In a new report titled “Towards a New System of Community Wealth,” researchers Ross Baird, Bruce Katz (currently my colleague at Drexel University in Philadelphia, where I hold the yearlong Philadelphia Fellowship), Jihae Lee, and Daniel Palmer lay out a potential solution. They define community wealth as “a broad-based effort to build equity for low-income residents,” which could unlock “hundreds of billions in market and civic capital” to revitalized struggling places across America.
The report—a collaboration of Drexel University’s Nowak Metro Finance Lab, the investment platform Blueprint Local, and L.A. Mayor Eric Garcetti’s Accelerator for America—notes that concentrated distress did not just happen, but is the result of a long history of class and racial division, and policies both underfunded and ill-advised.
As a result, today, black entrepreneurs are much less likely than white entrepreneurs to receive venture financing or small business loans, and when they do, the amount ends up being lower. Black-owned businesses average much less revenue than their white counterparts—$58,000 versus $546,000. This is not just bad for distressed communities; it hurts the whole economy. Baird, Katz, and their co-authors cite another study that found the U.S. economy would have 1 million additional businesses and 9.5 million more jobs if minority entrepreneurs started enterprises at a rate similar to white entrepreneurs.
Solving such deep-seated inequity will require shifting from an older model of community development to the new paradigm of community wealth-building, the authors write. The old model was characterized by top-down federal programs that often overlooked both neighborhood problems and neighborhood assets. This approach has traditionally focused on housing and de-emphasized economic development. Programs and initiatives were often narrow and in silos, and there was insufficient funding to build sustainable institutions and address problems holistically.
CONTINUE READING: https://www.citylab.com/equity/2019/11/urban-revitalization-poverty-inequality-research-class-race/602602/?utm_content=edit-promo&utm_campaign=citylab&utm_source=twitter&utm_term=2019-12-01T16%3A26%3A37&utm_medium=social
Image: David Goldman/AP