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    Who Discriminates in Hiring? A New Study Can Tell.

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    Applications seemingly from Black candidates got fewer replies than those evidently from white candidates. The method could point to specific companies.Twenty years ago, Kalisha White performed an experiment. A Marquette University graduate who is Black, she suspected that her application for a job as executive team leader at a Target in Wisconsin was being ignored because of her race. So she sent in another one, with a name (Sarah Brucker) more likely to make the candidate appear white.Though the fake résumé was not quite as accomplished as Ms. White’s, the alter ego scored an interview. Target ultimately paid over half a million dollars to settle a class-action lawsuit brought by the Equal Employment Opportunity Commission on behalf of Ms. White and a handful of other Black job applicants.Now a variation on her strategy could help expose racial discrimination in employment across the corporate landscape.Economists at the University of California, Berkeley, and the University of Chicago this week unveiled a vast discrimination audit of some of the largest U.S. companies. Starting in late 2019, they sent 83,000 fake job applications for entry-level positions at 108 companies — most of them in the top 100 of the Fortune 500 list, and some of their subsidiaries.Their insights can provide valuable evidence about violations of Black workers’ civil rights.The researchers — Patrick Kline and Christopher Walters of Berkeley and Evan K. Rose of Chicago — are not ready to reveal the names of companies on their list. But they plan to, once they expose the data to more statistical tests. Labor lawyers, the E.E.O.C. and maybe the companies themselves could do a lot with this information. (Dr. Kline said they had briefed the U.S. Labor Department on the general findings.)In the study, applicants’ characteristics — like age, sexual orientation, or work and school experience — varied at random. Names, however, were chosen purposefully to ensure applications came in pairs: one with a more distinctive white name — Jake or Molly, say — and the other with a similar background but a more distinctive Black name, like DeShawn or Imani.What the researchers found would probably not surprise Ms. White: On average, applications from candidates with a “Black name” get fewer callbacks than similar applications bearing a “white name.”This aligns with a paper published by two economists from the University of Chicago a couple of years after Ms. White’s tussle with Target: Respondents to help-wanted ads in Boston and Chicago had much better luck if their name was Emily or Greg than if it was Lakisha or Jamal. (Marianne Bertrand, one of the authors, testified as an expert witness in the trial over Ms. White’s discrimination claim.)This experimental approach with paired applications, some economists argue, offers a closer representation of racial discrimination in the work force than studies that seek to relate employment and wage gaps to other characteristics — such as educational attainment and skill — and treat discrimination as a residual, or what’s left after other differences are accounted for.The Berkeley and Chicago researchers found that discrimination isn’t uniform across the corporate landscape. Some companies discriminate little, responding similarly to applications by Molly and Latifa. Others show a measurable bias.All told, for every 1,000 applications received, the researchers found, white candidates got about 250 responses, compared with about 230 for Black candidates. But among one-fifth of companies, the average gap grew to 50 callbacks. Even allowing that some patterns of discrimination could be random, rather than the result of racism, they concluded that 23 companies from their selection were “very likely to be engaged in systemic discrimination against Black applicants.”There are 13 companies in automotive retailing and services in the Fortune 500 list. Five are among the 10 most discriminatory companies on the researchers’ list. Of the companies very likely to discriminate based on race, according to the findings, eight are federal contractors, which are bound by particularly stringent anti-discrimination rules and could lose their government contracts as a consequence.“Discriminatory behavior is clustered in particular firms,” the researchers wrote. “The identity of many of these firms can be deduced with high confidence.”The researchers also identified some overall patterns. For starters, discriminating companies tend to be less profitable, a finding consistent with the proposition by Gary Becker, who first studied discrimination in the workplace in the 1950s, that it is costly for firms to discriminate against productive workers.The study found no strong link between discrimination and geography: Applications for jobs in the South fared no worse than anywhere else. Retailers and restaurants and bars discriminate more than average. And employers with more centralized personnel operations handling job applications tend to discriminate less, suggesting that uniform rules and procedures across a company can help reduce racial biases.An early precedent for the paper published this week is a 1978 study that sent pairs of fake applications with