Just over two weeks into his administration, President Joe Biden has already made it clear that he wants to close the racial wealth gap in America.
“We have to make the issue of racial equity not just an issue for one government department; it has to be the business of the whole government,” Biden said, signing four executive orders relating to the question.
The gap is wide. The median wealth of a white family was $ 188,200, compared to $ 24,100 for black families and $ 36,100 for Hispanic families, according to the 2019 Federal Reserve Survey of Consumer Finances, released in September 2020. .
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“This is an area where not only are we not making progress, but we are losing ground,” said Marc Morial, president and CEO of the National Urban League.
“The Covid recession continued to push wealth up towards a more concentrated group of Americans.”
So far, Biden’s executive orders have attacked fair housing, ending the use of private prisons by the federal government, reaffirming the United States’ commitment to sovereignty and court consultation, and fighting against xenophobia against Asian Americans and Pacific Islanders.
He also made a number of proposals on the campaign trial. Here are some of his projects.
Biden’s first agenda was to incorporate a federal minimum wage of $ 15 into his stimulus package. However, it must pass Congress and was not included in the most recent Senate proposal. At the same time, Democrats reintroduced the Raise the Wage Act that will gradually increase the minimum wage to $ 15 by 2025.
According to Biden’s plan, the pay rise would give a rise to 31% of black workers and 26% of Latino workers, according to the Economic Policy Institute, a left-wing research group.
Opponents of the wage increase note that the Congressional Budget Office predicted that a minimum wage increase of $ 15 by 2025 could mean a median of 1.3 million jobs lost in the United States due to ‘a drop in business income.
But to really help increase incomes for people of color, financial education should be part of the package, said Louis Barajas, chief strategy officer at California-based MGO Private Wealth and a member of the CNBC Financial Advisor Council.
“I meet a lot of people who are poor and they don’t understand what it takes to level up,” said Barajas, who grew up in East Los Angeles and has since returned as a certified financial planner. to help underserved people. community.
During the campaign, Biden pledged an accelerated investment of $ 2 trillion to create jobs to build modern and sustainable infrastructure in black and brown communities. This includes not only roads and bridges, but also schools, clean water and broadband access.
Its goal is for 40% of overall profits to go to disadvantaged communities and for jobs to be filled by diverse, local and well-trained workers.
“We need a Rooseveltian public works plan in this country now,” Morial said.
Biden also signed an executive order directing the Department of Housing and Urban Development to review the effects of President Donald Trump’s regulatory measures that “have undermined fair housing policies and laws.”
Based on this analysis, HUD will take action to implement the requirements of the Fair Housing Act.
As a candidate, Biden proposed creating a new refundable and refundable tax credit of up to $ 15,000 to help families buy their first home. He also pledged to step up support for federal programs that financially support and revitalize struggling neighborhoods, as well as boost the construction of 1.5 million homes and social housing.
In addition to calling for grants to more than one million of the hardest-hit businesses in his Covid-19 relief program, Biden is also exploring longer-term solutions for small business owners of color.
During the campaign, Biden called for allocating $ 10 billion from the new Small Business Opportunity Fund to national and local venture capital programs. Based on the government’s past investments, he believes it can generate $ 50 billion in new equity investments for small businesses.
In addition to offering some sort of student debt cancellation, Biden also advocated making public colleges and universities free for all families with incomes below $ 125,000. He also wants to eliminate tuition fees at two-year community colleges.
According to the Center for Responsible Lending, nearly 85% of black bachelor’s graduates have student debt, compared to 69% of white bachelor’s graduates.
Institutions that are historically black and Hispanic, as well as others, will also see an investment under Biden’s plan. It includes building high-tech labs and digital infrastructure, as well as investing in programs that increase enrollment, retention, completion and employment rates.
For entrepreneurs, he would like to set up intensive one-semester business development programs at all public community colleges in the United States.
Communities of color have long been underserved by banks. In 2019, 14% of black households and 10% of Hispanics did not have a bank account, according to the Federal Reserve.
To make sure American banks serve everyone, Biden aims to strengthen and expand the Community Reinvestment Act. It currently regulates banks “but does little to ensure that fintechs and non-bank lenders provide responsible access to all members of the community,” its campaign website said.
Biden also wants to expand access to $ 100 billion in low-interest commercial loans by funding state, local, tribal, and nonprofit loan programs in black and brown communities. It proposes to expand the role of community development finance institutions (CDFIs) in underserved communities.
Big banks should also do their part, says Barajas. Instead of advisers getting a commission on the products they sell, institutions should rethink the way they work.
“They have to be the leaders,” he said. “They have to put people in these communities and pay them a salary to work in these communities full time.”
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