Business leaders, civic officials and local changemakers convened at a Nov. 16 U.S. News & World Report forum to discuss solutions for addressing financial inequity in New York and the country as a whole. Panelists widely agreed that the private and public sectors must work together to implement strategies for making the economy more equitable for all.
The event, “The State of Equity in America,” featured speakers from national and New York organizations across a range of sectors, including Mastercard, Planned Parenthood, the New York City Office of the Mayor, Empire State Development and The City University of New York, among others.
To set the tone for the day, Harris Poll CEO John Gerzema presented recent data from a U.S. News & World Report and Harris Poll survey highlighting racial disparities in the U.S. economy. For example, when compared to white Americans, Black and Hispanic Americans experience more difficulty affording living expenses; they’re more concerned about losing a job, and they’re more likely to report missing bill payments.
“What we see is that white Americans see an economic concern at the macro level, whereas people of color see it at the micro level,” said Gerzema. In other words, while many white Americans experience more general anxiety about the broader economy and inflation, many Black and minority Americans are more likely to endure the tangible financial hardships – “hard costs of living and real-life economic anxiety.”
Additionally, Americans of color feel that they don’t have access to the same wealth-building tools as white Americans. “Traditional investing has systemic racial barriers towards people of color,” Gerzema said. “They feel unfairly treated by banking and loan institutions.”
Despite all of the financial challenges facing people of color, many maintain “a sense of American optimism … a real sense of hope,” Gerzema added. He cited findings from the U.S. News-Harris Poll survey that revealed that Black Americans are more optimistic about the U.S. economy at large and the promise of the American dream.
So, how can those in positions of power create a more inclusive economy for all Americans, so that those who are hopeful to improve their financial standing have access to the same tools as everyone else? Throughout the program, forum experts shared their perspective and potential solutions in a series of discussions that explored housing, the economy at large and New York’s economic ecosystem.
“The thread that I’ve heard throughout the day here is that public and private sectors have to work together,” said Shamina Singh, founder and president of the Mastercard Center for Inclusive Growth, as well as executive vice president of corporate sustainability.
Big Picture: ‘Upending’ the Foundations of Financial Inequity
Financial inequity didn’t materialize overnight. It’s been widening for decades. Speakers touched on redlining policies that suppressed Black homeownership, and how public education is funded in many communities by property taxes, putting students living in low-income areas at an inherent disadvantage.
Many more systems were built upon this flawed foundation, said Maria Torres-Springer, New York City deputy mayor for economic and workforce development. Addressing the inequities inherent in the system, she added, will take “upending” the foundation itself.
“Simple programs cannot undo what policy over time has forged,” Torres-Springer said. “So what that means for us in city government is really looking at those systems that, frankly, for too long have betrayed New Yorkers,” including education, health care and child care – “systems that haven’t just contributed to inequality, but have entrenched it.”
The federal poverty level is another foundational issue that contributes to financial inequity, said Jennifer Jones Austin, CEO of the Federation of Protestant Welfare Agencies, an anti-poverty and advocacy organization. She pointed to the “structural economic deprivation” enabled by the current poverty level for a family of four living in America, which is $27,750.
“If we continue to build programs and policy on flawed foundations, what are you going to get? Flawed policies and flawed programs,” Jones Austin said. “Until you address that, everything else you do is like doing the same thing over and over and expecting different results.”
“Regardless of the struggle, if we are not committed to systemic change, it could bring us back here in another 30 or 40 years, and we’ll be talking about the same exact thing,” added Denise Scott, president of Local Initiatives Support Corporation (LISC), a national nonprofit community development organization.
Scott said that it’s also important to look at the bigger picture by promoting wealth equity, not just income equity. Building wealth through homeownership, investments and business ventures will have a longer-lasting impact than simply generating temporary gains in earnings, she added.
“We are looking at wealth as one of the big gaps, not just income,” said Scott of the work being done at LISC. “And looking at opportunities to push homeownership, small business creation – some of that work is still important even in a time when the economy doesn’t work in our favor.”
