white communities. And so, we have a long history of segregating Black communities and then deeming them too risky. And that, obviously, was the thrust of redlining — to deem Black communities, or communities with majority Black populations, too risky to receive refinancing loans or home loans. That limited our ability to accrue wealth over time. The children of folks who lived [under] redlining [laws] could not, essentially did not, own property thereafter. And we see the impact of this today. Wealthy people — and when I say wealthy, [I mean] people with assets — have better life outcomes, have better educational outcomes and have better criminal justice outcomes. And so, racism that was leveled against Black communities then is still playing itself out today. And if we’re going to correct the the police violence, we’re going to have to correct the systemic violence inflicted upon Black Americans every day.

Brancaccio: And some of that is how money flows. I spoke with Marc Morial of the National Urban League the other day, and he talked about the money we have spent on policing in America, including flawed policing. And he was thinking about other ways we could have spent the money to make people safer and improve how people live. There’s an opportunity cost to spending the money on things that are not working.

“If we’re going to stay within the confines of inequality, we’re never going to see systemic change.”

Andre M. Perry

Perry: Well, I mean, every day we spend money on injuries in prison, for instance. It’s money that should be used on overall health care. The money we invest in prison systems should be spent on education. And as states go into austerity mode, because of the recession, we’re going to really see that money missing from schools and other public services. And so if we really want to enact change in society, we’re going to really have to deconstruct this criminal justice system, because it’s crowding out the funds that should be used to build wealth in other areas.

Brancaccio In reimagining the economy, given the winter and spring we’re living through, maybe the window of policy of possibilities is now wider. What would be toward the top of your agenda to really change the lives of people and narrow these disparities by race?

Perry: Wow, there’s so many things, from reparations to business ownership and business financing. I’ll go with with one: If we can increase the number of Black businesses that have more than one employee by 15%, we can expand the economy by $55 billion.

Brancaccio: There’s this phrase, particularly among tech companies, trying to think about narrowing some of these racial disparities, “hire or wire:” Hire Black and brown people or invest in their ventures. I mean, that’s kind of what you’re talking about.

Perry: Oh, absolutely. That businesses have a responsibility to invest in communities right now. When big tech companies land in cities, it doesn’t necessarily lead to growth among the workers in that neighborhood. I’m from Pittsburgh, where Google landed its headquarters there. The Black communities around that neighborhood are struggling. There has to be a deliberate effort to invest in Black lives whenever a company comes to town. In fact, this is a time when mayors should demand, using tax incentives, that businesses hire Black people displaced by the our social distancing measures. We’re not going to get out of this just from public regulation. At some point, corporate leaders need to take responsibility for the policy violence they cause. Remember, many of these companies could change the economic trajectories of communities with a snap of a finger by hiring them, and by providing a living wage, and providing the benefits that will ultimately give vulnerable communities the protection. But it’s the structural inequalities that removed the benefits that that lowered the pay, that made it less likely that Black people had homes. Those are the things that make Black communities more vulnerable, and corporate America has a role in deconstructing those policies and practices, so that we can uplift the economic mobility of Black communities.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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