Episode 158- Black Lives Matter & The Black Tax: The Cost of Being Black in America w/ Shawn Rochester

Jamila Souffrant 14:09

Okay, hey journeyers. I'm really, really excited to have Shawn Rochester on the podcast to talk to us today because he is talking about a very important, not just topic. This is a realistic and real thing for us, especially people of color, especially black people, which is the black tax. And Shawn knows all about that he has a passion for talking about personal finance in general. But he's written this amazing book and has given amazing talks, which I'll link to in the episode show notes about the black tax. And so I can't wait for us to dive in. Shawn, welcome to the podcast.

Shawn Rochester 14:46

Thank you very much for inviting me on to the podcast. I'm looking forward to our our conversation and I'm super excited that you were able to see some of my work and and I look forward to some great things.

Jamila Souffrant 14:57

Yeah, so first of all, I really want to talk about what the black tax is, because I will raise my hand and admit that I actually did not really completely understand it at first as a black person, right? Like I didn't completely understand it even on this platform. I've had interviews and conversations with people, and it's come up, but the way we discussed it was more in the sense of as a person who's ambitious, are the most the person who's missing the most in the family having this responsibility of taking care of people in their family. And I feel like that's a disservice to what actually the black tax is because the funny thing or the thing that happened when I did talk about it in that way, I got a couple of responses from people who are not black, who said, hey, like that happens in like all cultures, like that happens to me too. Like, I'm the only one in my family that has this degree or makes this much money and I have the pressure of taking care of people too. So it's not just a black thing. And I think like when we don't know what it means, and we use it in that way, it undermines what it actually is because watching your presentation, like going through kind of your work. I really realized like, wow, this is something that needs to be heard by everyone, not just black people about what actually this is and why it's real and to talk more about it. So can we talk about first exactly what the black tax is?

Shawn Rochester 16:10

The black tax is the financial cost of discrimination against black people that is driven by conscious and unconscious, anti black bias, either from individuals or institutions or organizations, you know, across the country. So it's the manifestation of anti black bias in ways that has a financial impact on us and our families and our community. The black tax that people often talk about, which is what you just referred to, is a subset of that. And that has been exacerbated by this much larger black tax which has been happening here in this place where we live from 1619 up into the present, so while other people face that what we are encountering is of a different kind and others different order of magnitude.

Jamila Souffrant 17:02

Yeah. And I just think it's so important to have that distinction and to talk about and like you have data, which we'll go through about it, like what it actually how it actually impacts the bottom line for black people. Because I think when we use it in such a general way where other people can say, wait, that's not just you, like, we have that too. They kind of diminishes the reality of it, because then people can write it off and say, well, that happens to everyone. That's not just something that affects you. So I think this is so important to talk about what the black tax which you generally explain, but like how it actually impacts us, like financially and these unconscious and conscious biases, like what they actually are. So can we talk a little bit about how it seeps into our everyday lives out into our pockets and how it impacts us?

Shawn Rochester 17:42

Yeah, so there are a myriad of ways. So if you think about the job search, right, and a lot of people may be familiar with the research that was done at the University of Chicago, back around 2002. And I recall when it came out because I was at Chicago Booth Right at the time, and they wanted to get a sense of discrimination and kind of the job search market. So they sent out a number of over 5000 resumes to different companies and institutions across the country. And our resumes were the same, except some was stronger than others in terms of the quality of the institution that people went to school with depth of experience, quality of experience, so on and so forth. But what they did was they gave some of the resumes, black sounding names, and some of them white sounding names. So you would have like Emily for the ladies and then Jamal for the men, right? And then Brandon, and LaKeisha, but everything on the resume is the same. So they sent it off.

Shawn Rochester 18:47

And the first thing that they noticed was that if you had a black sounding name, same exact resume, 50% less callbacks. So your ability to get that opportunity to come in and talk about your background and the fit and how you could be great for the institution, well, you don't even get that shot, right, that's just kind of based on the name. The other thing that they noticed was if you looked at the quality of the resume, so as the quality of the institution, increased the depth, length of experience, and so on and so forth. For resumes that had a white sounding name, they saw a 30% increase in call backs, which would make more sense, right, you perceive this person to be a stronger candidate, let's talk to that person. I want to I want to talk to them more so but when it was a black sounding name, there was a zero increase zero statistical difference. So as the strength of the candidate increased the interest in talking to them about the job did not right, which is a particularly remarkable thing, because the job allows you to provide income right for your family and allows you to develop incremental skills and to deploy the skills that you already that you already have.

Shawn Rochester 19:57

The other thing that was very interesting is that they noticed that the effects were the same, regardless of the size of the company. So this existed in the large companies as well as the very small ones. It existed in the private sector as well as in the public sector and governments and the like. It was pervasive across. And then that, you know, University of Arizona did a study, or Arizona State University did a study and what they found was like white candidates with a felony conviction, got a higher call backs then black candidates with the you know, college degree, no felony conviction. So what's happening here is they're measuring how biases are playing out in decisions that people are making, and there's a significant economic impact. Now, ordinarily with someone would say, well, you know, we're being too sensitive, right, like everything's not about race. And surely there was some other rationale, but what these researchers are doing is they're isolating for racialized impacts. They are taking all that into into consideration.

