The wealth gap between black and white families is 10x. For every $10 of net worth in white families, black families have $1. And, it’s not surprising given our history.

Consider the compounding effect of the following [history](https://www.hbs.edu/faculty/Pages/item.aspx?num=56905 "African American Inequality in United States"): #### 1619 - 1865: Slavery - 246 years of no asset building for black families. #### 1865 - 1964: Reconstruction and Jim Crow - State laws known as “Black Codes” restricted civic and economic rights for blacks. - “Jim Crow” laws that segregated both people and, as a result, financial opportunity. - Southern states imposed laws intended to restrict black voters and limit the ability for blacks to own land, further extended economic inequities. - Home Owners Loan Act of 1933 institutionalized housing segregation by including race as a factor in underwriting (also known as the original ‘redlining’). #### 1965 - Present: It's Complicated - School funding primarily derived from local property tax dollars, leading to perpetual “funding gaps”, and a resulting two grade achievement gap, for black students. - Black families have 50% lower interview call back rates for jobs and earn 13% less when employed in the same job. - Black men are 6x more likely to be incarcerated than white men. - Black families are 6x more likely to be unbanked or underbanked, resulting is higher debt and lower savings. - 70% of middle class African American children were more likely to become poorer than their parents as adults. These data points are not independent anomalies. Instead, they tell a predictable story of the economic inequity that occurs when a group of people are held back for generations. While painful, this is where we are as a country and society. Now, the tide is turning. Eyes are opening. The cases of George Floyd, Ahmaud Arbery, Breonna Taylor and countless others have exposed wide ranging social injustice. The disproportionate financial impact of the pandemic has similarly put a spotlight on pervasive economic injustice. Fortunately, the conversations are no longer “if” we should take action, it’s “how”. Enter companies. Companies pay wages, provide safety nets through benefits, offer training and development, and care for the wellbeing of their people. They sit in a unique position of influence as the vehicles for economic growth in modern capitalism. Accordingly, they have immense power to move the needle on social and economic justice. ## Economic Justice Hierarchy of Needs With that as a backdrop, organizations must tackle the following hierarchy of needs to drive progress on the wealth gap. Economic Justice Heirarchy of Needs

#### Representation: Blacks make up [less than five percent](https://hbr.org/2020/08/why-do-boards-have-so-few-black-directors "Why do boards have so few black directors") of board members for Russell 3000 companies. In 2020, there were only [five black CEOs](https://hbr.org/2020/08/why-do-boards-have-so-few-black-directors "Why do boards have so few black directors") of Fortune 500 companies. According to the Center for Talent Innovation, blacks comprise 12% of the population but [less than 3.2% of senior leadership positions](https://www.cbsnews.com/news/black-professionals-hold-only-3-percent-of-executive-jobs-1-percent-of-ceo-jobs-at-fortune-500-firms-new-report-says/ "Black professionals hold only 3 percent of executive jobs 1 percent ceo jobs at fortune 500 firms new report says"). The historic inequities in education and opportunities provides some explanation. Still, companies must be intentional about bridging the representation gap.
#### Compensation and Benefits: SHRM’s 2019 [study](https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/racial-wage-gaps-persistence-poses-challenge.aspx "Racial wage gaps persistence poses challenge") revealed that black men earned 87 cents for every dollar a white man earned. In addition, blacks disproportionately hold jobs that are often not benefits eligible. And, for those who are, few have access to the most important wealth building benefit, equity in the company (e.g., stock options). Leveling compensation and benefits levels the playing field.
#### Financial Literacy: Only seven states require a standalone [personal finance course](https://www.nytimes.com/2020/02/07/your-money/states-financial-education.html "States financial education") to graduate from high school, with an additional 15 states requiring one or two weeks of personal finance embedded into another course. For adults, [black financial literacy scores](https://gflec.org/wp-content/uploads/2021/04/2021-P-Fin-Index-report-TIAA-Institute-GFLEC-April-2021.pdf?x85507 "2021 P-Fin Index report TIAA Institute") are 21% lower than whites. This lack of knowledge contributes to lower savings rates, higher debt, lower retirement plan participation, and less comfort with investing. Employers have ample resources and communication channels to provide objective financial education.
#### Unbiased Guidance: A vast majority of the middle class does not use financial advisors due to limited options, high fees, and, at times, lack of trust. Financial advising has historically focused on the wealthy to make their business models viable. Unfortunately, this lack of guidance disproportionately impacts black households and perpetuates the cycle of paycheck to paycheck. A financial strategy sets the foundation for building wealth. Employers can provide objective resources and extend trust to make it happen.
#### Financial Products: Predatory financial products are pervasive in black communities. With equitable representation, compensation, literacy and support, educated consumers will force financial services companies to innovate in the best interest of their clients. Employers can vet financial products, utilize their scale for discounts and serve as advocates for their team members.
One of the primary objectives of DEI initiatives is to promote more equitable distributions of wealth. In short, it’s about money. More specifically, it’s about helping African American employees make more money, understanding how to keep that money and pass down that money to bridge the wealth gap. These efforts will take time. Considering the gap has developed over 400+ years, our expectations of progress should be passionate and realistic. With that in mind, it’s important to not let perfect be the enemy of progress. Take a single step. Be intentional about hiring for the next role, investing in a financial literacy program, or simply gathering data to better understand the problem. There’s work to do. *Let's do the work.* __*Interested in learning more about DEI and Financial Wellness?* Join our interactive live virtual session: [“Aligning Financial Wellness and DEI Initiatives”](https://app.swapcard.com/event/human-resource-executive-r-health-and-benefits-leadership-conference/planning/UGxhbm5pbmdfMzY2NzA1 "Aligning Financial Wellness and DEI Initiatives SmartPath Session") on Wednesday, May 12th at 2pm ET during Human Resource Executive’s Health & Benefits Leadership Conference.__

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