Corporate America Has A Role In Narrowing The Wealth Gap
This spring, thousands of individuals, businesses, and governments joined the protests against racial inequalities—a movement that was unprecedented, both in terms of scale and global reach. Many corporations across America were quick to join the fight with statements, pledges, and donations. And many of them have held true to their promises (so far).
Corporate America certainly has a huge role in the fight against racial inequalities, and especially against the racial wealth gap. But the usual corporate playbook may not be enough: in addition to taking a stance through donations and statements, corporations should begin transforming internal practices to establish a permanent commitment for racial equality inside—and, eventually, outside—of their walls. Here are some steps that corporate leaders may want to consider in these efforts:
Hire and Advance More Black people
This may sound like a “no, duh” in this day and age, but research suggests that Black employees still represent a mere 8% of the workforce in white-collar jobs. And minority candidates are still finding the need to whitewash their names on resumes in order to get a callback for a job. It’s a strategy that, tragically, still works: candidates with “whitened” names are twice as likely to get a callback, studies suggest.
Hiring diverse candidates can’t be a one-off action. Team leaders should consistently maintain a diverse pool of job candidates, hires, and those in line to get promoted to ensure a permanent commitment to racial inclusion.
Establish and Maintain Diversity in Leadership
And speaking of team leaders: commitment to inclusion should begin from the top, with diverse leadership and executive teams. (Diverse leadership will more likely lead to diverse hires in the future—a ripple effect we can all be on board with.)
There is a lot of work to be done here: Black employees made up 3% of the CEOs, 1% of the CFOs and 3% of the division leaders at Fortune 100 companies in 2020. These stats shouldn’t really be that surprising: to get the CEO title, an employee likely would be required to have experience in other high-level executive roles. And since such few Black candidates do these days, we get stuck in a vicious cycle of high White bars. To address this, corporations could start with designing concrete career pipelines for their Black talent, one with trainings and advancements, that could potentially lead to a number of high-level leadership opportunities.
Partner with Black-owned Businesses
Helping advance Black-owned businesses could have a lasting impact not just on individual entrepreneurs, but on an entire community within the businesses. This is especially important on the backdrop of the devastating pandemic this year, with 40% of minority-owned businesses not expected to survive.
As part of J.P. Morgan’s $30 billion, five-year commitment to help advance racial equity, we are investing $750 million in procurement spending with Black and Latinx vendors. Creating lasting partnerships with minority-owned businesses will help those business increase their footprint and gain exposure to other large future clients. For those minority-owned businesses this can mean more revenue, more employees and, as they grow bigger, more minority executives in different sectors.
Improve access to credit to racial minorities
A crucial component to every entrepreneur’s success is access to credit. And Black entrepreneurs have historically lacked the same access to credit available to White entrepreneurs. Similarly, homeownership—a key asset for building multi-generational wealth—has been declining for Black young adults, dropping from 23.1% in 2000 to 13.4% in 2015, in part due to limited mortgage options available.
Financial services firms specifically can and should address these gaps by designing products that are intended specifically to even out the inequalities in access to credit. Those outside of financial services can be a part of the change through lobbying efforts and by joining forces with the number of companies dedicated to the cause.
At J.P. Morgan, a major part of our $30 billion commitment specifically addresses this issue. We are expanding our efforts in providing loans to underserved communities, with an $8 billion pledge in mortgages, $4 billion in mortgage refinancing, and $2 billion in small business loans for Black and Latinx households.
Speak with a J.P. Morgan advisor and create a personalized strategy.
JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (JPMS), a member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS, and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.
|INVESTMENT AND INSURANCE PRODUCTS ARE:|
|• NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY|
|• NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JP MORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES|
|• SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED|
This article was written by Diana Asatryan, content strategy, JP Morgan Wealth Management, at JPMorgan Chase & Co.