Shawn Rochester 21:02

Now if you said, okay, all right, I get that maybe that's just regular folks, right. But we're not going to be the regular folks, we're going straight to the top, you know. So they did some research to look at what was happening in the legal fields. So they created a memo. And in the memo they inserted, I think it was 22 different types of errors. So error, in fact, right, the interpretation of the facts, errors and grammar, spelling, so on and so forth. And then they sent off this legal memo to two sets of groups, which were law partners at major law firms. And when the party started was a black person who wrote it. They gave the score of 3.1 out of five. So it's about 62%. Right, which is a failing rate. But when they thought it was a white person who wrote it, they gave them a four out of five, which is 80%. Right? nothing to write home about, but it's a passing grade for something that's full of errors. The second thing is they noticed that there were seven errors in grammar and spelling. So these are things that you can catch easily. And when they thought it was a white person, they caught about three of those when they thought it was a black person, they caught six out of seven. So it was 100% difference, in the level of scrutiny and errors that they would detect in the same exact work. The only thing different is about who the employer thought actually wrote it.

Shawn Rochester 22:30

Now, the implication of this because you can, you know, you can live a good life as a lawyer is that if you're under that level of scrutiny for the same exact work, and the interpretation of your work product is wholly different. That could mean it is more difficult for you to get placed on the right projects to help you get visibility and to be seen, and potentially to get on a partner track. And the difference for the person who has the same exact capability. This is not elevating somebody who's not on the level, between partner and non partner could be well over $11 million over the course of a career. So the impact, the economic impact is really massive. Right? What does that do for that family? What does that do for that community for the church, that person may or may not be a part of the nonprofit boards that they sit on. It has a reverberating impact across our communities. And it's very important that people understand that these bias levels are quite high, and that there's an economic impact to it's just not how we feel about it. This is affecting legacy. And that's, in my view, unacceptable.

Jamila Souffrant 23:33

Yeah. And I love that there are facts to this and research because a lot of times were deemed as too sensitive and making everything about race. And what happens is like, it's not imagined, like, you know, I worked in corporate America for a long time before I started to do this full time. And so I've seen it firsthand. I felt it a bit. And it's sometimes it's so small, and you can't necessarily especially when you're in it, prove it in the moment. And so with these kind of studies is it's interesting I think what's also important is that if you think about it, people will say, well, we're not intentionally doing this. We're not intentionally holding black people back. And what do you say to that? Because I think that subconscious that what is not conscious what's happening, it's still seeps in. And it's deciduous to our growth economically and as people of color as black people.

Shawn Rochester 24:22

So there are two types of biases or two modes. The first is conscious. The second is, is unconscious, or implicit, they like to call it. So if you do some research, which was done by like, I think it was Chicago, Michigan, Stanford, and the associated press did some research back in like 2012 to get a sense of like the bias levels across the electorate. And for explicit bias, which is I know exactly what I'm doing. I know exactly how I'm feeling. There's no two ways about it. The levels of bias were around it was about 51% of five and ten.

Shawn Rochester 25:00

The levels of subconscious bias when they did the work was was about 56%. So almost six and ten. So you got half the population that they that they surveys which represents the country, that explicit bias. And they got almost six and tend to have an implicit bias. And if you look at the work that Harvard's done because they have this online test that you may be familiar with, it's called like the Implicit Association Test (IAT), right? The IAT. And many people have taken this test. Some of the last numbers I saw were that over 20 million people today, I've taken various levels of IAT. So they started looking at racial subconscious bias, right? What they call it is automatic white preference for that massive large pool of people who who taken that test, you know, since the mid to late 90s, maybe even longer. It's about 75% of the people have an they call it an automatic white preference. It's just a wonderfully nice way of saying anti black bias. When you think about that's a very high number. That's three quarters.

Jamila Souffrant 26:06

Yeah.

Shawn Rochester 26:06

So the point there is twofold. I never declare what kind of bias it is. Because I don't know what's in your head. I don't know what's in your heart, nor do I really care. But I'm interested in is in the impact and financial impact. And there's two modes, there's the explicit, that is the implicit, and those levels range from high to very high. The levels are actually so significant, it gives you the very strong sense and data back. And the data back says that the normal state is actually automatic white preference. People believe in normal state is egalitarianism. It's all equal. That if you do something to upset that somehow it's unfair. But the normal state is automatic white preference. It's not egalitarianism.

Jamila Souffrant 26:52

And when we talk about white preference, it's more of what the study showed that you talked about is thinking that they prefer to have a white person do the job or they prefer or think that the white person is better. Like, what is that, exactly?

Shawn Rochester 27:03

So what the test is detecting is your, what you associate positive and negative things with. So the test is saying that it's easier for people who take it to associate positive things with a white person than it is with a black. But it's more difficult for them to associate positive thing with black people. The issue becomes how does that manifest itself in our daily lives. Because whether or not a person knows about it has nothing to do with whether or not it's happening. Whether it's the person who's feeling it or the or the perpetrator of it. And this is where it starts to creep up in decisions that are really important, like you're making loan decisions about what business gets a loan. And it's very clear that when you look at black enterprises or black firms, and they have the same credit profile as a white firm, yet, they're twice as likely to be denied and yet when they do get credit on average, their credit is 100 basis points higher for the exact same credit profile. So your cost of capital, your cost of operating that business from a financial perspective is higher. That's how this bias manifests itself. Now, if you're a white person, you're getting a lower cost environment. Now, it doesn't require your permission. It doesn't require that you're aware of it. You could be totally against it. That's irrelevant. It's still happening. And it's happening in your favor. And it's happening, where it's much more costly for black people in particular.

