Doing Better: Reversing racial inequities key to NC’s economic competitiveness

North Carolina’s competitive advantage and future prosperity depend on our ability to harness the full potential of our human capital – and minorities will play an increasingly crucial role.

Today, African-Americans, Latinos, and Asians comprise more than a third of our population. A 2014 study by the Center for American Progress shows that African-Americans command more than $50 billion in buying power in North Carolina, while Latinos and Asians have almost $23 billion.

For our state to thrive, all of our citizens should have the chance to flourish in their personal lives and professional pursuits. Yet, our minority communities are struggling. Though African-Americans account for 22 percent of North Carolina’s population, only 10 percent of businesses are African-American-owned. And while home ownership rates are greater than 73 percent among whites, they are less than 50 percent for African-American and Hispanic households – a number that drops precipitously for lower-income families.

A 2010 study based on Census Bureau data shows that black households in our state have only 4 percent of the net worth of white households. Further, black households hold one-third of the home equity of whites, and black household savings accounts are a quarter of white households’. Half of all black households in North Carolina have less than $100 in savings.

Among the 33 states studied for this survey, North Carolina has the seventh-largest wealth gap between white and minority households. This gap is only projected to get bigger – exacerbated by disparities starting early in life.

Closing the gap

According to the 2012-13 state education data, just 14.2 percent of African-American students passed math and reading end-of grade tests versus 43.5 percent of white students (and 19.3 percent of Latino students), with significantly fewer African-American students graduating from high school than whites. Only one percent of black and Latino students are at the advanced level on the National Assessment of Educational Progress. Among African-American students who have access to Advanced Placement classes, only 4 percent score a three or higher (out of five) on their AP tests. The upshot: It’s much harder for African-American and Latino students to win admission to top colleges and enter top-paying professions.

We all pay a price for this, regardless of the color of our skin. A 2010 McKinsey report on the Economic Impact of the Achievement Gap in America’s Schools suggests that closing the racial equity gap would contribute between $310 billion and $525 billion to our national GDP. As the report states, “race and poverty are not destiny.” To act on that, we must acknowledge the extent to which systemic institutional barriers holding back minorities have long been grounded in racism.

Five years before the pioneering 1960 sit-ins by N.C. A&T students in Greensboro, prominent business leaders (including Greensboro’s former Mayor Fielding Fry) formed a group called Patriots of North Carolina. It was dedicated to fighting school integration and maintaining “the purity and culture of the White race and Anglo-Saxon Institutions.” More than 20,000 North Carolinians became dues-paying members and were instrumental in supporting the Pearsall Plan. Endorsed by Gov. Luther Hodges, the plan decentralized school districts and made it possible for school boards to resist integration. In the decade after Brown v. Board of Education, fewer black students in North Carolina attended formerly all-white schools than in Virginia or Louisiana – states that were much more publicly visible in fighting integration.

Institutional barriers

Ultimately, the Pearsall Plan was declared unconstitutional. Still, despite some important gains, including the 1970 Swann v. Charlotte-Mecklenburg Board of Education Supreme Court decision reinforcing the importance of urban integration, our state’s schools have actually gotten more segregated in the past 20 years. Minority students are increasingly isolated by poverty and lacking in opportunity.

Further institutional barriers exist for minority business owners. A Kauffman Foundation study shows that minority business enterprises typically encounter higher borrowing costs, get smaller loans, and have their loan applications rejected more than white companies with similar credit profiles. Similar stories and data reflect racial profiling in real estate lending.

None of this is acceptable or sustainable if we’re serious about our future. Reversing today’s racial inequities needs to be a top priority, and some groundbreaking efforts are underway. Organizations such as the Racial Equity Institute and the Institute for Minority Economic Development here in North Carolina can help lead the way forward. We’ll look in future columns at what they’re doing and what can be done to support them.

Christopher Gergen is CEO of Forward Impact, a fellow in Innovation and Entrepreneurship at Duke University, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin, a director at the nonprofit Center for Creative Leadership, blogs at They can be reached at and followed on Twitter through @cgergen.