Racial Equity Primer

A framework for conversations about racial and economic inequities in the United States against the backdrop of COVID-19.

How can the United States work toward economic opportunity for all? Building a better future—one that leaves no one behind—requires an intentional focus on inequities and injustices. At the San Francisco Fed, racial equity is core to our values and mission. We put together this racial equity primer to help develop a shared vocabulary and guide discussions.

What is racial equity?

In our work, racial equity means just and fair inclusion in an economy in which all can participate, prosper, and reach their full potential. We will know we have achieved racial equity when race no longer predicts life outcomes.

This definition of racial equity is adapted from the Government Alliance on Race & Equity (GARE) and Policylink.

Racial equity is central to the SF Fed’s mission

At the San Francisco Fed, we cannot ignore racial inequities. People of color are projected to become the majority of the U.S. labor force in the coming decades. Overlooking and undervaluing economic contributions of people of color will limit the full potential of our economy. In other words, achieving racial equity fits into the Federal Reserve’s mandate for maximum employment, which is central to our mission. We are committed to building our body of research, speeches, blog posts, and data related to issues that affect economic outcomes based on race in order to move toward a more equitable future.

Racism past and present shapes economic opportunity

Racial disparities are not simply a matter of individual choice and behavior. They are a product of a complex and often invisible history that has limited options and opportunities based on race. Many forms of racism, past and present, shape who benefits from economic opportunity.

Humans are hardwired to see difference

As social beings we often use shorthand to classify people based on markers of identity such as race or ethnicity, social class, physical ability, sexual orientation, gender, and religion. Over time, identity messages become part of the prevailing culture: certain groups are seen to have higher value and some groups become “the other.” It becomes all too easy to perpetuate cultures of exclusion unless we actively work against it. This manifests as explicit or unconscious bias at the individual level, but also gets built into our institutions and systems over time.

The foundations of institutions, systems, and policies include the biases of those who develop them

Many examples exist of how biases by race have been built into our policies and systems over time. Early in our country’s history, racial hierarchy emerged to rationalize unjust actions, often for the sake of economic gain. For example, in the acquisition of land and commodification of people for labor through slavery. Another common example is the practice of redlining. It started in the 1930s and led to the systemic denial of mortgage credit on the basis of race, with major implications for neighborhood disinvestment and the formation of the racial wealth gap.

Other racialized practices continue to shape modern day outcomes. Examples include racial steering, block-busting, investments in racially-exclusive suburbs, and disinvestment from urban central city areas where people of color live through practices such as racialized scoring of municipal bonds.

What are the long-term impacts? To this day, neighborhoods that were redlined have less economic activity (i.e. fewer public and private investments), lower economic value (e.g. home values), and less political power. This means more people of color disproportionately live in conditions of concentrated disadvantage.

The examples we shared illustrate ways that racism—a term that often evokes individual acts of discrimination or “individual” racism—exists in our institutions (“institutional” racism) and manifests through policies and practices (“structural” racism) in invisible and insidious ways. Over time, people of disadvantaged racial groups may come to accept negative messages about their own abilities and intrinsic worth (“internalized” racism).

“Race-neutral” is not enough

Research makes clear that anti-Black racism is particularly harmful in the United States. While most explicitly racist laws and policies have been overturned or replaced, modern “race-neutral” laws, policies, and practices are not enough to reverse the legacy of explicitly racist policies. They fail to acknowledge that communities of color, particularly Black communities, have a different starting line and continue to face ongoing discrimination.

Racial inequities and COVID-19

Health and economic impacts of COVID-19 disproportionately affect people of color, particularly Black people and also Latinx people, Indigenous people, and some people from Asian-American/Pacific Islander subgroups. We’ve talked about this issue, as well as related mental health impacts, in previous blog posts. And the coronavirus pandemic continues to expose long-standing underlying vulnerabilities. Response to the coronavirus pandemic will shape whether people of color—who were only just beginning to see job gains after 11 years of economic recovery—rebound and prosper or fall further behind in economic participation.

People of color, particularly Black people, have faced longstanding challenges that impact health and well-being

A person’s opportunities and experiences over a lifetime determine their health, shaped largely by the places in which they live and their economic circumstances. Good health flourishes when people have access to resources like neighborhood grocery stores with healthy and affordable food options, well-funded schools, high quality housing, and jobs that provide living wages and benefits. Poor health stems from neighborhoods with under-resourced schools, unmaintained housing, transportation barriers, environmental toxins, and fewer high-quality employment opportunities. Every person experiences stress. But unrelenting or “toxic” stress results in cumulative wear-and-tear on the body’s systems and ultimately poor health. This is key to understanding how social factors like economic status and neighborhood conditions “get into” the body.

People of color, particularly Black people, disproportionately lack resources where they live and work because of longtime racialized policies and practices, like the ones named above. The combination of toxic stress, disinvested neighborhood conditions, and constrained choices—all mediated to some extent by interpersonal, institutional, and structural racism—explains why so many people of color have underlying health conditions that can lead to more severe or fatal forms of COVID-19.