similar qualifications but different photos, showing a white or a Black applicant. Interestingly, that study found some evidence of “reverse” discrimination against white applicants.More fake-résumé studies have followed in recent years. One found that recent Black college graduates get fewer callbacks from potential employers than white candidates with identical resumes. Another found that prospective employers treat Black graduates from elite universities about the same as white graduates of less selective institutions.One study reported that when employers in New York and New Jersey were barred from asking about job candidates’ criminal records, callbacks to Black candidates dropped significantly, relative to white job seekers, suggesting employers assumed Black candidates were more likely to have a record.What makes the new research valuable is that it shows regulators, courts and labor lawyers how large-scale auditing of hiring practices offers a method to monitor and police bias. “Our findings demonstrate that it is possible to identify individual firms responsible for a substantial share of racial discrimination while maintaining a tight limit on the expected number of false positives encountered,” the researchers wrote.Individual companies might even use the findings to reform their hiring practices.Dr. Kline of Berkeley said Jenny R. Yang, a former chief commissioner of the E.E.O.C. and the current director of the Office of Federal Contract Compliance Programs, which has jurisdiction over federal contractors, had been apprised of the findings and had expressed interest in the researchers’ technique. (A representative of the agency declined to comment or to make Ms. Yang available.)Similar tests have been performed since the 1980s to detect discrimination in housing by real estate agents and rental property owners. Tests in which white and nonwhite people inquire about the availability of housing suggest discrimination remains rampant.Deploying this approach in the labor market has proved a bit tougher. Last year, the New York City Commission on Human Rights performed tests to detect employment discrimination — whether by race, gender, age or any other protected class — at 2,356 shops. Still, “employment is always harder than housing,” said Sapna Raj, deputy commissioner of the law enforcement bureau at the agency, which enforces anti-discrimination regulations.“This could give us a deeper understanding,” Ms. Raj said of the study by the Berkeley and Chicago researchers. “What we would do is evaluate the information and look proactively at ways to address it.”The commission, she noted, could not take action based on the kind of statistics in the new study on their own. “There are so many things you have to look at before you can determine that it is discrimination,” she argued. Still, she suggested, statistical analysis could alert her to which employers it makes sense to look at.And that could ultimately convince corporations that discrimination is costly. “This is actionable evidence of illegal behavior by huge firms,” Dr. Walters of Berkeley said on Twitter in connection with the study’s release. “Modern statistical methods have the potential to help detect and redress civil rights violations.” More

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    The Travel Industry’s Reckoning With Race and Inclusion

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    Tourists, particularly Black travelers, are paying close attention to how destinations and travel service providers approach diversity and equity after a year of social justice protests.Between the Covid-19 pandemic, which brought tourism to a near-complete halt for months on end, and last summer’s protests for social justice, the past year has been one of reckoning for the travel industry on issues of race and inclusivity.In the wake of George Floyd’s killing, everybody from hotel operators to luggage makers declared themselves allies of the protesters. At a time when few people were traveling, Instagram posts and pledges to diversify were easy to make. But now, as travel once again picks up, the question of how much travel has really changed has taken on new urgency.“From the very emergence of the Covid pandemic and especially in the wake of uprisings last summer, there’s a question about place,” said Paul Farber, the director of Monument Lab, a Pennsylvania-based public art and history studio that works with cities and states that want to examine, remove or add historic monuments. “What is the relationship of people and places? Where are sites of belonging? Where are sites where historic injustices may be physically or socially marked?”Monument Lab is one of several organizations, groups and individuals trying to change the way travelers of all colors understand America’s racially fraught history. Urging people to engage with history beyond museums and presentations from preservation societies is one approach.In turn, many travelers are paying close attention to whether companies are following through with their promises from last year. Black travelers, in particular, are doubling down on supporting Black-owned businesses. A survey released earlier this year by the consulting firm MMGY Global found that Black travelers, particularly those in the United States, Canada, Britain and Ireland, are keenly interested in how