This 22-minute podcast was released Oct. 21, 2020, as a part of the Timely Topics: Economic Equity miniseries.
“Our Community Development staff at the St. Louis Fed seek for every individual and community to have the opportunity and also the ability to participate in the economy,” says Daniel Paul Davis, vice president and community affairs officer at the Federal Reserve Bank of St. Louis. Davis joins Community Development team directors Ray Boshara, Nishesh Chalise, Sydney Diavua and Matuschka Lindo Briggs in a discussion about how St. Louis Fed works to promote a more inclusive and equitable economy.
I'm speaking with the leadership team of the Community Development department at the St. Louis Fed. We will hear from Daniel Paul Davis, the vice president and community affairs officer; Ray Boshara, assistant vice president and director of the Center for Household Financial Stability; Nishesh Chalise, director of Policy and Analysis; and Sydney Diavua, director of the Engagement team.
We'll start with Daniel. Daniel, thank you for joining us and sharing your team members in the Community Development department, what we at the bank often refer to as CD, for today's podcast.
Daniel Davis: Matuschka, it's great to be with you.
Briggs: So tell me about the work of Community Development at the St. Louis Fed. Why is the Federal Reserve engaged in this work, and what does your team seek to do?
Davis: Our Community Development staff at the St. Louis Fed seek for every individual and community to have the opportunity and also the ability to participate in the economy. And we also seek for them to be able to derive the benefits from the economy as well. I think it's fair to say we're working to create a more inclusive economy and one that's more equitable as well.
To me, one way to think about this is to conjure up in your mind a time when the national economy seemed to be doing quite well. Go back perhaps to the start—or before the start of the pandemic or perhaps picture a point in time in 2019. Just because the national economy seemed to be doing quite well, it doesn't necessarily mean that every household or every neighborhood or every demographic group was experiencing economic growth in a proportionate way. In fact, some may not have been experiencing the benefits of economic expansion at all. And it's because of this notion that the Federal Reserve is in the business of community development. Community development focuses on households and neighborhoods and groups that tend to be lower income or low wealth or those who have been historically underserved or even marginalized. We come alongside these communities to understand how they interact with the economy, the barriers they may face in doing so, and the opportunities that may be pursued to foster an economy that is more inclusive and one that's more equitable as well.
Briggs: Well, 2020 is such a key time to hear about your work and what you're doing. You mention that you're working to promote a more inclusive and equitable economy. Can you explain exactly what does this mean, and how does the St. Louis Fed's Community Development team approach this work?
Davis: To me an inclusive economy is one in which everyone can participate. And an equitable economy is one in which everyone can derive benefit regardless of their background, the color of their skin, their gender, or the ZIP code where they reside. In our work, we recognize that there are barriers preventing some households in some neighborhoods from participating in and deriving benefit from the economy, and that these barriers can be complex, and they're often structural in nature.
To do our work, we rely on the Federal Reserve's strength as a trusted source of independence, of justice, and nonpartisan information and also as an entity that can often bring stakeholders who may not be used to interacting with each other to actually gather at a common table. Therefore, we conduct research and analysis and also community engagement to examine how households and communities interact with the economy. We worked to unpack the structural disparities that keep those households and communities from participating in and deriving benefit from the economy by developing an informed understanding of what is happening in our communities to either exclude individuals from the economy or to invite them into it.
And we take the ideas we've gathered through research, analysis, and community engagement, and we serve them up or we lay them out on the table. We lay those ideas out, especially the ones promoting economic inclusion and equitable outcomes, so that they can be shared and discussed. And then local leaders can make informed decisions about where to invest or lend capital, and they can also become connected to the frontline entities working in these communities or neighborhoods to foster a stronger outcome.
Briggs: I appreciate you breaking that down. It's very helpful and insightful. Daniel, with everything going on in the world today, what are the key initiatives your team is focusing on in 2020? And I guess I'll ask another part to this too. Can you give us an idea of how much the lens has changed since the start of the year?