Jamila Souffrant 28:37

Yeah, and I wonder too, right. So the population or the people who were surveyed or who are taking part of this or they also are diverse range of people. So not only is it people empowering white people maybe have these biases, but it's also people in general, like fellow black people, right? We all have it.

Shawn Rochester 28:56

All of us have it. That's an American statement. We have it. We actually have two black taxes, which I talked about in the book, we have the external, black tax imposed upon us, both conscious and unconscious. But we also have an internal version that we impose upon ourselves. And as you may know, the way that we propagate that is through commerce. We'll be very helpful when it comes to like careers, jobs and education, all that kind of stuff. When it comes to commercial activity. That's where that bias bears his ugly head.

Jamila Souffrant 29:26

I definitely want to talk about that when we start talking about what we can do about that. Because I think it's fascinating because it is something that we do like as black people to our, you know, our own people. And I know this goes back to our history in this country, which you talk about in the book you talk about, and your talks. And so I do want to talk about like the impact of slavery, what that has done and like how even since we you know, been technically freed, how it hasn't been so long ago, and how all those events right have led us to where we are because just playing like devil's advocate, that again, these studies were so long ago, we've come so far, are you being too sensitive? Like hard work, hard work. So I do want to just go back to where we come from, and like why it is still important and impactful today.

Shawn Rochester 30:12

Right. So one of the things I try to do in the book, and certainly do in my talks is answer like an important question, which is, why is it that after 400 years, over 40-- 45 million African Americans only own about 2% of the U.S. wealth? Well, we got to quantify what we mean by come so far. So from zero percent to 2%, is the farness that we're referring to, right? Normally, people don't think about it kind of in that way that they're actually not aware of that, our ownership of wealth is so small to begin with. So that's one thing for us to think about it to examine. The other question becomes when people say, listen, hey, this was such a long time ago, as you just said, there was plenty of time to do well, like you got to get over it. The implication when you say that is that the thing or the trauma was small, relative to the time. And I so I go back and I said, alright, well, let's let's kind of talk about that. Because while there are myriad of things that we could never measure about the horror, of that period of chattel slavery, you can look at the economics behind the labor that was extracted from millions of people over a 250 year period. And those numbers range anywhere from like 24 trillion all the way up to 97 trillion, right? These are huge numbers. So even if you're assuming the truth is somewhere in the middle, you're at around $50 trillion dollars.

Jamila Souffrant 31:39

What's that $50 trillion represent?

Shawn Rochester 31:40

Labor extracted from those people. That's the value.

Jamila Souffrant 31:45

That they were not paid.

Shawn Rochester 31:47

Absolutely. Were not paid.

Jamila Souffrant 31:49

Right.

Shawn Rochester 31:49

Or the or what we could really say that they paid for this. What people don't realize is that in a capitalist society, nothing is free. Someone is paying for it. They paid for it. They weren't paid. They are the ones who paid the price for it.

Shawn Rochester 32:05

The other thing that we can look at valuing is you can say, okay, if you if you looked at 1860. And you could say, well, how much were those people worth? Because they're the most liquid asset in the country. They are trading on open markets, there's a price if they're old or young, male, female, able bodied or lame, right? So what was that price. And it turns out that their value was so large that you either have to measure in terms of total wealth of the country, which was between 16 to 20% of the total wealth of the country, or GDP, which is national income, which is one to two years of GDP.

Shawn Rochester 32:43

So if you start to put that in today's dollars, national wealth, about 85 trillion. So if you look at 16 to 20% of that you're talking 14 to 17 trillion take an average you're at 15.5 trillion. If you look at it from an income perspective on national income, GDP, the GDP is 19 trillion a year. So that to their value is somewhere between 19 and 38 trillion one to two years. If you can average it out here at 28.5. So there's two different ways to value those people. And if you take an average of those, you're at 22 trillion. Like this, there's no two ways. Like if you go back to the 1831, I think it's like, John Adams, he's making an argument against why you shouldn't free the slaves and one of the arguments that he makes is the capital base associated with them is so large, he's saying it's $1.2 billion at that time. If you inflate that to today's dollars, you can approach again, $50 trillion dollars. I mean, we start to be some really, really, really big numbers.

Shawn Rochester 33:41

So the point there is, when you said it was a long time ago, you're implying that it was a small matter. If you were me, you lose like 25 cents, not a big deal relative to what we have. If we lose 24 million, really big deal. And that's the power of kind of putting some numbers behind it and saying like, this is what was done. It didn't go to those folks. It was reinvested in infrastructure and systems processes that they didn't benefit from, in any way, shape, or form. And if you say well, and they didn't leave bondage with economic resource, and as we all know, in a capitalist society, the worst position you can be in is to have no capital. You are not free, unless you have capital, no matter how you try to convince yourself that that's the case. Or we try to convince ourselves, right? And they left that position with no capital. It wasn't like when the Israelites left Egypt, they left rich, and they could build a new society. The sentence of black people left in a position where it was just like, what you're going to do is you're going to work menial labor, because that's what we need, and that's what's necessary.