destinations and travel service providers approach diversity and have indicated that it has an influence on their travel decision-making.At Monument Lab, questions about belonging, inclusion and how history memorializes different people were coming up frequently over the past year, Mr. Farber said, particularly from travelers looking to learn about Confederate and other monuments while road tripping.In response, Monument Lab, which examines the meaning of monuments, created an activity guide called Field Trip, which allows people to pause on their trips to learn about specific monuments. On a worksheet, participants are prompted to question who created the monuments, why they were made and what they represent.The statue of Nathan Bedford Forrest, a slave trader, Confederate general and Ku Klux Klan leader, was removed from Health Sciences Park in Memphis, Tenn. in 2017. Like many other monuments in the United States, it had become a polarizing presence. Yalonda M. James/The Commercial Appeal, via Associated PressIn creating Field Trip, it became clear to Mr. Farber that there is a strong interest from travelers to learn about Black history. This sentiment is echoed by tour operators who offer Civil Rights and other social-justice-oriented tours like those focusing on the contributions of Black Americans, women and figures in the L.G.B.T.Q. community.“There are a lot of white people who for the first time have had a conversation about racial justice and maybe even heard the words ‘systemic racism’ for the first time,” said Rebecca Fisher, founder of Beyond the Bell Tours, a Philadelphia-based operator of social-justice-oriented tours that highlight marginalized communities, people and histories. “People heard the new words and now they want to learn. That doesn’t mean that it is backed up with results, but I am seeing a trend in interest.”On a tour with Beyond the Bell guests might, for example, participants hear about Philadelphia’s President’s House, but they’ll also hear about Ona Judge, an enslaved woman who escaped from George Washington’s home, and about the former president’s efforts to recapture her. One of the company’s most popular tours focuses on gay history in the city.Seeking Black-owned travel businessesBlack travelers, in particular, are increasingly looking for ways to show their support for Black-owned travel businesses.Even as the family road trip has made a comeback in the wake of the coronavirus, that sort of trip hasn’t been a source of unfettered freedom for generations of Black motorists because of Jim Crow laws enforcing racial segregation in America. And now, after a year in which protests of the police killings of Black people amplified the perils of skin color, Black travelers are seeking out Black travel agents, Black hoteliers and Black-owned short-term rentals in addition to organizing in groups dedicated to Black travelers.In fact, according to the international survey of nearly 4,000 Black leisure travelers by MMGY Global, 54 percent of American respondents said they were more likely to visit a destination if they saw Black representation in travel advertising. In Britain and Ireland, 42 percent echoed that sentiment, and in Canada that number was 40 percent.“Another highly influential factor in the decision-making process is whether the destination is perceived as safe for Black travelers,” the survey noted. “Seventy-one percent of U.S. and Canadian respondents felt safety was extremely or very influential to their decision.”In Facebook groups, Clubhouse chat rooms and across other social media platforms, Black travelers regularly ask one another for recommendations about where to travel, particularly about where others have been where they felt safe and welcome. While these questions are often about foreign destinations, in a year when Americans could largely only travel within the United States, inquiries increasingly arose about where travelers felt safe within the country.“I was just curious on some good and safe locations for a first time solo traveler here in the States,” one woman posted in a group specifically for Black women travelers in June.“Where’s a good ‘safe’ place to travel in the States?” asked another woman who was planning a 35th birthday trip with her sister.This type of community gathering, though now online, isn’t new. For decades, African American travelers have looked to one another for guidance on where to travel. The most referenced form was Victor Hugo Green’s Green Book, a guide for Black travelers that was published annually from 1936 to 1966.Last summer, facing an onslaught of messaging from travel companies saying that they supported the Black Lives Matter movement and would be committing to diversifying their ranks and finding other ways to be more inclusive, Kristin Braswell, the owner of CrushGlobal, a company that works with locals around the world to plan trips, decided to make the inclusion of Black businesses central to her work.As a Black woman with a passion for travel, she started making travel guides that focused on supporting Black businesses. Each guide, whether it be to national parks, beach towns or wine country, provides information on businesses owned by Black people as well as guidance about diversity in the area and more.