“There are historical, systemic issues that have kept certain people out, whether it be underinvestment, whether it be historical exclusion, whether it be lack of access to quality education,” said Tanya Odom, the Walton Family Foundation’s director of equity and inclusion, during a recent From Day One webinar on “Creating New Pathways of Access to Economic Opportunity and Inclusion.”
Odom’s fellow panelist, Aaron Walker, identified three specific sources of wealth inequality in the U.S.: unequal access to financial capital for business investment, social capital, and coaching.
Walker, who is the founder and CEO of Camelback Ventures, which invests in businesses founded by women and people of color, and Odom were joined by three other professionals who are influential in philanthropy, local organizing, advocacy, and recruiting. The panelists talked about effective and scalable ways businesses can work across sectors to remove barriers to economic advancement for marginalized people. The discussion was moderated by Bloomberg Opinion Editor Romesh Ratnesar.
Bridging the Resource Gap
“One of the byproducts of the racial wealth gap is that entrepreneurs who are trying to start businesses just don’t have a proximate access to the money that they need to start their company,” said Walker.
In the U.S., Black entrepreneurs start their businesses with about $35,000. For white entrepreneurs, that figure is $107,000. Black business owners also have to jump through more hoops than their white counterparts do. In a study published in The Journal of Public Policy & Marketing that examined business loan applications against race, 73% of Black applicants were asked for financial statements, and only 50% of white applicants were asked to provide the same. Thirty-one percent of Black applicants were asked for W-2 forms, though no white applicants were asked.
Panelists lamented that when capital is routed to organizations that support people of color and other marginalized communities, that money often flows into the same pools, and smaller organizations plugged into local communities are left without resources.
Harry Johnson, who is CEO of the Memorial Foundation, which promotes awareness and upkeep of the Martin Luther King, Jr. Memorial in Washington, D.C., said, “After George Floyd, a lot of folks threw money, saying, ‘Hey, here’s some guilt money,’ but they didn’t understand what they would give it to. They just say, ‘We want to give some money,’ and so they gave the NAACP, the Urban League, and other historic organizations a lot of money, without understanding, Is it going to help solve the problem in the communities?”
Johnson sees the same thing happen when companies recruit students of color, so he points employers to lesser-known HBCUs. “Everybody’s heard about Morehouse and Spelman and Howard. They get a lot of play. They have not heard about Philander Smith or Harris-Stowe or others,” he said.
Odom said the root of this is that people assume they already know what the problems are or where the needs are. “We can either say, ‘Here’s the money,’ or we can say, ‘What’s the barrier?’” Odom said, asserting that businesses have to “pay attention to what the people closest to the problems are saying,” and one way to do this is to diversify philanthropy itself.
“There are so many disparities in entrepreneurship, particularly when it comes to funding, particularly with women and minority and underserved entrepreneurs. It’s such an unlevel playing field,” said Kim Lane, the chief operating officer at Right to Start, an organization that works on the local, state, and federal levels to expand access to entrepreneurship.
Businesses can open new avenues to economic opportunity by investing in their communities, working in collaboration with NGOs and with governments, said Lane. On the local level, Right to Start identifies the problems entrepreneurs encounter through their network of paid advocates who look for barriers to entrepreneurship at the hyperlocal level.
Lane shared the example of an advocate in Fayetteville, Ark., who discovered that a high local licensing fee was preventing people from starting businesses. Together with Right to Start, the advocate recommended that the city waive the licensing fee, and they agreed.
Building Social Capital
Lack of social capital can be addressed in the workplace with better recruiting practices and better training, panelists said. Early career experience often comes in the form of internships, but “historically, internships were unpaid,” said Walker. “That means you have to have a certain economic status to go unpaid, particularly as a young person.”
He believes companies need to seek out first-generation college students who don’t graduate with the social connections that can get them a job quickly. “We’ve made this promise to a lot of first-generation college students: ‘Go to college, and you’ll get a job, and that will be your pathway out of poverty.’ We were making this promise to a lot of young folks, but we weren’t keeping it.”
Israel Gutierrez, the VP of talent acquisition at news outlet Axios, said the company is seeking out talent from underrepresented groups. He joined the From Day One webinar from Chicago, where he was attending the conference of the National Association of LGBTQ Journalists, or NLGJA. He’s quickly growing the size of Axois’s newsroom, he said, and “this is also our very first year where we are attending all editorial conferences that are targeted at underrepresented groups.”
Axios is also training managers on hiring practices that look for competencies and mitigate subjective evaluations. “Everyone will have one particular subjective way on how to properly assess a candidate,” said Gutierrez. “What competency interviewing does is set a particular set of criteria where you assess a candidate on particular behavior.” He then checks in with managers throughout the hiring process to revisit specific competencies and make sure evaluation practices don’t dull along the way.
Enhancing Coaching and Mentorship
People in marginalized communities often don’t have access to the coaching and mentorship they need to advance professionally and financially, group members said. “We have these models of what leaders look like and sound like and how they move through the world,” said Walker, “but there is a diversity of ways to lead.”
Walker said he encourages young people to be their own advocates if they’re not getting the help they need: “Sometimes we look at asking as a form of weakness, or something to be ashamed of because it means that you’re lacking, but I think about it as the opposite, which is that you’re giving someone an opportunity to participate in your story.”
Johnson added: “It’s really up to us, as older adults, to give guidance to young folks, to say there is a pathway to your success, and here’s how you do it. Nobody wrote a book to us on how to be successful. We just looked at other people, saying ‘I can do it.’”
Emily McCrary-Ruiz-Esparza is a freelance writer based in Richmond, Va. She writes about the workplace, DEI, hiring, and issues faced by women. Her work has appeared in the Washington Post, Fast Company, and Food Technology, among others.