Jamila Souffrant 34:52

Yeah, it's powerful, and I'm so thankful that you're able to communicate it in this way so clearly and with facts. One of the things that really when people talk about slavery and the you know, the fact that okay, like you said, like our ancestors were freed, but they were freed into what and you talked about this in one of your talks about, essentially, they were still like slaves. I mean, they still were owned because they now had to work to buy back almost like their freedom. They would get into debt because they couldn't pay they weren't getting paid enough. Can you talk about that cycle that occurred because I think sharing just like the after effects like and how we can't just look at it as when slavery ended, because it it persisted under a different name for a long time, different names, actually, you know.

Shawn Rochester 35:34

So there were global ramifications for the emancipation of black people in America, because it caught, it causes gigantic cotton famine, because cotton was the most important commodity in the entire world. And the U.S. dominated 80% of that market. This is just to get an idea of how important that came from these 4 million people in the South. Right 80% of market is 61% of U.S. exports. The full economic value of the South 50% of it is those 4 million people. There is no argument position or conception that black people held in bondage were not immensely critical to everything that's been created in the country. The numbers are just too large to disaggregate. So when they're emancipated, but what is the need? The need is you got this global cotton famine, and it's affecting the whole industrialized world. So you need to put these people back to work and how you go about doing that. Now, there is no distribution of land. We all know about the 40 acres and a mule that never happened, right? Although they did distributed to land to white folks through the Homestead Act. So what's the need? The need is readily available, massive labor. So they shifted into a this thing they call like this Jim Crow system. Which is let's break these mega plantations into smaller locks. Let's have black family settle on those locks. We'll make an agreement with them that if you agree to plant cash crops, that at the end of the harvest, you will share any portion of the crop share cropping right? Now, it is a actual contract agreement. But what is the challenge? How do they lock people into it? First challenges these folks don't have economic resources. And it takes quite a bit of energy, effort and resources to go from now to end the crop. So who provides all of that? The white farmer provides the tools and the clothes, food shelter, they provide the seed, they provide everything at rates, credit rates up as high as 70% per year. They're setting your whole cost structure, right? You're borrowing and all your costs are tied to them.

Shawn Rochester 37:58

The other component of it is that when the harvest comes ,and you take the crops to market, the white farmer is the market. So they tell you what your crops are worth. So they control your revenue. And they control your cost structure, which means that they control your profit. If you're lucky, your profit is going to net to zero. If you're unfortunate, and they don't want you to work with someone who might be more generous than they are, then your profit is going to be negative, which means you're going to owe them and they're going to roll that into the following year. And now you're in perpetual debt servitude. Now, we have this Hollywood mindset, that if it were me, and I was in a situation I wouldn't put up with. I'd walk away from it. But what they did to ensure that the system was like hermetically sealed there was no out is they wrap nefarious laws around the situation. So if you chose not to participate in that, then they could hit you with vagrancy laws, which said if you can't prove that your land owner, whether you're gainfully employed, they could charge you with a criminal offense put you in a state of county jail. Now, if you said, well, I might do it, but on second thought I don't really want to do it now, because this is nefarious, right? If you break that contract, then they put contract enforcement laws in place, which said, If you break that employment contract, we can charge you to criminal offense, put you in a state or county jail. And if you're in a state, or county jail, you just like, I'm just gonna stay here. And I still don't want to do the work and they can lease you back out to the same white farmer through convict leasing, or to a private corporation in the first place.

Shawn Rochester 39:42

They made sure that there was no possible out for you. And under the conditions of convict leasing, you have a one in two chance of death. And what I try to help people understand is, it is not this thing about the strength and the heart of the individual. And if it was me it would be different. It was designed to have this outcome. It had been fought through on multiple levels. These people didn't have an out. And it wasn't a choice. And during this period of time, 4000 black people were killed by their fellow citizens by lynching, a public execution by their federal system. This was serious business, right? Your life and your family's life was in your own hands. And it's, it's not really taught in the curriculum. It's not taught in our institutions, which is why people think it wasn't so bad. Or think there was somehow a choice in the matter. The consequences of going against these systems were a unimaginable level of brutality for all to see. It's a very sad and kind of traumatic thing to think through, but people need to understand it because there's an economic impact. to it. How are people accumulating any wealth during that period of time? Extremely difficult to do that. And it helps to inform why you have so many people in a situation that we're in today because wealth is temporal. It increases over time if it's employed well.

Jamila Souffrant 41:19

Yeah, it compounds. And so it's important to understand this history. And it brings us to today. So not only did we start at a disadvantage, right? Now, we're at this point where we are seemingly given equal opportunity. And I think it's important that we talk about we kind of discussed in the beginning was this implicit bias, even if someone's not consciously doing it happens still where it impacts the bottom line? And so to understand now, like what we can do, because the biggest thing like so for me, you know, I'm I know you're Caribbean, where are you from?

Shawn Rochester 41:55

Barbados.