“These road trips and initiatives that speak to people of color in general are important because we’ve been left out of travel narratives,” Ms. Braswell said. “If you’re going to be creating experiences where people are going out into the world, all people should be included in those experiences.”Ms. Braswell added that the bulk of her business comes from Black travelers. These travelers, she said, are looking for Black travel advisers who have the knowledge of places where they are welcomed and can help them plan their trips. Over the past year travelers across racial backgrounds have been increasingly asking for tours and experiences that include Black-owned businesses, she said.Across the country, as people protested against police brutality, travelers demanded to see more travelers who looked like them in advertising; they spoke out against tourism boards that hadn’t been inclusive in the past and formed organizations like the Black Travel Alliance, calling for more Black travel influencers, writers and photographers to be employed.The Alliance and others have been pushing for more Black travelers to be visible and included in the industry and in spaces of leisure travel.Going beyond museumsAt the same time, tour providers like Free Egunfemi Bangura, the founder of Untold RVA, a Richmond-based organization, are offering tours that center on the contributions of Black people. In a city such as Richmond, which was once a capital of the Confederacy, she said that means seeing the value of working outside the established system of preservation societies and museums that are typically run by white leadership.To Ms. Bangura and other activists, artists and tour operators, museums and traditional preservation societies are part of the culture of exclusion that has historically left Black people out and continues to present versions of history that focus on white narratives. Ms. Bangura’s tours take place on the streets of the city as a better way to understand the local history.At a time when state legislatures are pushing for and passing laws that limit what and how much students learn about the contributions of Black and other marginalized people to the country, Ms. Bangura and others said, tours that show their contributions are even more important.“There is a way to take these experiences out of the hands of the traditional preservation community, so you don’t have to go into the walls of a museum,” Ms. Bangura said, adding that another reason institutions like museums aren’t optimal is because some people aren’t keen to visit them. “But think of how often it is that after you come outside of a Black-owned coffee shop, you’re actually able to hear about some of the Black people in that neighborhood or people that fought for Black freedom.”Kalela Williams, the founder of Black History Maven, leads a tour in Philadelphia’s Seventh Ward.Whitney IngramAdditionally, although the tourism industry took a hit last year, outdoor activities continued to draw visitors, making outdoor tours like Ms. Bangura’s and Ms. Fisher’s of Beyond the Bell popular. Ms. Bangura said the style of her offerings makes them accessible for all travelers, especially those without access to smartphones for scanning QR codes or those unable to take part in headphone-aided tours.Among the several kinds of tours and experiences Ms. Bangura has created is Black Monument Avenue, a three-block interactive experience in Richmond’s majority-Black Highland Park neighborhood. Visitors can drive through and call a designated phone line with unique access codes to hear songs, poems and messages about each installation. Every August, she runs Gabriel Week, honoring Gabriel Prosser, an enslaved man who led a rebellion in the Richmond area in 1800.“I call him brother General Gabriel,” Ms. Bangura said, adding that in her work, she encourages “people to decolonize their history by making sure that history is being told from the language of the oppressed, not the language of the oppressor.”Walking tours, for those who go on them, also provide a visceral sense of history that differs from the experience of a museum. Even as the National Museum of African American History and Culture has attracted record numbers of visitors to Washington, D.C., tours like Ms. Bangura’s can provide a more local perspective and show visitors exactly where something significant happened.“We can find community in walking together, we can find community in exploring a neighborhood together, and we can find a sense of where we are, we can find a sense of where folks have been and we can find common ground,” said Kalela Williams, the founder of Black History Maven, a Philadelphia company that primarily offers walking tours of the city that focus on Black history.“It’s important to see where things were, how things were working in relation to one another,” she said. “You can see the proximity of folks’ houses and schools and churches. You can imagine how folks would have walked around and navigated and visited each other in a way that you might not in a museum.”THE WORLD IS REOPENING. LET’S GO, SAFELY. Follow New York Times Travel on Instagram, Twitter and Facebook. And sign up for our Travel Dispatch newsletter: Each week you’ll receive tips on traveling smarter, stories on hot destinations and access to photos from all over the world. More

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    Black Workers Stopped Making Progress on Pay. Is It Racism?

