The devastating effects of COVID-19 and reckoning with the depths of racism still locked in the systems we depend on have forced each of us to reimagine much about our lives. From work to education, grocery shopping, health care and the way we relate to and build community with our neighbors, very little looks the same today as it did one year ago.
As Minnesota and cities and counties prepare to invest $2.58 billion from the American Rescue Plan Act (ARPA), policymakers should go beyond economic stimulus and recovery and catalyze transformation to build an equitable and inclusive economy.
Unlike resources from its CARES Act predecessor, the ARPA offers state and local governments flexibility and a horizon for investing dollars, ingredients that are critical for transformation. As Minnesota's business leaders and policymakers began economic recovery planning, the Center for Economic Inclusion elevated lessons learned from the last recession, and found that according to the Urban Institute, despite a strong recovery, Minneapolis and St. Paul fared the worst of 274 cities on racially inclusive economic recovery.
COVID-19's devastating economic impact on Black and brown workers and business owners have only compounded a long history of systemic racism and wealth extraction. Now is our time to act, but it will require immediate and sustained investment with racial equity in the center. Investments that close long-standing wage gaps and stimulate business growth in Black, Indigenous, Asian and Latinx communities will pay dividends for all Minnesotans.
We urge policymakers to adopt a racial equity framework while investing the ARPA dollars to not only stimulate economic growth but also shared prosperity by investing in Black, Indigenous, Asian and Latinx workers and business owners. McKinsey reports that by closing racial wealth gaps, U.S. gross domestic product could be 4 to 6% higher by 2028. Securing this regional growth will require assessing each policy and investment for its intended and unintended impacts on closing racial disparities.
Instituting the Minneapolis-based Voices for Racial Justice's Racial Equity Impact Assessment will equip policymakers with five critical questions to mitigate disparate impacts that too often accelerate the path from good intentions to harmful results. The 2020 House Select Committee on Racial Justice issued a report to the Legislature with critical priorities for centering racial equity that should guide investment decisions including:
• Incentivize and nurture the growth of higher-quality businesses and industries, particularly those led by Black, Indigenous, Asian and Latinx people. Invest directly in efforts led by our communities to stimulate businesses in high-growth sectors that can be leveraged by the corporate procurement commitments made by businesses headquartered here in Minnesota.
• Aim to stabilize and strengthen not only neighborhood small businesses, but also tech ecosystems that support Black and brown entrepreneurs. Automation and augmentation will most directly affect Minnesota's Black and Latinx workers, according to Accenture. Investing in reskilling for tech careers is critical, and that must be done through training programs that are trusted by job-seekers.
• Support reskilling, along with career navigation and placement services to facilitate a racially diverse talent base with access to family-sustaining wages and benefits. Direct appropriations and competitive grant programs that intentionally invest in organizations that job-seekers trust have helped Minnesota narrow the employment gap over the last three years. But, according to data released by the Brookings Institution in February, after 15 years of stagnant wage inequities, this year the wage gaps between white workers and workers of color grew by more than $3,000. This is the time to leverage everything we have in supply and demand tools and investments to close these gaps and stimulate inclusive and equitable growth.
Fifty years from today, generations of Minnesotans will still benefit from and experience the consequences of the investments made by state and local policymakers with the ARPA. Let us be on the right side of history.
Tawanna Black is the founder and CEO of the Center for Economic Inclusion and a nonresident senior fellow at the Brookings Institution.