The Past and Present of Race, Money, and Equity in America

Q: How did this collaboration come about?

Louise Story: We were working together at the Wall Street Journal in the summer of 2020. That was a period in which a lot of people in our country were talking about these issues. Through the discussions within our own teams, within the media, and within public discourse, the project developed almost organically.

What we’re trying to do through the book, the course, and our Substack newsletter is help people think about both the history of race and money and what understanding that history lets them do today to create a more equitable society.

Q: What happens when you look at the history of this country through the lens of race and money?

Ebony Reed: It depends on who you are. It depends on your experiences, the part of the country you are from, your economic background. Many things influence what you see when you look at race and money. Regardless of background, I do think that people understand that over time different groups in the United States have had different experiences.

Long after slavery, injustices that include government policies around housing, education, and criminal justice have impacted the economic well-being of Black Americans. Home ownership rates are lower for Black Americans. That influences generational wealth. The student debt load is higher for Black women than any other group, if we separate out by race and gender. Yale SOM Dean Kerwin Charles has done research on the differences between Black and White men as it relates to employment post-1940. We’ll be looking at all of these issues in the class and the book.

Story: Public perception of these things can also be different from reality. Yale professors Jennifer Richeson and Michael Kraus have done research into what people believe is happening in terms of progress with the racial wealth gap and what’s actually happening. Asked to estimate the size of the wealth gap between White and Black families, people were off by 80%. The average White family has ten times the wealth of the average Black family. We will also examine some documents around slave-based lending from the mid-1800s that are from the collection of SOM professor William Goetzmann.

Q: Why are these issues particularly relevant to MBA students?

Reed: After the death of George Floyd, we certainly saw CEOs step into the conversation around social issues and inequality.

When a certain population isn’t treated equitably or doesn’t have the same opportunities or can’t grow their wealth, then it’s a problem for society as a whole. A lot of people recognize that; we saw so many people around the world come out in the summer of 2020 for marches and protests.

Story: It’s important—and will continue to be important for a long time to come—for business leaders from all backgrounds to understand the history, to grapple with it, to talk it through, to debate it, to think about it, and then to keep it in their mind as they lead in all of the roles they go into.

Reed: Every business leader has to know how to approach diversity, equity, and inclusion efforts. How to build a product that considers their customer base. How to navigate different markets.

Story: A company thinking about diversity will not make progress unless it’s considered in multiple dimensions. We talk about the diversity triangle, where it’s a focus within the company culture, the customer base, and in products. The whole triangle needs to be present because the pieces depend on each other.

For example, a company makes an effort to hire people from a greater variety of backgrounds. But if they then say, “This is how we’ve always done it. Now you do it exactly how we’ve always done it,” that’s not really a strategy that’s going to work with a lot of workers. People want to work at a company that has products that speak to them. People want to work at a company that has a customer base that’s relevant to them. And importantly, people want to work at a company that’s going to listen to them and bring their background and experiences into the product creation and the marketing.

Q: Black Americans do have assets in aggregate. Do you see them as more likely today to move the needle by using their money to support businesses that support Black Americans?

Reed: It’s not clear that’s the answer. Jared Ball, a professor at Morgan State University and author of The Myth and Propaganda of Black Buying Power, argues that focusing on the Black community as a group that can consume has prevented discourse about more fundamental changes that would help Black Americans build wealth.

One question on many employees’ and business leaders minds today is: To what extent do companies have a responsibility to weigh in on social issues and the public policy that might address them? Should that play into how businesses target and market to Black consumers?

Story: A central question that we’re asking is, what is a Black-focused company? Throughout history, there’s been a lot of different companies claiming that they’re serving this population and that they’re focused on this population, but what they mean has often varied. The Freedman’s Savings Bank was created by Congress after the Civil War as a place where freed slaves could put their money. There was a lot of advertising around how their money would be kept safe. It became quite large.

It held the deposits of Black Americans, but it was not, especially in its early days, run by Black Americans. And instead of loaning money to Black Americans, the bank invested in risky things, including the railroads. By 1874, the money was lost. This not only caused financial suffering to Black depositors but also created a distrust of the banking system that has carried on for a long time.

With this lens of race and history, we’re saying, “How do I think about this a little differently?” Even though our research is primarily focused on Black Americans, we will encourage the students to think about many different minority groups. As a business leader, it’s important in all areas to think, “How do I understand the world from other people’s vantage point?”

This class cuts across the whole core curriculum of an MBA. In one week, the readings and the lectures are focused on economics. In another it’s finance and financial history. We’ll look at marketing, leadership and cultural norms. Cydney Dupree’s work will be featured in one of our lectures focused on how you interact with workers and teams.

