MLK Jr. Day 2021: From Decency to Economic Equality

by Suzanne Hanney

In the last year of Dr. Martin Luther King Jr.’s life, his dream of people judged by their character, not their color, had “at many points turned into a nightmare,” he said in an NBC News interview televised June 11, 1967.

Exactly four years earlier, President John F. Kennedy had announced legislation that became the Civil Rights Act of 1964. Racial segregation in schools and public accommodations as well as racial employment discrimination became illegal. The Voting Rights Act followed in 1965. The Civil Rights Movement had gone from a struggle for decency to one for genuine equality, and his “superficial optimism” was dosed with reality, Dr. King said.

“I think that the biggest problem now is that we got our gains over the last 12 years at bargain rates, so to speak. It didn’t cost the nation anything,” Dr. King told NBC correspondent Sander Vanocur. “In fact, it helped the economic side of the nation to integrate lunch counters and public accommodations. It didn’t cost the nation anything to get the right to vote established.”

But the right to eat at a lunch counter was meaningless if Black people couldn’t afford it, so economic equality was always on Dr. King’s mind. Simultaneously, in 1967, Dr. King saw that the Vietnam War limited the federal government’s capacity to create the full-labor economy he thought was necessary. “People must be made consumers by one method or the other. Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted.”

What made Blacks different from European immigrants who also struggled, Vanocur asked King rhetorically. Was it color alone?

Color had become stigmatized, King responded. “But at the same time, America was giving away millions of acres of land in the West and Midwest. Which meant that there was a willingness to give the white peasants from Europe an economic base, and yet it refused to give its Black peasants from Africa, who came here involuntarily in chains and had worked free for 244 years, any kind of economic base.

“It was freedom without food to eat or land to cultivate and therefore was freedom and famine at the same time,” King said of the Emancipation Proclamation. “I believe we ought to do all we can and seek to lift ourselves by our own bootstraps, but it’s a cruel jest to say to a bootless man that he ought to lift himself by his own bootstraps.”

The Emancipation Proclamation and the Homestead Act both took effect on Jan. 1, 1863. The former freed the slaves while the latter granted 160-acre plots of public land for a small filing fee and a pledge to live on it for five years. Before it was repealed in 1976, the Homestead Act resulted in the settlement of 10 percent of U.S. land: 270 million acres, according to History. com. Out of four million claims, 1.6 million deeds were officially obtained. Native Americans, meanwhile, were forced onto reservations to make way for the homesteaders.

The land was open to any citizen, intended citizen or even freed slaves, although few laborers had access to livestock, tools and crops in order to build a farm, according to History.com. In the late 1870s, however, African American “exodusters” who took their name from the biblical book, moved from the South to Oklahoma, Colorado and Kansas; they accounted for about 25,000 more people in the 1880 Kansas census.

Robert Johnson, chief economic inclusion officer and general counsel at YWCA Metropolitan Chicago, sees the Homestead Act as one more government method that contributed to today’s “racial wealth gap.” The typical white family has a net worth of $171,000, compared to $17,150 for the typical Black family, according to the Brookings Institution.

Robert Johnson

“The government was complicit in the segregation that followed slavery; you were relegated into a sharecropper existence, another form of slavery where you could never own anything, but you were enriching the land of the people for whom you were working,” Johnson said. “From Jim Crow to redlining, where Black folks were forced to live in certain areas where there was no access to financing, whereas others were financing the American Dream, government played an active role. When you say there is no systematic racism, you ignore the history of this country. From its inception, there were choices to benefit some groups and not others, and that’s why you have a wealth gap, why white families have 10 times the net worth.”

The racial wealth gap has grown over the last 30 years and persists at every age and income level. Inheritances are the biggest socioeconomic factor behind this historic inequity, according to the Brookings Institution.

Only 8 percent of Black families, for example, receive inheritances, compared to 26 percent of white families, according to McKinsey & Co. And when Blacks do receive an inheritance, it is 35 percent on average that of a typical white inheritance: $83,000 vs. $236,000.

Inherited wealth is a cushion, say Brookings and McKinsey, that allows families to weather setbacks like illness or job loss and to take risks, to start new businesses. The wealth gap, on the other hand, can contribute to homelessness. Almost 70 percent of middleclass Black children will fall out of the middle class as adults, according to McKinsey.

The racial wealth gap is also bad for the U.S. economy as a whole, because it is projected to mean $1 trillion to $1.5 trillion less in anticipated consumption and investment from 2019 to 2028, according to the McKinsey study.

Closing that wealth gap, however, would bring $1.4 trillion worth of African American consumption of goods and services to the U.S. economy, said YWCA Metropolitan Chicago’s Johnson. That’s right below Canada's GDP (Gross Domestic Product).

“Republicans like to say a high tide lifts all boats,” he added. “If you give them a boat and give them an opportunity to row in that same ocean, it creates a ripple effect. Black folks never asked for handouts, only that you not exclude us from opportunities, not even extra privileges. Just get your foot off my neck. It’s not about us being favored, although you have been favored. We’re just asking for equity. Give us the opportunity to compete. Remove the weights off our ankles so we can walk forward and jump higher.”

