CityLab, February 25, 2020: Why Black Businesses and Homeownership Won’t Close the Wealth Gap
Economic plans like Mike Bloomberg’s assume that boosting Black homeownership and entrepreneurs will close racial wealth gaps. New research suggests it won’t.
The top-line goals of the plan, known as the Greenwood Initiative, are creating one million new Black homeowners, 100,000 new Black businesses and investing $70 billion in the 100 “most disadvantaged” neighborhoods of the U.S. The New York Daily News called it “an initiative similar to calls for reparations for slavery,” and the Bloomberg campaign says it will “close the racial wealth gap” while saying homeownership in particular is “a vital way to build generational wealth and community and is a pillar of the American Dream for many.”
Amongst 2020 Democratic candidates, Warren’s and Sanders’ racial equity plans advocate for more sweeping wealth-redistribution changes, such as the Green New Deal, free universal health care, reparations and offering federal housing assistance to victims of redlining. The Greenwood Initiative offers federal matching funds for housing down payments in the country’s most disadvantaged communities and offers to streamline housing down-payment programs in general.
Several new studies cast doubt on the idea that simply owning homes or businesses can help dissolve racial economic inequities. The first, from a group of University of Georgia geography scholars, concludes that a “racial appreciation gap” exists in the housing market that hinders African Americans’ ability to generate wealth through owning a home.