Q: You mentioned housing as a tool for wealth generation. How is that showing up both historically and today?

Story: Ebony and I are co-professors and co-authors, but you’re getting two different perspectives and some different experiences in the pairing of us. For example, when we started this project, we had a surprising finding about housing. We knew each other as successful professionals doing well in our lives. When we began talking about housing, we discovered both of us had to sell our homes during the financial crisis. I told Ebony how hard it had been but eventually I sold it and moved on.

Ebony then said to me, “Louise, I haven’t actually moved on from that.”

Reed: Just this month I made the last payment on a house that I haven’t owned since 2009. It was a short sale—there was a gap between what was owed on the mortgage and what the new buyer would be willing to pay. The bank said, “You’re on the hook for that gap, and we’re not going to negotiate.” A lot of people got more favorable arrangements. In the end, it would’ve been cheaper and had the same impact on my credit if I’d walked away. I didn’t want to do that. There was a lot of pride in having my first home. I didn’t want it to go to foreclosure.

Louise and I both covered the 2008 financial crisis. She was reporting on Wall Street for the New York Times. I was a deputy metro editor at the Detroit News. That had a huge impact on us as we began to think about inequities and the connection to race and money. The financial crisis and the housing bust are still having an impact on a certain segment of the population today.

We know that a large percentage of wealth for Black Americans was lost during that period through loss of their homes. For Black families who never bought again, more than likely they won’t gain that wealth back as we see rising housing prices in the pandemic.

Q: Your course will also include redlining.

Story: Yes. In the late 1800s, there was a lot more racial integration of neighborhoods. Black residents may have been in smaller homes, but many places that now are very segregated were more mixed. Government policies, city zoning, and the banks put our country on a path to segregation in the early 20th century.

Then in the 1930s, a New Deal program, the Home Owners’ Loan Corporation, mapped metropolitan areas. Neighborhoods were color-coded by “desirability.” Those coded red—anywhere Black Americans lived—were deemed too risky for the government to insure mortgages.

That meant that as the big White middle class in America was formed during the boom times of the ’40s, ’50s, and ’60s, Black Americans were left out. Redlining was a big part of that. After slavery, it’s one of the most important things that happened in this country affecting the racial wealth gap. There are real costs of segregation that we’re still living with.

One of the things we’ll be doing in the course is have everyone look at the redlining maps that were used in the places they grew up. And for international students, we’ll look at New Haven. Perhaps it will be an opportunity for people to see their own communities differently.

In addition, it will be a way to talk openly about where they grew up within their town and how that shapes their understanding of things.

Q: The history of the country has seen many periods of progress toward greater equality followed by backlash. Are there reasons to think we might see significant progress on race?

Story: That’s part of what we’re trying to understand in our reporting. We’re looking with open eyes to see whether contemporary efforts at reform are being done in a way that will lead to something different. We hope that things will become more equitable, but we haven’t concluded that that’s the case at this point.

Q: You’ve both worked as journalists and you’ve both taken on strategic leadership roles in media organizations. How has that perspective shaped this work?

Story: Ebony and I both are media leaders who in multiple jobs at different companies have led our organizations to listen more to their audiences when creating their content. We’ve advocated for shaping content based in part on what the audience is interested in and the feedback media organizations get from conversations with their audience. Those are things that news outlets don’t always do.

As we dug into this project, we wanted to be in conversation with people. We’re bringing a lot of expertise, a lot of documentation and information, but we started the newsletter to be in thoughtful conversation about what readers think about what we find in our reporting. A lot of insights come from being in conversation.

Reed: That’s one of the reasons I’m looking forward to our conversations with our students as we dig into some serious and important topics.

Story: A topic that we haven’t touched on here, which we’ve seen in our own reporting, is the ties to race and money in the criminal justice system. Ebony is the chief strategy officer at the Marshall Project, a phenomenal nonprofit that does journalism on the criminal justice system.

Reed: You can’t really study and look at race and money in the United States and not intersect with the criminal justice system. Whether it be the requirements for bail, mass incarceration, or even voting.

The Marshall Project recently published a significant package on the court system in the Cleveland area, where it’s mostly White residents voting for judges who decide cases with mostly Black defendants. The judges have a profound impact on the Black population but for a lot of different reasons voters in Cleveland aren’t filling in any selection in the judicial elections. The coverage is fascinating and includes questions from the audience about what they’d want to know about the judges to be able to feel informed to vote.