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    William Spriggs, a professor at Howard University, wrote an open letter last year to his fellow economists. Reacting to the police killing of George Floyd in Minneapolis, he began the letter with a question: “Is now a teachable moment for economists?”Slamming what he saw as attempts to deny racial discrimination, Dr. Spriggs argued that economists should stop looking for a reason other than racism — some “omitted variable” — to account for why African Americans are falling further behind in the economy.“Hopefully, this moment will cause economists to reflect and rethink how we study racial disparities,” wrote Dr. Spriggs, who is Black. “Trapped in the dominant conversation, far too often African American economists find themselves having to prove that African Americans are equal.”After a year in which demands for racial justice acquired new resonance, Dr. Spriggs and others are pushing back against a strongly held tenet of economics: that differences in wages largely reflect differences in skill.While African Americans lag behind whites in educational attainment, that disparity has narrowed substantially over the last 40 years. Still, the wage gap hasn’t budged.In 2020, the typical full-time Black worker earned about 20 percent less than a typical full-time white worker. And Black men and women are far less likely than whites to have a job. So the median earnings for Black men in 2019 amounted to only 56 cents for every dollar earned by white men. The gap was wider than it was in 1970.Lost ProgressEarnings of Black men, as a percentage of the earnings of white men, are at the same place they were in the 1960s and 1970s. More

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    Biden’s Budget Has Racial Equity Efforts Baked In

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    The budget, which was released on Friday, includes tens of billions of dollars worth of programs intended to bolster the fortunes of people of color and other historically underserved groups.WASHINGTON — Six days after his inauguration, President Biden vowed that his administration would see everything through the lens of racial equality, making it “the business of the whole of government.”On Friday, his $6 trillion budget began to make good on that promise.Sprinkled throughout the president’s enormous spending plan are scores of programs amounting to tens of billions of dollars intended to specifically bolster the fortunes of Black people, Asian people, tribal communities and other historically underserved groups in the United States.Mr. Biden is not the first president to spend money on such programs. And civil rights advocates said the budget released on Friday fell short in some critical areas like student loans, where they say even more money is needed to rectify a longstanding lack of fairness and a lopsided burden being carried by minorities.“It’s going in the right direction, but it’s not a perfect document,” said Derrick Johnson, the president of the N.A.A.C.P., who said he was disappointed that the president’s budget did not call for canceling student loan debt, which falls disproportionately on Black Americans.But he added that his organization was pleased that the president was “continuing to make one of his priorities equity” via the budget.That idea — of focusing special attention on the distribution of taxpayer money across racial groups — has never been approached as methodically as it has this year by Mr. Biden, advocates say. Asked about the president’s equity agenda on Friday, Shalanda Young, the president’s acting budget director, said her department had “built that in” to the overall spending plan by giving “clear directions to our agencies that they are to use that lens as they implement these programs.”“This is not something we should have to call out,” she said. “This is something that should be pervasive in how the government does its business.”Much of the president’s vast budget directs spending that is not explicitly distributed based on race: health care, education, the military, transportation, agriculture, retirement programs and foreign policy, among other areas.But within all of those programs, Mr. Biden’s team has proposed increased spending with the goal of ensuring that people of color and others who are often left behind get a bigger share of the overall pie.Among the budget items, big and small, that are driven by equity:$3 billion to reduce maternal mortality and to end race-based disparities in maternal mortality.$15 billion for “Highways to Neighborhoods,” a program that would reconnect neighborhoods cut off by infrastructure projects developed decades ago.$900 million to fund Tribal efforts to expand affordable housing.$936 million for an Accelerating Environmental and Economic Justice initiative at the Environmental Protection Agency.$110 million for a Thriving Communities initiative, to foster transportation equity through grants to underserved communities.$39 billion for tuition subsidies to low- and middle-income students attending historically Black colleges and universities and those serving other minority groups.Mr. Biden foreshadowed that kind of budgetary decision-making in his first days in office. In a speech announcing his “equity agenda,” the president said he was committed to going further than his predecessors when it came to considering groups that had, in his words, been too often left behind.