Black Enterprise, March 4, 2020: The Rise of Black Businesses and Homeownership Won’t Close the Racial Wealth Gap
Almost every Democratic candidate has ending that gap once and for all as a part of their platform.
But recent studies have shown that it will take more than a home or a business to solve racial inequities. Even if someone has the necessary things needed to own a home or a business. The legacy of racial segregation has left a lasting effect on how companies perceive African American customers and their profitability. A report from the Brookings Institution found a correlation between positive reviews on Yelp and revenue growth for White businesses but not for minority-owned businesses. In fact, the exact opposite happens. Businesses located in predominantly Black neighborhoods with high Yelp ratings saw less revenue growth between 2016 and 2019 than poorly rated businesses in predominantly White neighborhoods.
Another factor is redlining, which has hindered Black homeownership for years. Warren and Sanders have both promised to end redlining in Black communities but the damage has arguably already been done. A group of University of Georgia geography scholars introduced the effect of the “racial appreciation gap” on the housing market, which hinders African American homeowners to generate wealth through their property. The team analyzed home sale values in Atlanta and its surrounding suburbs and found that homes in predominantly Black neighborhoods failed to appreciate in value since the mortgage crash recovery; homes in predominantly White neighborhoods appreciated considerably.
