Dive Brief:

• A large majority (67%) of U.S. mayors are worried about the racial wealth gap in their cities, Boston University's Initiative on Cities found in a recent survey of 126 mayors. However, that concern is largely concentrated among mayors who are Democratic and from large cities compared with mayors who are Republican and from less-expensive cities.
• The mayors who said they are concerned about the racial wealth gap were nearly unanimous in supporting "generic racially targeted programs" like support for Black and Latino small business ownership. However, just 40% favored specific programs like reparations or universal basic income.
• The racial wealth gap is a major barrier to racial equity and better outcomes for minority communities, so finding ways to help communities of color build wealth is important, said Maxwell Palmer, an associate professor of political science at Boston University and an author of the survey's report. "Mayors are very worried about it overall, especially Democratic mayors. But we have very little consensus on solutions to address it,” he said. 

Dive Insight:

There can be large disparities between the net worth of White families and Black families. According to the Federal Reserve, the average Black and Hispanic or Latino household earns about half as much as the average White household and has about 15% to 20% as much net wealth.

The wealth gap was created by discriminatory federal, state and local laws and policies that enforced segregation and created a "race-based bifurcated economy," wrote Mehrsa Baradaran, a law professor at the University of California, Irvine, School of Law, for the New York University Law Review.

The roots of the racial wealth gap extend back to slavery, when "Black labor built White fortunes and established the systems and institutions that perpetuated Black oppression and White privilege," Marc Morial, president and CEO of the National Urban League, said in an emailed interview. The century of Jim Crow that followed prevented Black people from acquiring education, owning property, securing stable jobs and participating in civic life, he added. 

Throughout the decades, many Black communities have been broken up by the construction of highways, while race-based violence by White people has also targeted Black prosperity. This includes the 1921 massacre in Tulsa, Oklahoma, in which a violent White mob killed hundreds and destroyed what was known as "Black Wall Street."

Meanwhile, Black business owners are twice as likely to be denied loans by banks as White-owned businesses, with denials occurring even after their businesses are earning a profit and having good credit scores. A December 2020 analysis of Census data by the Brookings Institution found that Black businesses are only 2.2% of the 5.7 million employer businesses in the U.S., while Black people are about 14% of the country's population. Black businesses also are much more likely to hire Black employees, the analysis stated. 

White families have also become homebuyers at much higher rates than families of color, especially Black families, which housing experts say is largely due to discriminatory policies and practices and systemic barriers that for decades have prevented Black families from owning a home. That includes racial redlining — in which the Federal Housing Administration and other entities refused to insure mortgages in or near Black neighborhoods —and federal policies that denied many Black veterans returning home from World War II the low-interest mortgages and loans other veterans could access through the GI Bill.

The disparity has allowed White families to accumulate and pass on generational wealth that was not available to Black families. 

"You grow wealth through generations by passing things down," said Karen Freeman-Wilson, president and CEO of the Chicago Urban League, during a panel on Rebuilding Black Wall Street at the SXSW conference in Austin, Texas, this month. 

Modern-day redlining practices, implicit and explicit bias in lending, hiring and home appraisals continue, practices that "uphold centuries-old systems that are not just incidentally but deliberately and relentlessly discriminatory," Morial said.

Boston University's Menino Survey of Mayors found that 58% of mayors of larger cities expressed significant concern, compared with just 26% of mayors of smaller cities. It found 80% of Democratic mayors were concerned about the racial wealth gap in their community versus 32% of Republican mayors. Further, 22% of Republican mayors were not worried about the issue at all, with no Democratic mayors sharing that view. 

Whether local leaders are Republican or Democratic, the racial wealth gap impacts everyone, the National League of Cities said in a statement to Smart Cities Dive. "We have the power to change those systems to make them work for everyone in small or large cities, rural or urban, democratic or republican. When we make systems work for everyone, we make cities stronger."

Policies to address the racial wealth gap include ones that forgive student loans, provide free and reduced tuition for people of color, expand affirmative action, lower interest rates for loans and allow housing values to remain stable and rise without gentrifying neighborhoods, said Melissa Harris-Perry, a presidential endowed professor at Wake Forest University, during the SXSW panel. 

Cities could also adopt policies that require development projects to hire local workers at livable wages, create affordable housing and public amenities and force businesses that receive public funding to eliminate discriminatory policies, according to Morial. But the effort needs to be coordinated among state, local and federal governments as well as with the private sector and community-based organizations, he said.

Another solution, Freeman-Wilson added, is reparations. Only 41% of surveyed mayors supported the reparations program put forth in Evanston, Illinois, in which Black residents received up to $25,000 in homeownership assistance. Likewise, 40% supported universal basic income programs like the one in Stockton, California, which provided low-income residents $500 per month for two years. 

It's easier to support policies that are more generic rather than targeted programs that have a dollar amount attached to them, according to Palmer. "Once you start to define it, who’s going to benefit and how the money's going to be spent, it becomes harder to build support. It’s harder to commit to something like that,” he said.

But Morial believes the survey results likely stem from an "undercurrent of White resentment against Black achievement on any level," a sentiment that many politicians are trying to exploit as a campaign tactic, he said. "Denial of racism as a factor in economic opportunity is part and parcel of a certain brand of right-wing ideology so policies to eliminate these gaps are unlikely to emerge from that faction," he said.