“We need to open the promise of America to every American,” he said during the speech on Jan. 26. “And that means we need to make the issue of racial equity not just an issue for any one department of government.”That approach has incited anger from conservatives, who accuse the president and his advisers of pursuing a racist agenda against white Americans. Fox News ran a headline accusing Mr. Biden of trying to “Stoke Nationwide Division With ‘Racial Equity’ Push.” And The New York Post published an editorial, titled “In Push for Woke ‘Equity,’ Biden Abandons Equality,” that accused the president of being “un-American.”The budget contains “Highways to Neighborhoods,” which reconnects neighborhoods cut off by historic infrastructure projects, such as Claiborne Avenue in New Orleans.Abdul Aziz for The New York TimesA group called America First Legal, which is run by Stephen Miller and Mark Meadows, two top aides to former President Donald J. Trump, won a preliminary injunction this week from a Texas judge against an effort by Mr. Biden’s Small Business Administration to prioritize grants from its $28.6 billion Restaurant Revitalization Fund to businesses owned by minorities or underserved groups.“This order is another powerful strike against the Biden administration’s unconstitutional decision to pick winners and losers based on the color of their skin,” the group said in a statement.The president appears unlikely to back down. In a speech days after his inauguration, he vowed that “every White House component, and every agency will be involved in this work because advancing equity has to be everyone’s job.”Still, for all of Mr. Biden’s forceful rhetoric — he once pledged to no longer allow “a narrow, cramped view of the promise of this nation to fester” — his administration made little effort on Friday to focus attention on that principle or to highlight details about how an equity-driven approach would change the way the government spends its money..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 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(min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}During a news conference to introduce the budget on Friday, Ms. Young and Cecilia Rouse, the chairwoman of the White House’s National Economic Council — both of whom are Black women — did not mention the president’s equity agenda until a reporter asked about it toward the end.And the budget itself does not try to quantify the effect of following the president’s guidance to make decisions based on a sense of racial equity. There is no “equity” section of the budget. Aides did not send out fact sheets to reporters on Friday promoting the “equity spending” in the president’s inaugural budget.That left some of the public relations work to civil rights groups and other advocates, who quickly pointed to examples of spending that would benefit communities who had traditionally been left behind by previous presidents.Sara Chieffo, the chief lobbyist for the League of Conservation Voters, an pro-environment group, pointed to the $936 million Accelerating Environmental and Economic Justice initiative at the Environmental Protection Agency, which is aimed at cleaning up the environment in underserved communities.“The importance of this administration’s proposal to make the largest-ever investment in communities of color and low-income communities who have been subjected to environmental racism for decades cannot be overstated,” Ms. Chieffo said.Marcela Howell, the president of In Our Own Voice: National Black Women’s Reproductive Justice Agenda, praised the president for investing in programs that specifically benefit Black women.“Kudos also go to President Biden for funding important programs to address racial equity and economic security,” she said in a statement, adding that “we applaud the proposed investments in infrastructure and job creation, affordable child care and work force training, education” and more.The Planned Parenthood Federation of America issued a statement thanking Mr. Biden for what the group called “important investments” that it said would help to “address the maternal mortality crisis and its devastating impact in communities of color.” More

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    Banks Fight $4 Billion Debt Relief Plan for Black Farmers

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    Lenders are pressuring the Agriculture Department to give them more money, saying quick repayments will cut into profits.WASHINGTON — The Biden administration’s efforts to provide $4 billion in debt relief to minority farmers is encountering stiff resistance from banks, which are complaining that the government initiative to pay off the loans of borrowers who have faced decades of financial discrimination will cut into their profits and hurt investors. More

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    Jerome Powell strikes a hopeful tone but emphasizes the pandemic’s uneven costs.

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    Jerome H. Powell, the Federal Reserve chair, struck a hopeful tone about the United States economy in a speech on Monday — but he emphasized that the economic fallout from the coronavirus pandemic has disproportionately harmed vulnerable communities.“While some countries are still suffering terribly in the grip of Covid-19, the economic outlook here in the United States has clearly brightened,” Mr. Powell said. And in the United States, “lives and livelihoods have been affected in ways that vary from person to person, family to family, and community to community.”Mr. Powell used the remarks to preview an upcoming Fed report that will show how Black and Hispanic workers lost jobs at a greater rate in pandemic lockdowns and how the pandemic pushed mothers out of the labor force and made it harder for people without college degrees to hang onto work.Among the statistics he highlighted from the Survey of Household Economics and Decisionmaking, which he said will be released later this month:About 20 percent of adults in their prime working years without a bachelor’s degree were laid off last year, compared to 12 percent of college-educated workers.More than 20 percent of Black and Hispanic prime-age workers were laid off in 2020, versus 14 percent of white workers.Roughly 22 percent of parents were not working or were working less thanks to child-care and school disruptions.About 36 percent of Black mothers, and 30 percent of and Hispanic mothers, were not working or were working less.