Still, progress can’t be made in the public and nonprofit sectors alone. Private business has “an enormous impact on the quality of the local economy,” said Darren Walker, president of the Ford Foundation, a national nonprofit organization aimed at promoting human welfare.
But business has become more “outward-directed” over the past 40 years, said Kathryn S. Wylde, president and CEO of the Partnership for New York City, which focuses on building connections between the government and business communities. “I think that has come at the expense of really focusing on the local equity issues.”
Finding Balance in a Rental Housing Crisis in New York
Shifting the blame to real estate developers seems to be an easy way out for those who are looking for a housing crisis scapegoat, particularly in a high-cost-of-living city like New York. But some of the prominent thought leaders in the housing space believe that partnering with developers is key to building a path forward for the future of an affordable and equitable housing market.
“The developers – and the construction industry, and the financial industry – have to be part of the solution, so demonizing them is not productive,” said Alicia Glen, founder of MSquared, a real estate development and investment platform, at the U.S. News forum.
Developers and policymakers are critical for the construction of mixed-income housing that includes units at various price points, in contrast to expensive luxury housing. Mandatory inclusionary housing as a solution has yielded positive results in New York City, said Barika Williams, executive director of the Association for Neighborhood and Housing Development, a community organization in the city.
In addition to mixed-income housing, the right to legal counsel has protected many of New York City’s renters from eviction and homelessness, Williams said. Many advocates and developers, however, have differing opinions on rent regulation, another proposed solution to rising housing costs.
Even with a few key wins among policymakers, there’s still work to be done to address New York’s housing crisis, Glen and Williams said, noting that things can’t be solved with a free-market approach alone. Williams and Glen agreed that developers, philanthropic groups, and others across the public and private sectors must work together to create a more realistic rental environment by understanding the market’s target audience: the renters themselves.
“In a city where 50% of our household’s population are renters who need units $1,500 [a month] or below, we are not going to address this entirely with market-based solutions,” Williams said. “Part of the solution has to be recognizing that we have a population that cannot compete in a market where the average two-bedroom is two or three thousand dollars, they just can’t do it.”
Attracting Tech Talent to New York in the Era of Remote Work
In New York, where a significant component of the city’s tax base comes from commercial real estate, the rise of remote work lessening workers in offices amid the COVID-19 pandemic has been particularly challenging. Less tax revenue for the city means less funding for the programs that are critical to the welfare of New Yorkers who need help the most, experts noted at the U.S. News forum.
“Our economy is being fundamentally changed by the forces of technology and lifestyle, and that’s not good for the office market,” said Richard Mack, CEO and co-founder of Mack Real Estate Group, a New York-based developer. “And it portends a lot of problems for the structure of New York as we know it today. People, from an economic perspective, take mass transit, go into offices, spend money and then leave. That’s an economy that we’ve built a substantial infrastructure around.”
One solution is for policymakers to look into the regulatory challenges of repurposing commercial space, said Hope Knight, president, CEO and commissioner of Empire State Development, New York’s state economic development agency. She believes one way to ameliorate the problem is to increase mixed-use space, creating 24/7 communities where people can thrive even when they aren’t going into the office.
“We’ve got to rethink the future of commercial real estate in New York City,” Knight said.
Rebuilding the infrastructure of New York is also key to attracting and retaining talent in the tech industry, which panelists said is vital to the future of the regional economy. Beth Ferreira, partner at the venture capital firm FirstMark, said that tech companies are continuing to move and build in New York, partly because “young people want to be here.”
Local leaders in education also have a role in establishing New York City’s standing as an influential technology hub rivaling Silicon Valley. That’s a priority for Félix V. Matos Rodríguez, chancellor of The City University of New York, which counts more than two dozen campuses across the city’s five boroughs. He understands the need for higher ed institutions like CUNY to create “pipelines” to the tech industry, acting as a network between students and tech companies.
“When you have those sustained relationships, you’re going to be able to weather a negative economic cycle in a stronger way … in a way that builds a recovery that’s equitable,” Matos Rodríguez said. And to solidify the theme of the forum, it will take the public and private sectors working together to prepare New York for the future of tech – particularly in the era of remote work.