Davis: You could really think about our team's initiatives as falling into one of three buckets. The first is the deep engagement work that we do to understand where the rubber meets the road in the communities. This is our boots‑on‑the‑groundwork in the communities, and it's driven by the challenges and opportunities that those communities themselves help us service.
The second bucket is the way in which we bring our analytical heft to the table to amplify the quantitative and the qualitative data trends that are emerging in our communities. And we leverage an evidence base we've developed on issues like housing or employment to identify promising practices and policies that can lead to a more inclusive and equitable economy.
And the third bucket is a specialized national research center that we lead, which provides timely research and information on the state of U.S. balance sheets, how they matter for strengthening families in the economy and new ideas for improving them.
At the start of 2020, in many ways communities of color and also households that are low income and low wealth were just beginning to see job gains and an improved economic outlook after over a decade of national economic growth, and then the pandemic hit. And the pandemic has in many ways exacerbated disparities that have been long‑standing within the economy. To be responsive to this, our team is working to understand how the pandemic specifically is changing the dynamics for whether or not household and communities are able to participate in the economy. For example, we've been working to understand what ways the pandemic has contributed to greater income insecurity or food insecurity or housing insecurity. We're also working to unpack which households are most vulnerable to an economic shock like the pandemic and what long‑term effects the pandemic might have on generational wealth and other longer‑term outcomes.
In addition to the pandemic, we've arrived in this collective national moment in 2020, where the country is grappling with historical patterns of racial discrimination that continue to reverberate today. The research, analysis, and engagement our team conducts have been useful in this important moment to demonstrate the disparities that do exist in so many of our communities, especially in our communities of color. So we're working to provide research and thought leadership and activities that acknowledge that generations of inequities persist into the present, and their effects have compounded over time, and they weave through society.
We're also working to provide information and have conversations that do not perpetuate narratives that blame people of color for institutional or systemic failures. We seek to be responsive to the challenges and opportunities of any moment we find ourselves in. And I'd say this is especially salient in 2020.
Briggs: Sydney, can you tell me about the Engagement team and their specific role in CD? I understand that they're the outreach arm of the team.
Sydney Diavua: The Engagement team is what we would consider the boots on the ground, hearing from stakeholders, whether they're in local government, nonprofit, philanthropy, we're really hearing from them what's impacting low- and moderate-income communities from their perspective. We're talking to them about any trends that they're seeing, any major challenges or barriers, but also some opportunities that can support economic mobility in communities. And we're bringing that information back into the bank, bringing it back to our Community Development partners, but also to others in the bank to help them form their work. So that's the foundation of our work, but we also look at engagement in four other different ways.
One, we work to expand partnerships between funders and community development projects. So as we learn about community development projects that are happening that really support communities, we also have partners within the funding community, whether they're financial institutions or philanthropy. And we try to build relationships and bridge those two sectors within community development to help enhance outcomes.
The second thing that we do is that we offer trainings on the needs and opportunities of the communities across our district as well as bringing to bear some of the best practices, whether they're from within the community, from within the Eighth District, or even outside of the district, bringing some of those best practices to the table so that community members can learn how they can utilize new tools or new strategies to really impact outcomes.
We also work in partnership with our Consumer Affairs division, where we conduct what are called community contacts to support Community Reinvestment Act bank examinations. And so we do those as a part of our work under the Community Reinvestment Act.
And, lastly, we look at opportunities for other members from our Community Development department to share their expertise, whether it's from the Center for Household Financial Stability or our Policy and Analysis team, we look at how we can bring some of that research and some of their insights on policy and data out to bear into the community.
Briggs: Ray, the Center for Household Financial Stability, also known as HFS, has been a part of CD for over five years. Can you give us an overview of what you do as the research arm of the division?
Ray Boshara: Sure. Thank you, Matuschka. So our title is Household Financial Stability, but our real focus is on family wealth, which is what you save and you own less all of your debts, so net worth. And we focus on that because it's been relatively understudied but increasingly seen as critical to both economic resilience and upward economic mobility. We really aim to answer three questions: What is the state of family wealth in the U.S.? Secondly, why does it matter for families in the economy? And, finally, what can we do to improve family wealth?