“The Fed is focused on these longstanding disparities because they weigh on the productive capacity of our economy,” Mr. Powell said. “We will only reach our full potential when everyone can contribute to, and share in, the benefits of prosperity.”Mr. Powell said that while achieving an equitable economy is the job of many parts of government, the Fed has a role to play with both its economic tools and in its bank supervision and community development work.“Those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities,” Mr. Powell said. “We see our robust supervisory approach as critical to addressing racial discrimination, which can limit consumers’ ability to improve their economic circumstances.” More

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    Beyond Pandemic’s Upheaval, a Racial Wealth Gap Endures

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    Billions in aid has been dispensed, and the social safety net has been reinforced. Will there be more ambitious steps to address longtime inequities?Not since Lyndon Baines Johnson’s momentous civil rights and anti-poverty legislation has an American president so pointedly put racial and economic equity at the center of his agenda.President Biden’s multitrillion-dollar initiatives to rebuild infrastructure in neglected and segregated neighborhoods, increase wages for health care workers, expand the safety net and make pre-K and college more accessible are all shot through with attention to the particular economic disadvantages that face racial minorities. So were his sweeping pandemic relief bill and Inauguration Day executive orders.Yet as ambitious as such efforts are, academic experts and some policymakers say still more will be needed to repair one of the most stubborn and invidious inequalities: the gap in wealth between Black and white Americans.Wealth — one’s total assets — is the most meaningful measure of financial strength. Yet for every dollar a typical white household has, a Black one has 12 cents, a divide that has grown over the last half-century. Latinos have 21 cents for every dollar in white wealth.Such disparities drag down the American economy as a whole. A study by McKinsey & Company found that consumption and investment lost because of that gap cost the U.S. economy $1 trillion to $1.5 trillion over 10 years, or 4 to 6 percent of the projected gross domestic product in 2028.Mr. Biden started talking about the wealth divide on the campaign trail, calling on the Federal Reserve to take on a new role and “aggressively target persistent racial gaps in jobs, wages and wealth.”Vice President Kamala Harris and several Democratic senators have supported proposals targeted specifically at the gap — from increasing Black homeownership to establishing trust accounts for newborns (“baby bonds”). And senior economic advisers who have joined the Biden team, including Cecilia Rouse and Jared Bernstein, have talked about the need for programs that attack structural inequities, noting that disparities in income over time create more entrenched gaps in wealth.Heather Boushey, a member of the White House Council of Economic Advisers, said the president’s proposals were intended to work together to make sure that unexpected or temporary economic jolts — like the loss of a job — didn’t snowball into a disastrous tumble.“No one thing alone is going to check the box to close the wealth gap, but the combination of all these things together will make real progress,” said Ms. Boushey, who has written frequently about the issue.Government support is crucial, economists say, because there is so little that individuals can do on their own to close the wealth gap. The most surprising finding that researchers at the Federal Reserve Bank of St. Louis established after a decade-long study of inequality and financial vulnerability was that no matter what financial decisions you make or schools you attend, roughly 80 percent of those yawning disparities are determined by your skin color, the year you were born and your gender.Median wealth of Black, Hispanic and white households

    Note: Figures adjusted for inflationSource: Federal Reserve Bank of St. LouisThe New York Times“There’s a lot you don’t control,” said Ray Boshara, who headed the research effort. “These larger forces really have an impact on your ability to accumulate wealth.”Imagine playing a game of Monopoly with a set of rigged rules. Your opponent gets $2,000 in cash, rolls with two dice at every turn, and earns $200 every time he circles the board and passes “Go.” You, by contrast, begin with only $1,000, roll with a single die and earn $100 at “Go.”At the game’s end, you can hand off whatever cash and property you’ve accumulated to a friend or family member, and the next round just continues.The rigged game helps explain the origins of the wealth gap. The heavy hand of a history studded by intimidation and terrifying violence, segregation and unfair housing, zoning and lending policies has prevented generations of Black families from gathering assets.In the 19th century, when the government distributed the country’s most realizable asset — land — during the Homestead Act, African-Americans were left out. In the 20th century, when the focus shifted to building a berth in the middle class through homeownership, African-Americans were again largely excluded from federal mortgage loan support programs and the G.I. Bill of Rights. Tax policies, in turn, favored the wealth-building strategies that were offered to whites.Even New Deal assistance programs like unemployment insurance that were created to help people survive the Depression excluded agricultural and domestic workers, who were overwhelmingly Black.Again and again, African-Americans were shut off from the capital that makes capitalism work.