Jamila Souffrant 41:56

Barbados. I'm Jamaican, and I have like, you know, fellow immigrant, friends and then I have people who were like, really like, they were family is from here from the South. And in general, right, like we're taught and I was taught like education like is the key and you do your best and, and work hard. And so you know I graduated got a good job work hard, like invested, saved, did all the right things. And so sometimes right? When you you look at like a trajectory of like someone like myself it's like all right hard work and pull yourself up from your bootstraps, right? Provided you have the boots, you look at it and you say, okay, so now that we are in a better position, right than we were back then why has not much changed? And so people who are looking at us or and say like hey, like you can do more, you can do better, you can try harder. It's not it's no longer like the government or the man's fault. What do you say to that? Because I am one of self responsibility and that's what I'm teaching my kids that you know, you can't wait for the system to fix itself. So you do have to try harder and harder maybe then the next person and that's just what reality is. But how do we talk through that? And like help people understand that sometimes even with the hard work, you're still not on the same playing field.

Shawn Rochester 43:09

Yeah. So I don't think our works the problem, we got people who walk like six miles to get water in different countries. We got people who work 10 hour days making minimum wage, right, people are working really hard. The issue is, what yield does that hardware generate for you? And that is all about where is that hard work taking place? Because if you look at if you go if we go back to the data, because at the end of the day, this is all based on economics and capital and access to resources. So if you go back and you look at people who come from communities with persistent poverty, and you compare that to people who come from communities with significant resources, the young person who comes from a community with persistent poverty, is 99% less likely to complete a four year degree. It's not about hard work. Ninety-nine percent less likely. That means one out of 100. And that's because of massive resource differentials right? Ninety-nine percent less likely.

Shawn Rochester 44:11

The second thing that we know is academic achievement has very high correlation to economic resources. Almost every measure, they'll measure like, well, they'll say, well, what's the amount of segregation that's happening? Right? And segregation is nothing more than wealth distribution between black and white people or white people or non white people, right? They will be like, what's the level of poverty again, as an economic measure? Or they would say, well, what's the median or average kind of family income, again, it's an economic measure, and a proxy for wealth. The higher those things are, the more well people tend to do the resources in your community and your family has much more to do with how well you want to do, then your hard work because your hard work is magnified because of those economic resources. So the data is very clear about that. I try to help people understand like intelligence, capability, scale, all that stuff follows a normal distribution. It's Gaussian, which means across population, whatever, you got 15%, significantly above average, I call him the ultra brilliant, we all like to think we're part of that group, you got 70% that are kind of in the middle, right? And then you got 15% that are dramatically lower. What wealth and access to resources does is to allow you to develop more of your existing capability. So the problem in this country and in others is that people mistake a monopoly on the resources that develop talent and skill for a monopoly on talent and skill. It's a significant difference. And if we don't understand the role that the environment plays, we're going to keep blaming individuals for the outcomes that that environment actually creates.

Jamila Souffrant 45:57

Yeah,.

Shawn Rochester 45:58

That's kind of my thought on that.

Jamila Souffrant 46:00

So what can we do about it? We have significant research that shows how these biases conscious and unconscious affect us to this day, right? So we have the statistics and we have the numbers about what we were not given and with the work and the kind of capital that we were, as our history as slaves in this country or black people in this country, what that has done and how we've liked having wealth and the opportunity that we were not provided. So now we're at the point where, okay, we now seem to see that there's still implicit and explicit bias. And I love the fact that we talked about the two black taxes like not only others but on ourselves that we, that we do.

Shawn Rochester 46:37

Absolutely.

Jamila Souffrant 46:38

Now what right? So we become this far, and we're still here. So what can we do? What are the solutions for people, for companies for the environment for the government, and can it be fixed?

Shawn Rochester 46:50

Yeah, it can be fixed. So this there's a couple things the first part of the challenge is that we collective we want silver bullets. What's the one thing that we can do to correct this stuff tomorrow? It doesn't, it doesn't happen. It's not going to happen. Because it was no one thing that was done to get us into this situation, right. It's a compendium of things that we kind of have to work on in parallel and in series. So that's just kind of overarching. That it that I'm trying to be specific about because there's many it's that we can work on. Are things that we have a gap in jobs, businesses, and capital. And it's the gap in those things that are driving almost all the socioeconomic issues that we're seeing.

Shawn Rochester 47:31

So I advocate for this economic framework that I call PHD, which is purchase, hire and deposit in ways that create jobs, create and expand businesses and provide capital in our community. The P is about what as individuals or families what we purchase for corporations, governments institutions that's about their supply chain. So we can have a stimulative impact on businesses by procuring their products and services. Now we're all familiar with this $1.2 trillion of consumer spend that we do it is bantered about a number is probably higher now. But about 2% of that actually goes to black enterprise 98% of it doesn't. So we're really despite the rhetoric, we're really not spending our economic resources on our businesses.

Shawn Rochester 48:21

So one of the first thing to do is to start to shift our demand for our own businesses. And it's as simple stuff as if we're in a position to buy a home and we're so blessed and so well capitalized, and we start to go down that path and do those things. You know, do we use a black realtor? Do we use a black broker? Right when it comes to like insurance? If we have to fix up the house, we'll use a black contractor, electrician, plumber, carpenter, so on and so forth. Right? Those are things that we have control over. Those are things that are high dollar spend items that can have massive impacts on those service providers. In terms of the supply chain span, if you look at corporations, and governments, less than 2% of their their spent tends to go to black firms, minority firms, black firms. So we look at government supply chain spend at that number, I think is probably approaching $600 billion dollars. It's massive. And then when you start talking about corporate supply chains, it's massive. The issue is if you want to show solidarity or to help the economics advancement of black folks, I'm saying do it through economics, right? Do it through procuring your services from black firms, you can have a massive stimulus, you could create 15,000 jobs when you when you do that, are you buying your products or services from?