And our theory of change is really to use data to come up with data that we hope informs decision makers at all levels. And, of course, lately we've been focused quite a bit on COVID, you know, who's most vulnerable, what some of the responses might be as well as on racial equity.
Briggs: Nishesh, we've talked of outreach and research functions of the CD team. Those seem pretty easy to break down by their name. Policy and Analysis is a little trickier. Tell me about your team and the function.
Nishesh Chalise: Well, I think about the Policy and Analysis team in terms of two buckets of work. The first focus is really on research and analysis, and we use that to identify challenges and trends in the community. And then the second bucket of work is really in terms of building capacity of our stakeholders, and we do that by sharing expertise, sharing some of the latest research with them so that they are best informed to make their decisions.
Briggs: So I know, Nishesh, your team is considered the subject matter experts.
Chalise: Yes, currently we have two subject matter experts in our team. One focuses on housing security, so she's concerned with the looming evictions due to COVID pandemic and overall thinking about how families and communities can build wealth through housing. Another subject matter expert is focused on workforce development and thinking about how individuals and families can have access to high‑quality jobs. And she's also currently focusing on early childhood education and early childhood centers, because there's a lot of connections between cost for early childhood education and how that impacts workforce and housing security also.
Briggs: So, Sydney, what I'm hearing is that you are hearing a new tone and drive to embrace racial equity.
Diavua: We are. One example, it's interesting, we've been working with funders in the Mississippi and Arkansas Delta with a group that is called the Delta Philanthropy Forum. And this is a group of funders who began convening about a year and a half ago to really discuss how they could be more strategic about the investments that they were making as funders into the Mississippi and Arkansas Delta. And one of the issues that emerged in their work early on, before the pandemic, was that there was some challenges that related directly to racial disparity in the Delta that despite the efforts that they made programmatically, despite the things that they funded, that without attending to these racial disparities with an access to funds, with an access to capacity building, that they weren't really going to move the needle as much.
And then after the pandemic started and after we saw all of this unrest around the country, these funders have come together and said now is the time. Our goal is going to be to look at how we can advance racial equity within the Delta and looking at how we can approach this through the Delta Philanthropy Forum. And so that's just one example, but one of many that we're seeing in that funders, local governments, and nonprofits are really looking at this goal of advancing equity through their work.
Briggs: So, Sydney, it sounds like you have your partners' attention. How can the partners work with you in the community? How can they use what you find in your outreach to help them move the needle to address racial inequities?
Diavua: So one of the things I spoke about when I talk about the work that we do as Engagement is that we work to expand partnerships between funders and community development projects. And one of the resources we have to do that is our Investment Connection program. So our Investment Connection program, it's a bit of a matchmaking program between funders and Community Development projects that align with the Community Reinvestment Act. We do training and capacity building for nonprofits to help them understand what CRA is and how to talk about their work in the context of the CRA, the Community Reinvestment Act.
The Community Reinvestment Act is a regulation in which banks are required to make loans and to invest in communities in the same place in which they're taking deposits. It was signed in 1977 really as a response to redlining, to ensure that all communities had equitable access to credit and to lending.
We also do some training with these nonprofits on, well, what does it mean to talk to a funder? How can you align your work to build a relationship with the funder so that it's not just a one‑time transaction, but you're really building a deep relationship that can go forward into the future? And on the other side, we're convening funders. We've had two roundtables just this past summer, one in Memphis and one in St. Louis, to understand where are funders focusing their efforts? How are they responding to needs around COVID‑19? How are they collectively addressing some of these needs through either rapid response funds or thinking about resiliency funds and new investment vehicles into communities.
Briggs: Ray, when did the center first take on issues of racial equity? And was that a challenge?
Boshara: So when our center began, we started talking about race, and that's because race is one of the three demographic drivers of predicting who has wealth and who doesn't. We've looked at race from the very beginning, but we've also looked at education, and we've also looked at age or birth year or generations. And race not only in and of itself has been a driver, but it also compounds education and compounds generations. Basically, you know, if you have an education gap or you have a generational gap, it's made worse by race.
