Perry: Higher ed must respond to society’s racial inequity

Colleges of Business must respond immediately to issues of racial inequity in society, according to renowned researcher Andre Perry, a senior fellow in the Brookings Institute’s Metropolitan Policy Program. In a powerful message (WATCH HERE) delivered during Black History Month, Perry argued that higher education has the power to enact real change. By intentionally investing in Black businesses and increasing student awareness of history and inequity, future business leaders will be better prepared to act in an equitable way.

“This is such a critical time in our country,” said Perry. “If we can’t figure out ways to invest and support small businesses and help transform large companies to do the right thing, then we’re really missing this moment.”

Perry detailed the current challenges in correcting the racial wealth gap in a presentation and open forum delivered via Zoom to the University of Illinois Urbana Champaign on February 23. The event was co-sponsored by Access and Multicultural Engagement in the Gies Business Office of Undergraduate Affairs and by the Gies College of Business Office for Diversity, Equity, and Inclusion.

Racial inequity, which Perry argues has been amplified by the coronavirus pandemic, leaves many Black families at a significant economic disadvantage. Less wealth also means Black Americans are underrepresented in the market for financial products and services.

Perry predominately studies the nation’s 1,200+ black majority cities for the Brookings Institute. He also looks closely at the assets in those cities – housing, businesses, transportation hubs, and infrastructure – and tries to measure the value of those assets. He has found that homes in Black neighborhoods are worth less, on average, than homes in predominately white neighborhoods.

Looking at absolute price and controlling for structural characteristics and neighborhood amenities like education, crime, and walkability, Perry found that equivalent homes in similar social circumstances are worth about 23% less in majority Black neighborhoods. All told, this devaluation totals $156 billion in lost equity. That amount could have financed 4.4 million Black-owned business, paid for 8.1 million four-year college degrees, replaced the pipes in Flint, Michigan nearly 3,000 times, or covered 97% of damage of Hurricane Katrina.

“Policies have extracted wealth,” said Perry, whose father was murdered in prison as a young man. “We’re always blaming Black people for the conditions and characteristics of the neighborhoods they live in. But if my father would’ve lived in a more equitable society, he would’ve had a better opportunity for education, a better chance to own a business, and his neighborhood would’ve had a better infrastructure. Discrimination and devaluation was an accomplice to his death.”

The devaluation of homes and businesses in majority Black neighborhoods has a stark negative impact on upward mobility, according to Perry’s research. The solution, he suggested, is threefold: invest in people, invest in places, and divest from racism. Perry supports investing capital toward minority-owned firms and homeowners, removing unnecessary bureaucratic barriers to entry for Black entrepreneurs, making targeted infrastructure investments, removing policies that extract wealth from Black communities, and installing anti-racist policies that encourage inclusion.

“It’s about addressing policies, not about playing the blame game on individuals,” said Perry. “It’s the systems we need to fix.”