Regional President Speech

Home / News / Speeches / Thomas I Barkin / 2020 Our nation has recently increased its focus on a tragic reality: Life outcomes vary widely by race. In June, the unemployment rate for black Americans was 15.4 percent, more than 5 percentage points higher than the rate for white Americans (10.1 percent). Even before the current crisis, when unemployment was at historic lows, there was a gap of around 3 percentage points. Median income for white households in 2018 was $71,000, compared to $41,000 for black households. The wealth gap is even larger: White households’ median net worth is nearly 10 times higher than that of black households. More than one-third of white adults have bachelor’s degrees while only about one-�fth of black adults do. And if you’re white, you’re even likely to live longer. Here in Richmond, Virginia, life expectancy can vary by as much as 20 years between some of the poorest, mostly black neighborhoods and the most a�uent, mostly white neighborhoods. This has been made all too clear by the disproportionate toll the pandemic is taking on communities of color. In the Fifth Federal Reserve District, which spans from South Carolina through Maryland and most of West Virginia, a larger share of our population is black, at 22.6 percent, compared to 12.3 percent in the country as a whole. That’s not surprising given our history: Every state (including the District of Columbia) was a slave state, even those that did not secede from the Union. My o�ce is in the former capital of the Confederacy. When I look out my window, I can see the island where Union prisoners of war were held and the ruins of a bridge burned by retreating Confederate troops. The legacy of this era still a�ects outcomes today, in ways both obvious and subtle. Our small towns also have a larger black population than in the nation as a whole; nearly 20 percent of our small-town residents are black compared to about 9 percent nationwide. This is particularly true in the Carolinas, where many plantations were located. Nearly 37 percent of South Carolina’s small-town population is black. And we know smaller towns in this country have struggled to keep pace with the growth in the cities. There are of course also signi�cant black populations in our district’s major cities, and these cities are thriving along many dimensions. But — with the exception of the District of Columbia, which is a unique circumstance — they also display some of the worst economic mobility in the country. According to research by economists Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, Charlotte, North Carolina, has the worst economic mobility of the nation’s 50 largest metro areas. Raleigh was number 48 on the list, and Baltimore was number 37. (Atlanta, another southern city, came in 49th.) Education is critical to growing incomes and wealth. But the black residents of our region were explicitly denied equal access to education for 100 years after the Civil War. I attended recently integrated public schools in Tampa, Florida. My black classmates clearly started at a disadvantage, and we know that kind of disadvantage can be hard to overcome even generations later. Even after schools became integrated, “white �ight” to private schools and the suburbs largely re-segregated southern school systems once again. And limitations on cities’ ability to grow (and in some cases their ability to operate) left their educational funding disadvantaged as well. For example, Baltimore’s current boundaries were e�ectively �xed by a 1948 change in the law that allows county residents to reject any future annexation attempts by the city. The Jim Crow era limited black individuals’ ability to access credit, build businesses and thereby create wealth. Many instead chose to emigrate from the south to seemingly more attractive parts of the country. Those who remained have struggled with credit for generations, starting with the sharecropping model that left so many in peonage. And for years, many Deep South states have been comparatively reluctant to spend on local services, which disproportionately go to and provide jobs for the disadvantaged. The regional Fed banks are charged with understanding the dynamics within our districts. In pursuit of that goal we have been investing in research that addresses these issues and the racial inequities that result. We have made a big investment in analyzing how to support smaller towns, where residents su�er from educational disparities, inability to connect to jobs, isolation, and low workforce participation. We have work underway on economic mobility, a particular issue in our larger cities. We have a multi-year commitment to workforce development. Motivated by research �nding that well over half of income and wealth inequality is determined by a person’s circumstances at age 23, we have focused especially on the critical role played by early childhood education and on the preparation students need to succeed at college. We’re working to understand di�erences in whites’ and blacks’ opportunities to participate in �nancial markets, particularly around mortgage markets, payday lending, and student loans; our community development team has launched a new program to connect banks with Community Reinvestment Act-eligible projects. The racial disparities in our district are the result of hundreds of years of unequal access and unequal treatment. In the context of a country with great challenges, we recognize ours are even greater. We’re committed to playing a positive role in �nding the solutions. See Virginia Commonwealth University’s Mapping Life Expectancy Project. Based on the 2014-2018 American Community Survey. See Abigail Crockett and Jessie Romero, “Demographics and Disparities,” Regional Matters, July 23, 2020. West Virginia was formed from 50 Virginia counties that seceded from the Confederacy. It was admitted to the Union in 1863 and abolished slavery in 1865. Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” Quarterly Journal of Economics, November 2014, vol. 129, no. 4, pp. 1553-1623. Mark Huggett, Gustavo Ventura and Amir Yaron, “Sources of Lifetime Inequality,” American Economic Review, December 2011, vol. 101, no. 7, pp. 2923-2954. Economic Inequality and Poverty Education Workforce Development Receive an email noti�cation when News is posted online: By submitting this form you agree to the Email Address Subscribe (804) 697-8956 (804) 332-0207 (mobile) © 1997-2024 Federal Reserve Bank of Richmond

Tom Barkin (2020, August 2). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_20200803_tom_barkin

@misc{wtfs_regional_speeche_20200803_tom_barkin,
  author = {Tom Barkin},
  title = {Regional President Speech},
  year = {2020},
  month = {Aug},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_20200803_tom_barkin},
  note = {Retrieved via When the Fed Speaks corpus}
}