Jamila Souffrant 49:38

So can I interject? Because I think that's really key. And when you first started talking, you know, I'm envisioning as a black person to give money or to buy from into put more money into the pockets of fellow black like business owners and service providers. But it also would require like non black people to do that, right. So this is like when and it's same with the companies, right? We're talking about everyone wanting to do that. And I guess the thing is, what's the motivation? Like we because we want to do better and like so me my motivation would be because I want to see like the economics of black people in my my future family change in this country. But what is the motivation for someone who's non black to do that? Because I think that's kind of where the disconnect comes where even if we did do that, like, I'm wondering how far that would get us. I'm not saying we shouldn't we should still do it if we're the only ones even that do that. But how does someone who's not black listening to this save themselves? Why should they get involved in this manner?

Shawn Rochester 50:31

Yes. So I agree. And this PHD model is is for everybody. Right? It's for everyone. It's for individuals is for black. By the way, there's black firms that don't do business with black firms. Right. So it's for everybody. There's no one is it's kind of beyond this kind of concept. Let's just talk about that $1.2 trillion. That is responsible for about 22 plus million jobs in the U.S. economy, almost none of which are in our own community. So this is a massive portion, right? So we can have a lot of impact by small moves.

Shawn Rochester 51:05

The second thing is like the what I, right now we have to put ourselves in the mindset of others, which is, their position is you did this stuff to yourself based on the decisions that you made or didn't make. Because as I understand it, this is a land of opportunity. And you work really hard, right? And I worked really hard. And I got where I am. And you're not. So perhaps you should just work harder. And by the way, if I feel that the problems with the individual and not the environment, I got my own problems. Why I gotta help you, right? Life ain't sweet for me type of thing. But that is because you associate the issues with the individual. And what I'm trying to help people understand through what I lay out in the book and the talks in the conversations is no it was it's the environment plays that role, right? It's not the people the people are a product of the environments that they did not create. Now, it is very likely that others didn't know that because not what they were told. It's not what they learned in school. And that's not what they hear in a social circles, but you hear it now. So you can disaggregate the associating kind of the blame for the situation from the individual to understanding the environment. And then I'm saying, if you want to play a role, if you want to help, this is the way you do it. You do it through economics.

Shawn Rochester 52:25

Let me let me give you an example. Remember that maybe like four and a half years ago, something that was this march up and down, was it Sixth Avenue? After all the police, there was a slate of police shootings, right. Yeah. And it was like, you know, the numbers I heard was, like, 25 plus thousand people and arm and arm and it was a great moment of solidarity. Right? It was it was a beautiful thing. That's terrific. People look at that. And they see, you know, 25 or 30,000 people or whatever the number was, I look at that, and I see three or $4 billion dollars spend. That's what I see. And if you want to show solidarity and you want to have an impact, particularly socio economic things, the way you do it is by influencing supply spend that you have control over.

Shawn Rochester 53:07

You can buy cars from black dealers, you can use black realtors, to, you can use black wealth managers and accountants and attorneys and all of these different wonderful high quality services that we have here, which will never be outsourced, by the way. You know what I mean? And you can do it today. And most people have never even thought about it. And I just want to introduce that to them, because you help them and that helps their family and that helps their communities because we're very interconnected as a people. Now that's just that what you can do as a household or an individual. But you might have some decision making ability in corporations you might sit on some boards might be working with some nonprofits, there's a lot of economic opportunities that our businesses could be pulled into. If people see here's how I can help because we got a massive gap in jobs, right businesses and capital. Providing liquidity to our businesses is imperative. You want to help? Do that. We got 110,000 black businesses up, they need about up to $9 billion of liquidity, right access to capital. And the vast majority have said that they would hire people, if they had those resources. And they employ a million people. Like let's think about that. And not just all of the other kind of visual stimulus that we get. If you're not creating jobs, businesses and providing capital to me as a shiny object. And we have had enough of shiny objects.

Jamila Souffrant 54:32

Yeah, you were going to talk about hiring as part of the PHD model.

Shawn Rochester 54:36

Right. And that's just to what extent are we properly represented on the payrolls of various companies, governments and institutions? Right. I think we got to deal with the underlying issues, because the underlying issues are, people think we're at fault. People think that we are less capable. This could be conscious and unconscious and when people believe that it likely means that they're willing to deal with you in small doses. So if there's one or two of you present, Mm hmm. I can kind of deal with that. If there's a significant number present, it feels like some thing is wrong, some better qualified people now are not here that should have been here. Right. And that whole narrative is, is incorrect, but it is pervasive.

Shawn Rochester 55:25

So you're gonna have a constant level of resistance to it. But we have to deal with those fundamental issues. So people can see that it's not a burden, right? There's the brilliance of the population that you don't have access to. There's a reason why they say you get better returns when you kind of have diverse presence of people on your payroll. And it's not because of the magic of diversity. It's because you're tapping into the brilliance of a population that you were excluding previously. It's not rocket science, but it is rocket science. If you don't believe that.