“That’s how we built the racial wealth gap,” said William A. Darity Jr., an economics professor at the Sanford School of Public Policy at Duke University. “Unless you have a comparable program focused on building Black wealth, you’re not going to do much about it.”Unequal outcomes in one generation turn into unequal opportunities in the next. Without assets, Black parents cannot offer as much financial support to help pay for their children’s education, first home or efforts to start a small business.Black graduates, for example, have to take out bigger loans to cover college costs, compelling them to start out in more debt — on average $25,000 more — than their white counterparts.Recognizing an uneven playing field is not as obvious as it might seem. The lopsided Monopoly rules were developed by social scientists at the University of California, Berkeley, nearly a decade ago as part of an experiment on money’s effect on human behavior.They found that winners consistently credited their hard-earned skills and smarts for their success rather than a skewed playing field.Research shows that outside forces prevent Black workers who are just as talented and hardworking from achieving the same success as their white peers.Harold M. Lambert/Getty ImagesThat all-too-human response clouds thinking about inequality, said Paul Piff, who led the research team and is now a psychologist at the University of California, Irvine.Americans, much more than people from other countries, interpret “their advantages in terms of things they themselves have earned or deserved as opposed to thinking it’s the result of an unfair world,” Professor Piff said. “Then the inequalities you’re seeing aren’t unfair, they’re just necessary outcomes of things that people did or didn’t do,” he said, so you are less willing to do anything about them.Mr. Boshara at the St. Louis Fed said the implications were particularly pertinent in thinking about the racial wealth gap.“People feel they’ve earned everything they have, but the evidence just doesn’t support that,” said Mr. Boshara, who is helping to lead a follow-up research initiative at the bank, the Institute for Economic Equity. “It counters the American narrative that everybody who has something made it on their own.”Challenging shibboleths about hard work and personal responsibility can meet resistance. People often take immediate offense, interpreting the argument as detracting from their own demonstrable hard work, skills and talent. What the research highlights, though, are the outside forces that prevent other individuals who are just as talented and hardworking from achieving the same success.The same house in a Black neighborhood will fetch less money than it would in a white one. A Black worker with the same credentials as a white colleague will earn less. Even among college graduates, the Black jobless rate tends to be twice as high as the rate for whites. Such inequities operate like an invisible tax on African-Americans, a tax on being Black.The pandemic has underscored how crushing unpredictable and uncontrollable twists in circumstances can be. When Congress approved the $1.9 trillion relief plan, Mr. Biden pointed out that millions of Americans were jobless and lining up at food banks “through no fault of their own.”“I want to emphasize that,” he added. “Through no fault of their own.”The pandemic has hit African-Americans and Latinos hardest on all fronts, with higher infection and death rates, more job losses, and more business closures.Proposals that confront the wealth gap head on, though, are both expensive and politically charged.Professor Darity of Duke, a co-author of “From Here to Equality: Reparations for Black Americans in the Twenty-First Century,” has argued that compensating the descendants of Black slaves — who helped build the nation’s wealth but were barred from sharing it — would be the most direct and effective way to reduce the racial wealth gap.Vice President Harris and Senators Bernie Sanders of Vermont, Elizabeth Warren of Massachusetts and Cory Booker of New Jersey have tended to push for asset-building policies that have more popular support. They have offered programs to increase Black homeownership, reduce student debt, supplement retirement accounts and establish “baby bonds” with government contributions tied to family income.With these accounts, recipients could build up money over time that could be used to cover college tuition, start a business or help in retirement.Several states have experimented with small-scale programs meant to encourage children to go to college. Though those programs were not created to close the racial wealth gap, researchers have seen positive side effects. In Oklahoma, child development accounts seeded with $1,000 were created in 2007 for a group of newborns.“We have very clear evidence that if we create an account of birth for everyone and provide a little more resources to people at the bottom, then all these babies accumulate assets,” said Michael Sherraden, founding director of the Center for Social Development at Washington University in St. Louis, which is running the Oklahoma experiment. “Kids of color accumulate assets as fast as white kids.”Without dedicated funds — the kind of programs that enabled white families to build assets — it won’t be possible for African-Americans to bridge the wealth gap, said Mehrsa Baradaran, a law professor at the University of California, Irvine, and the author of “The Color of Money: Black Banks and the Racial Wealth Gap.”She paraphrased a 1968 presidential campaign slogan of Hubert Humphrey’s: “You can’t have Black capitalism without capital.” More