Recovery Together: Developing a Collective and Equitable Approach to Economic Recovery
Over the last several months of the pandemic and in the wake of the racial justice uprisings, there has been a steady drumroll of corporate commitments to racial equity, justice, and reducing economic inequity. JP Morgan Chase committed $30 billion. CitiGroup committed $1.5 billion. Bank of America committed $1 billion. Dozens of other corporations like PayPal, Apple, Adidas, and Andreessen Horowitz have committed to large contributions and changes in practice, including setting bold hiring and procurement goals, investing in Black businesses, and procuring more inclusively.
When we add them all up, the numbers and efforts are impressive, staggering even. But how do they compare to the cost of racial injustice and inequality? And, given the systemic nature of economic inequality, how much of a difference can individual corporate commitments make without being part of a larger vision? Anyone who knows the Center for Community Investment can recognize that just committing the capital is not enough. We must create the enabling environment for that capital to land in the communities that need it most.
I live on the South Side of Chicago in South Shore, the community Michelle Obama called home as a child. We are a beautiful and economically diverse community. I live three blocks from Lake Michigan. We enjoy easy access to commuter rail downtown. Our architecture is magnificent. On paper, it would make sense to invest in South Shore. Yet we have struggled for decades to see investment in our neighborhood and have been one of the Chicago communities hardest hit by COVID-19 cases and deaths, both early on and over the course of the pandemic. And South Shore is just one of the many majority-Black neighborhoods in the city that continue to languish as a result of structural racism and entrenched segregation.
Our region has worked to quantify the costs of our notorious racial and economic segregation. We would generate an additional $4.4 billion in income for local residents if we reduced segregation to the level of other large regions. Let us reflect on that: $4.4 billion in just one region of the country. And this is a pre-pandemic estimate. Here in Chicago, as in many other areas across the United States, we are bracing ourselves for the full economic fallout from COVID-19. Majorities of Black (69%) and Latinx (63%) households in Chicago have reported serious financial problems during the pandemic including depleted savings and the inability to pay rent, mortgages, utilities, car payments, and credit cards.
But how do we recover equitably when we have no roadmap? Never in our country’s history have Black people been able to benefit fully from the recovery after an economic downturn. Take the Great Depression: Roosevelt’s New Deal locked many Black workers out of Social Security and National Labor Relations Act protections by excluding many of the occupations Black workers held, such as domestic work, to appease Southern states. Because states were given control over the G.I. Bill, Black World War II veterans were steered away from college and into vocational training. They couldn’t get mortgages due to redlining and racially restrictive covenants.
A recent study looked at the predatory practice of contract sales in Chicago between the 1950s and 1960s. Contract sales required buyers to make monthly payments at extremely high interest rates after large down payments. The contract seller retained the deeds to homes and could evict buyers, who accumulated no equity. This scheme took advantage of Black families, who could not get traditional federally-backed mortgage products and were not allowed to purchase homes in many neighborhoods, by steering them into exorbitantly priced and risky lease-to-own contracts. This practice alone stripped $4 billion from its victims.
However, we don’t need to look back that far. The housing recession of the mid-2000s stripped away the small wealth gains Black families had made, as so much of their wealth was tied up in their homes. Without the diverse asset portfolios held by white households thanks to intergenerational wealth transfers, Black families were left behind during the housing recovery. Between 2005 and 2009, the median net worth of Black households dropped by 53 percent, while white household net worth dropped by 17 percent. Early outcomes of COVID-19 relief actions have also been concerning. For example, small businesses and businesses of color faced challenges getting support from the Paycheck Protection Program, given long standing issues with access to capital and the lack of traditional banking relationships needed to access these grants and loans.
These past recovery experiences serve as important proof that “rising tides lift all boats” strategies do not work in an economically unequal America. So this time, Chicago is working to do things differently. At the onset of the COVID-19 crisis, The Chicago Community Trust partnered with United Way of Metro Chicago to launch the Chicago Community Covid-19 Response Fund, which raised and deployed approximately $35 million to support the communities, organizations, and families hardest hit physically and economically by the pandemic.
As the pandemic dragged on, we began to talk with civic partners about recovery. We wanted to take the lessons learned from our COVID-19 relief efforts and other collective civic efforts of the past and apply them towards developing a new approach aimed at garnering more just economic recovery outcomes. The result of these conversations is that we are seizing this moment to develop a longer-term and more equitable regional recovery effort: We Rise Together, which will focus on targeted solutions to address the economic impacts of COVID-19 and accelerate economic recovery for Black and Latinx communities.
In developing and co-designing We Rise Together, The Chicago Community Trust and its partners first looked to existing (pre-pandemic) community-led and community-informed efforts that resulted in recommendations for creating a more equitable regional economy. We then tapped the thought partnership of leading national think tanks like the Urban Institute, New America, and the Brookings Institute to identify evidence-based recovery strategies. In collaboration with the Metropolitan Planning Council, New America Chicago, and Chicago United for Equity, we are building an ongoing community engagement process. We are also engaging a steering committee that has equal parts community, private sector, and philanthropic representation and includes key city and county government stakeholders as ex-officio members.
Prioritizing equity on every front, we are including Black and Latinx community members as decision-makers in We Rise Together’s governance, investing first in what has already been prioritized by local change makers and coalitions, and creating working groups to bring more voices to the table. We plan an ongoing engagement effort to seek input as we stay abreast of the inevitable evolution of priorities and the recovery context and adjust appropriately.
Our three-pronged approach to collective vision and action includes securing private-sector commitments to instituting more equitable business practices, advancing policy change, and funding strategic initiatives. Our initial areas of focus include housing stability, workforce, financial services, wealth creation, and neighborhood investment. As we do this work, we are facing head-on the complexities of bringing together the communities most impacted by the recession with the private, civic, philanthropic, and public sectors to advance collective efforts that will together add up to more than the sum of their parts. We do not have all the answers, but we know that we do not want to replicate the traditional process by which power brokers decide what is best for the communities most impacted by economic inequality.
No one city, corporation, or community can solve racial and economic inequality. Across this country, we must forge a new way to work together, increase impact, and mitigate the unintended (or, sadly, sometimes intended) consequences of not engaging the people who have been most impacted by structural racism and economic exclusion in finding solutions. Through collective action, fundraising and grant making, We Rise Together aims to dismantle barriers to opportunity and ensure the Chicago region emerges from these challenging times stronger, more equitable, more just, and more prosperous.
Joanna Trotter is the Senior Director of Community Impact for The Chicago Community Trust, a community foundation serving the Chicago region. The Chicago Community Trust aims to create a thriving, equitable, and connected Chicago and has prioritized closing the racial and ethnic wealth gap as its central strategy. Joanna leads the Trust’s Growing Household Wealth portfolio.