Jamila Souffrant 55:58

Yeah.

Shawn Rochester 55:59

The D is about deposits, right. So I'm an advocate for putting deposits and black financial institutions, you have to have financial institutions that provide liquidity right to you, it's necessary for any society, country, so, so on and so forth. About $4 out of every $10,000 in the U.S. banking system is in a black bank, we just do not have enough deposits, right in our banks to be able to lend to the population. And the challenge with the financial industry is that there has been and still remains significant discriminatory practices. So the cost of capital is much higher and the availability of capital is much lower. And other groups have more money in their banking system. So they can somewhat protect themselves from a portion of the discrimination that they will feel they face.

Jamila Souffrant 56:51

Yeah, and I love that you went through the PHD, as a solution and what we can do and one of the things that struck me is that you stress that we should be specific when we talk about helping black people, because I think there has been a big push on helping minorities and people of color. And when we talk in that general sense, there are programs like you know, a lot of programs that are directed to non white people to help them. When I was in college, I was a part of the Inroads program for minority students to help them get into fortune 500 companies as interns, and it was great. I remember the first year I got in, it was like, maybe like 50% black people, and then maybe the other 50% were other people of color. And as I grew, and I graduated, and I started working full time, we would see now the pool of Inroads interns, hardly any of them were black. Fine, right. Like there's still talented people of color that we're getting chances, which was amazing. And there were, you know, other non black people who were given those opportunities for whatever reason, I wanted to point out is that when we're not specific, when we kind of stay general with who we're helping, which again, we're not saying that women and other people of color, don't also need the assistance, but it's just like when we do that we still are not really impacting black people the way we want to the way we say we want to when we want to we're so general.

Shawn Rochester 58:08

Yeah. So we have to be specific. Let me give you an example. So to crystallize it, and then we'll talk a little more. So if you look at, you know, the supply chain spend that I mentioned, if you look at, okay, how much is spent with black businesses, you know, Asian businesses, Latino businesses and women businesses, which is primarily by the way, white women, right? About 90% of all that economic revenue stream is driven by white women, if you aggregate that entire group together, only 4% of it is to black businesses. That will be the diverse minority inclusive group that's non white male, right. Or percent.

Shawn Rochester 58:55

Now we can talk about what people's intentions are, and I do pople have good intentions, but I'm saying is your intentions and the outcomes are not aligned. So when you are not specific, these are the outcomes that you wind up with 96% go to non black people. Now, why do you have to be specific? And why do you have this diversion of how resources are really allocated? The challenge is people don't realize that anti group bias is not the same. The levels of intensity are actually different for different groups. There was a study that was done a few years ago to look at why Asian population had done so well. Right. You know, they have an extraordinary appreciation for education, and an a drive and all the time. It's it's a part of the family and organization, all that kind of different stuff. They looked at that and what they found was that's not the that's not the real driver. The real driver is the level of discrimination against them has been falling over time.

Shawn Rochester 60:00

In America, your ability to accumulate wealth is proportional to the level of bias that you face. And black people face the highest level of bias. The other people in this kind of non white group this minority group, they also have anti black bias. And these are the things that we never speak about. And because we don't speak about them, we don't understand them. And because we don't understand them, the solutions that we design, don't take it into account. You're never going to get the appropriate outcome. And it was interesting it's like when people are solving other types of problems they're really good at it may take all this stuff into consideration. When you're solving problems for black folks, they tend to be less understanding of the nuances of actually addressing the issue. So that's part of the of the challenge. And we know that when the programs are specific, that when they're well designed, well executed and well funded, that they work. And at the end of the day, what does working me? It means creating jobs. It's creating more businesses, right. And that helps to create more liquidity within the community. At the end of the day, this is a enormous win and opportunity for for everyone. That's why I focus on this notion of PHD. There's some people who aren't aware of the history and they're not even aware that this stuff is still happening. And for those who now are aware and want to have an impact, this is how you can go about doing it, right. Apply this framework, and let that framework help you to understand the efficacy and impact of what you're actually doing.

Jamila Souffrant 61:38

Yeah. And it's so powerful because again, this is necessary, like a conversation for everyone to hear. It's necessary for me to hear because we as people have our own biases that are impacting us. And so to at least to understand that, and to be honest, a lot of it is being like the honest conversations about being truthful about how we feel about things. I think it's like a good stuff. And as you were talking, I'm thinking, Is there like a specific human that know the answer? This may be a silly question. But is there a specific ban on why you can't have more specific direct programs just for black people? Because I think what comes up for people as well, then now you're excluding these other people that need help, right? These other races that also, you know, Latinas and other minority groups that still need help. And so people, the playing devil's advocate will say, well, now you're, you're excluding other groups and people who need help. So is there something that's stopping like more programs specifically for black people?

Shawn Rochester 62:31

Yeah, you have a combination of the bias that are pervasive. And then you also have a combination of the law and how it's written. So prior to, when you start getting into like the Civil Rights Act, where it's fine to be discriminatory against black people, there's a shift from racialized laws to non racialized laws. So it makes it difficult for people to be specific. Because if you're being specific, you're saying black, now you're being racial. And then the other thing that people don't understand is the definition or the composition of minority has changed dramatically over time. Right? So if you if you go back to 1940, and you ask like, they didn't really talk minority so much at that time, it was more like coloreds, and stuff like that, right? But if you looked at that non white group, 97% of those people are black. When you start getting into the 60s, like 1960 ish or so. Right, you're at about 70% of black. In addition to the Civil Rights Act, you also have the Immigration Act, which dramatically changes the composition of the U.S., right. You have a huge influx of Latinos and Asians and much less people coming from Europe. Right. A few more folks coming from like the Caribbean. But now that is 70% of that category is not black.