COVID-19 compounds existing challenges

Because of underlying social inequities, people of color disproportionately face additional challenges unique to the COVID-19 crisis:

  • Employment in service industries with more face-to-face contact and higher coronavirus exposure;
  • Low-wage hourly jobs affected by reduced hours and closures;
  • Lack of sick leave or paid time off;
  • Lack of a regular source of health care and reliance on emergency departments with higher exposure risk;
  • Fewer savings to weather financial shocks;
  • Overcrowded housing, larger household sizes, and more frequent intergenerational contact;
  • Challenges with childcare closures;
  • Lack of access to reliable internet and devices; and
  • Under-resourced schools that may not provide tools for distance learning.

Stimulus checks, intended to provide relief, were in some cases slower to reach people most in need. Many people of color—who are disproportionately unbanked and lack direct deposit, and more likely to use certain tax-preparation services—experienced such delays.

Moving toward a more equitable future

One effective strategy for achieving just and fair inclusion in an economy is centering communities of color who have been most impacted by racial inequity. By centering our solutions on those who are most disadvantaged, we often achieve outcomes that work best for everyone.

In the current moment, for example, efforts to reach small business owners could be made more equitable by specifically considering the needs of business owners of color. Most businesses owned by Black people, for example, are smaller in revenue and staff and may lack existing relationships with banks. If programs for this particular population are not designed, existing inequities are likely to get worse. Designing programs with this population in mind, however, will likely create ease and access for many others.

5 tips for getting on the same page

Open dialogue is essential in working toward racial and economic equity, but talking about the issues is not always easy or comfortable. Here are a few things we have learned about speaking up on these issues. We recognize that these ideas are just the beginning.

  • 1. Acknowledge differences.
    You may have privilege based on your racial identity, job, and other factors. Acknowledge it. If you are white, practice finding ways to center and elevate the voices and experiences of people of color, without burdening them to educate on racial equity or validate your learnings. If you are a person of color, remember that you are an expert in your own experiences, which are unique and can differ from the experiences of people who share your racial identity. Everyone should consider that not all racial groups have faced the same burden of inequity.
  • 2. Be humble, ask questions, and listen.
    Asking for different perspectives and truly listening will help strengthen our communities.
  • 3. Tell the full story: do not start the story in the middle.
    Acknowledge that the starting point is different for people of color due to current and historical policies and practices. Racial differences will often be attributed to individual responsibility or personal behavior. This places the burden of change on the people facing the most disadvantage. Keep in mind that while behaviors matter, the choices available to people of color are often constrained and out of an individual’s control.
  • 4. Focus on strengths and resilience in communities of color when articulating challenges.
    Call attention to the ways that people of color continue to thrive, adapt, fight against unfairness, and strive for more.
  • 5. Tell the story of us not of them.
    Reinforce that we are in it together; highlight examples of how addressing the needs and harnessing the contributions of those who need it most will benefit everyone.

Addressing common misconceptions

Strongly-held beliefs often make it difficult to see the ways society perpetuates racial inequity. The following misconceptions come up a lot when talking about race. Here are the facts.

  • If race is a social construct, then why acknowledge differences by race? Aren’t we all the same?
    While there are no inherent biological differences attributable to race, the social impacts of racism are very real. Inequities will persist if we ignore the idea of race, and it is important to quantify the impacts of racialized systems on populations of color. When we do so, we must not attribute differences in outcomes to race when the differences in outcomes are actually reflecting racism (manifesting on individual, institutional, structural, and internalized levels as a result of current and past policies and practices).
  • Aren’t the poorer outcomes we see among Black people a class issue not a race issue?
    As summed up recently by Angela Glover Blackwell on KQED’s Forum, “Many people of color are poor because of their race and ethnicity.” Disadvantage can occur for people across multiple forms of identity (e.g., class, gender, or sexual orientation). But race cuts across every identity group and compounds the challenges people face. People of color experience overlapping forms of discrimination, which often leads to stark racial disparities, even within other identity groups. For example, single white women with a bachelor’s degree have seven times the wealth of single black women with a bachelor’s degree. In other words, white people facing many disadvantages would be even worse off if they were not white.
  • Everyone has choices. People who make poor choices to eat unhealthy food and engage in risky behaviors will of course have worse outcomes related to COVID-19.
    People behave within the constraints of their environments. As one example, the availability, price, and ease of access to fresh food in one’s neighborhood shape behavior around food. In our current crisis, it is important to remember that individual choices are shaped by conditions in which people live and work. For many people of color these places have conditions conducive to COVID-19 transmission. In addition, many individuals within communities of color have felt pushed to the margins and systematically discriminated against in countless ways. People who have been marginalized are less likely to trust the word of authorities that have overlooked their well-being or been detrimental to their communities in the past. In the context of health care, language and cultural barriers, lack of diverse care providers, and distrust due to past injustices in medical research may result in individuals not receiving or heeding instructions of medical care providers.
  • Heading toward a better future

    The pandemic and unrest across the country display the ways that the systems we have created work for some while leaving others behind. At this moment, as many inequities become clearer, there is an opportunity to move closer to a future of racial equity.

    Bina Patel Shrimali is a senior researcher in Community Development at the Federal Reserve Bank of San Francisco, where she conducts research at the intersection of economic opportunity and health. She holds a Doctorate in Public Health from UC Berkeley.

    The author acknowledges Laura Choi, Joselyn Cousins, Naomi Cytron, and Laurel Gourd for their contributions to this article.

    Image credit: khananastasia via iStock.

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The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.