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Notes from the Field

Closing the Racial Wealth Gap One Homeowner and Good Job at a Time: Toledo Taps Existing Resources to Increase Equity

Think you don’t have the resources to increase equity and inclusion? Maybe you already have what you need. Toledo’s approach makes use of financial resources and partnerships already in place.

The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.

In the field of community development, achieving racial equity should not require a paradigm shift—after all, we have been focused on leveling the playing field for communities of color for more than a century. Then why are we still fighting against inequity? Because structural racism, that’s why. Centuries of public policies and institutional practices—including well-intentioned community development efforts—have blocked people of color from opportunity and prosperity.

Today, the wealth gap created by structural racism remains stark. The starkest divide in wealth (a family’s assets minus its debts) exists between white and Black families, with typical white families having eight times more family wealth than typical Black families, according to a 2019 Federal Reserve Board survey. In addition, the median income for white households is nearly 40 percent higher than that of Black households, and Black households are twice as likely to live in poverty. It’s clear that we are nowhere near leveling the playing field.

As community development professionals, we have to examine and redesign our own programs, policies, and practices to focus intentionally on closing the racial wealth gap. In Toledo, our approach is aimed at increasing homeownership opportunities for families of color and increasing access to living-wage jobs in in-demand fields. Here’s how:

Homeownership: The Toledo YR16 Initiative

Homeownership is a key driver of intergenerational wealth, which can be passed down to give the next generation a leg up. Toledo has one of the widest gaps in homeownership rates for Black and white families in the country, with Black families being about half as likely as white families to own their home.

Seizing the chance to transform a disparity into an opportunity, the Toledo Financial Opportunity Center (FOC) Network is partnering with the City of Toledo, the Lucas County Land Bank, and local developers and owners to transition the disproportionate number of Black families renting in single-family, low-income housing tax credit developments to homeowners through the Toledo YR16 Initiative.

As a result of targeted outreach, layered homebuyer incentives, free financial coaching to bolster credit scores, and ongoing homebuyer education classes, more than 160 households have engaged, resulting in 86 new homeowners, including 44 families who previously rented their homes. More than 90 percent of these new homeowners are Black.

Job Training: FOC Bridges to Career Opportunities Program

The effects of racist policies and practices have resulted in Black workers receiving fewer opportunities for education, training, and living-wage jobs, leading to persistent wage gaps. According to the US Bureau of Labor Statistics, Black male workers, on average, earned 73 cents on the dollar compared to white male workers in the last quarter of 2020, while Black women earned 85 cents on the dollar compared to white women. The Toledo FOC Network partners are implementing LISC’s Bridges to Career Opportunities (BCO) program model in the healthcare and advanced manufacturing sectors to enable underserved residents throughout Toledo-Lucas County to land better-paying jobs with opportunities for further growth.

LISC’s BCO programs are integrated into the FOC career and financial coaching services and provide a bridge to overcome the basic skills gaps that can prevent residents from accessing living-wage jobs that local employers in growing sectors are looking to fill. BCO clients receive access to free, contextualized job training that helps them ramp up foundational literacy and math skills while also receiving technical training and pursuing industry certifications.

Since the launch of the Toledo BCO initiative in 2019, 241 individuals have attained an industry-recognized credential, resulting in an average starting wage of $13.91. Targeted outreach and engagement has ensured the program reaches the most underserved residents—more than 60 percent of program participants are Black.

The beauty of this approach—applying an equity lens to existing homeownership and job training programs—is that we are able to tap into financial resources and partnerships already in place to achieve the collective goal of equity.

Often, groups and organizations point to a lack of available resources as an excuse as to why goals of equity and inclusion cannot be accomplished. Imagine being told, “I’m sorry, we would really like to close the racial wealth gap, but we just don’t have the resources to accomplish this massive feat.” If this imaginary conversation makes you angry, good—you are ready to reimagine your community’s approach to deploying existing resources and to realign those resources to achieve income and wealth equality.

Achieving equity should not require a paradigm shift among community development organizations, but in most cases, deep-rooted structural racism dictates that it will.

Kim Cutcher is the executive director for LISC Toledo, one of Local Initiatives Support Corporation’s 37 offices across the country. LISC is a national nonprofit community development financial institution that supports community development and helps build resilient, inclusive communities of opportunity. LISC Toledo is a partner for the Policy Summit 2021 on June 23–25.