Even if not funding the full employment programs Dr. King sought, government should be a catalyst, Johnson said. He praised Chicago Mayor Lori Lightfoot’s INVEST South/West initiative for bringing public and private partnerships together to spur investment in 10 underserved neighborhoods and to grow the city’s tax base.

Similarly, the non-profit YWCA Metropolitan Chicago (YWCA) has worked with the private-sector JP Morgan Chase on homeownership. Only 40 percent of Black families own their homes, compared to 73 percent of white families, according to McKinsey, so home ownership is important to building wealth and is roughly one-third of Johnson’s focus.

JP Morgan Chase, meanwhile, has committed $30 billion over the next five years to advance racial equity, including 40,000 loans for Black and Latinx households, refinancing lower rates for minorities and even hiring 150 community managers to open branches in underserved communities. According to McKinsey, better bank access could save a Black family $40,000 instead of using check cashing services and prepaid cards over a lifetime.

This year the YWCA itself will launch a financial product, the Respect Card, aimed at people in banking deserts. As a prepaid debit card, the Respect Card will allow renters to build credit – the first step toward home ownership – without risk of debt, because of the limits on the card.

The YWCA’s focus on home ownership is to provide affordable housing counseling, mortgage and rent assistance, foreclosure counseling and reverse mortgage counseling within the Financial Inclusion Institute. Housing is roughly one-third the YWCA’s focus on reducing the wealth gap, employment accounts for roughly 22 percent and entrepreneurship 45 percent, Johnson said.

“There are 2.6 million black businesses in the United States and 96 percent have no employees,” Johnson said. “They are solo entrepreneurs, operating out of their home or in the ideation stage: mom and pops, but not employing folks. We could eliminate Black unemployment if all of our small businesses could hire one employee. The idea is to work with our small businesses to get them to grow so they could be legitimate businesses and not a side hustle, so they could get access to capital to expand, get into storefronts and commercial corridors. We don’t have that in our community. A dollar only cycles in the Black community six hours before it goes out. The idea is to grow our businesses, put our money back into the community where folks can live, work, pray and play, like it used to be, the suburban model. The wealth gap and the retail gap are inextricably intertwined.”

Interestingly, Black women are the fastest growing group of entrepreneurs, so Johnson and the YWCA are in the process of launching a Women of Color Entrepreneurship Center with the DePaul University Women in Entrepreneurship Institute. While there is already a lot of attention to startups, he sees fewer resources for later-stage companies and wants to help them grow through strategic partnerships, mergers and acquisitions. “Women entrepreneurs don’t typically get funded by venture capitalists; less than .05 percent of venture capital goes to them. We are focusing on trying to develop cohorts of women businesses – scalable businesses – and providing them with access to high-net worth individuals, helping them to grow enterprises.” Besides Chase Bank, BMO Harris and Bank of America are committed to similar efforts, he said.

Dr. Martin Luther King Jr.

Marion S. Trikosko / Library of Congress

Since Black Americans account for $1.4 trillion in consumption annually, the issue is not scarcity but rather, “How do we leverage the money we already have so we can grow it? My goal is to distill all of this into very accessible principles that are time-honored and never change.”

Besides owning your own home, “pay yourself first” is one of these principles, because “You’ve got to have a base. The psychology of money is once you start saving, it becomes hard to spend. Once you understand your value you understand it’s more valuable to have freedom – which is money in the bank – versus a whole closet full of designer goods that have lost most of their value since you bought them – a depreciating asset.”

Self-worth is something people should feel on the inside rather than from designer labels, “but we’ve all succumbed to Madison Avenue: advertising and immediate gratification," he said. “People who understand wealth creation understand you buy assets, and assets buy your toys. You cannot create generational wealth quickly. A lot of this may not occur in our lifetimes.”

However, Johnson understands the history behind the mindset. “From our landing in this country, tomorrow was not promised to us. That goes on today, why you are seeing the Black Lives Matter movement after the death of George Floyd. That fragility makes it hard to get past the PTSD, the idea that life could end at any moment so that people can’t get past today, plan for tomorrow.”

Similarly, on April 3, 1968, the night before his death, Dr. King presented a similar message of economic empowerment. Two Memphis sanitation workers had been crushed to death by a faulty truck and so he urged a citywide strike and Black boycott of white businesses. He told the crowd at Mason Temple that Blacks were poor when compared with white society in America, but collectively richer than all the nations of the world except for the U.S., Soviet Russia, Great Britain, West Germany and France. American Black annual income was $30 billion a year – more than the national budget of Canada. “That’s power right there, if we know how to pool it.”

Dr. King described how he had been stabbed by a demented woman while signing autographs for his first book 9½ years earlier, when he was just 29. And earlier that day, technicians had carefully inspected and then guarded the plane carrying him to Memphis, to ensure his safety. He lived with the possibility of death.

“Longevity has its place,” Dr. King said. “But I’m not concerned about that now. I just want to do God’s will. I have been to the mountaintop. I’ve seen the Promised Land. I may not get there with you. But I want you to know tonight that we, as a people, will get to the Promised Land.”