And when we talk about racial economic equity, we really have a long way to go. We're starting with a 10 to 1 wealth gap, so whites have about 10 times the amount of wealth that Blacks do, and that's a number that hasn't really changed in 30 years. And, very importantly, when we talk about racial economic equity, I don't mean equality in outcomes, but really more equality of opportunity.
So right now being Black means that whatever financial, educational, family, and other choices you make means you do not generate as much wealth as a white person does who makes similar choices, and that's just not right. So when it comes to economic outcomes, we'd like for race not to be a strong predictor, you know, like it is right now.
Briggs: Ray, I agree. I've read your stuff. You do lead with facts, but I will say the Center seems to be the function in CD that pushes the envelope on the sensitive topics in regards to race. So why are these topics so crucial to discuss, and what is your team trying to do when you push this envelope at times?
Boshara: I think the reason that we kept pushing on race was because it kept showing up in the data. Race matters way more than it should in predicting economic outcomes. You know, it's just not right that if similarly positioned whites and Blacks make fairly similar choices about, you know, their finances, about their education, about their family structure yet have very different economic outcomes, that isn't right. And so we felt like we really need to talk about this because it matters economically.
There's a little bit of a conundrum here. You know, the nation has made great progress on voting rights, on education, on political representation, antidiscrimination, a whole range of things, but that is not translating into more wealth. All those things that we accomplished as a nation over 30 years have not changed that 10 to 1 wealth gap in any fundamental way. So we thought it was important to push the envelope a little bit and talk about why race matters.
Briggs: I know that you are looking for change and you're doing this research and studying this for a reason. Who is your research targeting, and who are you trying to influence and inform?
Boshara: I think with anything that we do, we're really focusing on what I call decision makers at any level, the journalists who decide what gets covered and how it's framed, the policymakers who allocate funding, the foundations that make their own decisions about their portfolios, nonprofits who can only do one of 10 things they'd like to do in a community. So we really are focused on anybody who needs to make some kind of a decision, and we hope that our data informs their decision.
When we found that younger generations today are on track to have less wealth than their parents did at the same age, we hope that policymakers and funders and others might think a little bit more about generational equity in some of their programming.
Briggs: Nishesh, can you share some key initiatives that your team is focusing on and building on positive change when we look at racial inequities currently?
Chalise: Yes. We currently are working on two major projects. One is we have a survey that goes out every two months to our community partners assessing the impact of COVID‑19 on the low to moderate income communities that they serve. And another initiative is our Delta Capital project, which is looking at how investment flows into different counties in the Delta. And the hope with both of these initiatives is to inform our communities and various stakeholders as they try to think about how to strategically plan for or respond to this pandemic and, again, for the Delta Community's initiative, how to think about investments flowing into the counties and how that investments has an impact on the social economic outcomes.
Briggs: And I guess to follow along that, Nishesh, my last question to you would be: How can the data you collect help partners outside of Community Development to move the needle and to address racial inequities? How best can they use your information?
Chalise: I think that is something that we are continuously trying to figure out. So we would probably do more engagement and outreach and ask them what can we provide that would help them the most, and so in some sense trying to get an understanding of what is their need that we can respond to. At another level I think our work focusing on racial equity, the hope is that we raise the level of societal consciousness about these issues and some of the challenges so that any work that other folks do is informed by our work.
Briggs: Daniel, I would like to ask you if you feel like all eyes are on Community Development right now. And if yes, is that a good thing?
Davis: There are more eyes everywhere looking at how to create a more inclusive and equitable economy and more voices talking about it too. From my perch at the Federal Reserve that’s a very good thing.
Briggs: I would like to thank the Community Development leadership team for their time and for sharing the important work that they do.
To find out more about the CD team, please visit our website at https://www.stlouisfed.org/community-development. And for more Timely Topics podcast episodes, visit stlouisfed.org/timely topics. You can also subscribe to our Timely Topics podcast series on Apple Podcasts, Stitcher, and Spotify. Thank you for listening.