In the face of racism

By Theodora Lau and Bradley Leimer

Systemic racism and a long history of discrimination have meant that African Americans have always fared worse in the labor market, both in good times and more so in bad times. While there may be some celebrating that the national unemployment rate in May fell to 14.7% from 13.3% in April, black unemployment remained virtually unchanged. In April, the black unemployment rate was 16.7%, in May, it actually increased to 16.8%.

Here are some more chilling economic figures:

• The median net worth of black households in 2016 was $17,150, according to the Federal Reserve’s Survey of Consumer Finances. The median net worth of white households at the same time was $171,000.
• The median black household had just 9.4% of the wealth of the median white household in 1968; by 2016, that ratio had fallen to just 8.7%.
• Compared to white families, black families are 40% less likely to own their homes than white families.
• According to a 2017 Gallup poll, 36% of black respondents said they had money in the stock market, compared to 60% for white respondents.
• The typical black household had just 46% of the retirement wealth of a typical white household in 2016.

From homeowners to policy makers, from media moguls to Fortune 500 executives, from teachers to tech founders and funders, black Americans are severely underrepresented. In fact, “in 2020, there are only four black CEOs leading Fortune 500 firms, and fewer than 10% of the most senior P&L leaders in the Fortune 500 are black.” 

“Black CEOs make up 0.8% of the Fortune 500 despite African-Americans representing 13.4% of the U.S. population.”

Income inequality in the U.S. is the highest amongst the G7 nations, according to Pew Research. Specifically, the income gap between white and black has held steady since 1970. Without a doubt, drastic changes are needed and are very much overdue. 

But where do we start?

A path forward

The vast majority of power voices and empowered positions in the country today are controlled by one homogenous group. To create lasting change, it will require us to examine our own actions and our own unconscious bias — as citizens of this country, and as one nation.

We need more diversity within our policymakers, to make sure that the interests of the diverse population of the country are being represented. While this has improved — especially with the new House of Representatives of 2018 — there is much more room to improve at the national, state, and local levels of government. 

After a decade coupled by the Great Recession and the COVID-19 pandemic, the time for radical change to improve the lives of African Americans is way past due.These problems are far from new. For context, we suggest you watch Segregated by Design about the foundation of racism in society in the past century and how bank lending policies played a critical role. 

Within financial services, we must recognize our industry’s role in creating a culture of systemic racism through the support of policy and procedures that denied wealth to black households for more than a century. We must demand that People of Color are represented within leadership and Board level positions within banks and corporations that control access to capital. Jennifer Tescher has a fantastic article on American Banker recently that laid out the steps that the banking industry must take. 

We must also provide different pathways for people to take advantage of the future of work and succeed — from basic training to re-skilling. Yet we must recognize that economic opportunities don’t just come from education and training for higher paying employment, they come from everyone involved in mentoring and leading teams at every organization.  

We must close the digital divide that plagues our country — 12 million school-aged children don’t have sufficient internet access at home to finish the assignments handed out in class. Internet access is a privilege in the richest country in the world, and it should be a right.

We must improve diversity in media — how images of people of color, especially African Americans — get portrayed. This plays a crucial role in how our society welcomes — as well as rejects — different faces. No one is born hating another person. Humans tend to relate more to causes and faces that we are familiar with, and thus harbor beliefs about others that they are less exposed to. Exposing the society to different voices can change the narrative and help us overcome such unconscious bias. Rejecting stereotypes is not about being color blind; rather, it’s about embracing our differences — and seeing people as unique individuals. 

We must improve diversity in the boardroom — at all executive levels. We must create and support a diverse and inclusive culture for all voices to thrive. We must also seek out — and fund founders — from more diverse backgrounds. Our ecosystem is not homogeneous — neither should our solutions nor those who create them. While the $100 million by Softbank, $10 million by Goldman Sachs, and $2.2 million by Andreessen Horowitz represent positive steps, it is only a drop in the bucket compared to the megafunds that these venture capital firms have raised for far less diverse projects. 

“Corporate America has failed black America.” Darren Walker, President of the Ford Foundation and a member of the board of Pepsi

It is time for soul searching. Is our own network diverse? How about those who we partner with? Do we include diverse viewpoints in what we do — beyond the hashtags, beyond the social photos of solidarity? After two straight weeks of protests, after more violent clashes than this country has seen in quite some time, the time for action is now. 

In the face of racism, what do we do next? 

As Bradley wrote in his heartfelt piece “Outside is America”: To change our society, to change our industry, we will need every one of you. Revolutions begin in the mind before it reaches the streets. But real change — lasting change — begins within our hearts.

We must examine our own actions and check our own biases to move forward. 

The first thing we should do is look in the mirror. 

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The murder of George Floyd and the protests that have followed are creating a period of global contemplation. How should we react, how should we feel, and how can we improve our society. Listen in to Arun, Bradley, and Theodora, via iTunes and Spotify, as we talk about some of our feelings about the past few weeks, how venture capital and financial services have reacted, and what we see as some of the things we think need to change. 

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Unconventional Ventures helps drive innovation to improve systematic financial wellness. We connect founders to funders, provide mentorship to entrepreneurs, strategic advisory services to a broad set of corporates, and broaden opportunities for diversity within the ecosystem. Our belief is that anyone with great ideas should have a chance to succeed and every voice should be heard. Visit unconventionalventures.com to learn how you can partner with us today.