Shawn Rochester 64:01

So the trauma and the economic exclusion was for black people, but the majority of the inclusion is going to actually non black people. And people aren't dealing with the biases that are persistent across all these categories, and particularly the categories that are very economically powerful. And that's part of what people need to understand. People come here and they benefit from minority programs that they didn't know about and you're not white male, you know what I'm saying? And you're in this category called Brown, colored by definition 1831. If you look at like the black codes, the slave codes, you know, to me, they describe what a personal color is, as a person who has African blood, so they call it so that exclusion was was for them. But if you come to the country, and you're like, wow, I can, so I can do contracts with the stuff. There's something to help me and that's great, but the problem is how are black people benefiting from that? And even when you develop and you're able to build your company through these vehicles are black people in payroll? Are they in your supply chain? Are you providing any kinds of liquidity, or do you feel the same way that society feels about these very people for whom you are benefiting? But it appears to you like it's based on your hard work, because it's there's no point where anybody's achieved success without hard work, like hard work is actually just a background residence that's required you to work hard and desert, your outcomes can be a little different than if you work hard, kind of rich, the beautiful soil out and kind of Iowa in the Midwest, those kind of things. So people need that that kind of context.

Shawn Rochester 65:37

And like what I said, it's like, we don't, black people been here 400 years, 2% of U.S. wealth. How is that possible? You have other people have come here and they have excelled. They've excelled because they have access to programs that were designed to help correct economic exclusion for black people. And they have benefited from from enormous resources. By the way, all of which is coming from capital that was extracted from black people and redeployed into the infrastructure, kind of this country. And they're not aware of it, how they deploy their resources are in a way that tends to look when you look at the numbers as economically exclusive. So you're kind of compounding the problem. And now if you overlay on top of that, the fact that you didn't know all this history, and to you, it looks and you've been told, by the way this, and it looks like they're the problem, if only they would kind of get up and work hard. That's part of the people say, look, we need to have a conversation on race. And I'm like, No, we need to be educated on it first, right, because what kind of conversation is the uneducated gonna have with the ill-informed? That energy and passion that immigrants bring people from the south already had that, but you couldn't go to that school? You couldn't start it up? There were people who were murdered for attempting to do the American dream. Like if you, somebody puts you under 100 years of that, you will adjust. Right? People who come who don't go through all of that they're not aware of the differentials. They're like, oh, you have what I had, I just work hard, you just kind of not. And it's like, no, we need people to understand that because if they understand, then they can have more empathy. And understanding and empathy are very important to solving big problems. I remember I was in DC, and I kind of watched this, like, the capitalism. It's like a 15 minute Welcome to America type thing. You know, like, you know, the Puritans and then George Washington is like a little flash the slaves and then boom, they're free. And then boom, somebody's on a bus, and it's a protest. And then we're all good. There's so little information as to what actually transpired that it hinders people from, I think acting in the good positive ways that they would want to act if they had access to other information.

Jamila Souffrant 68:09

So some of my lack my, my ending questions for you was like next steps. And I think for a lot of people, just the education of this is important. And so obviously getting your book, which I would love for you, like, what made you decide that this was a necessary book to write? And by the way, I'm so glad you wrote the book, I'm so glad that you are talking about the facts, because I think that's what gets pushed back the most are like, what's what's the numbers like? These are just feelings like this is just like perception. So I think this book and this information is so necessary, but what made you decide that it was time for something like this? Because from what I know, I haven't seen anything else like this or book written in this capacity that goes over all of this. So what made you feel like this was something you needed to do and get out into the world?

Shawn Rochester 68:52

Well, I started actually working on like personal financial management. You know, we have a lack of information on how to manage our resources. And it's because of all this trauma that we're kind of talking about. I wanted to be able to put something in place to help us do that more effectively. When I did that, I've written a book on it, and it's gonna be coming out shortly. And I had like classes and seminars on this kind of stuff. And it's very powerful and transformative, you will love it. And it's like now that we help you put yourself in a better situation, right, much stronger financially, when you deploy your resources. And when you think about who you're doing business with, I wanted people to also consider doing business with black enterprise, because it'll help create jobs, right, and it has this wonderfully positive ripple effect through the whole economy. But what I know and understand is you can start with, hey, you should just go buy and do business with black business, because we don't want to, right. We talk a lot about it. But if you just look at where we spend our money, and if you talk to any kind of black business owners, right, they can give you all kinds of stories right about that.

Shawn Rochester 69:56

So I wanted to create the most powerful case for commercializing black enterprise that I could for everybody to do. Right, us and others. And it seemed like when we talk about doing business with each other, it's either in the form of like a philanthropy, you know, I mean, I'm support, you know, this kind of stuff, where we don't talk about doing business with Prada and Fendi and all those places as a philanthropy, right? We feel like it's an equal exchange for whatever product and, and the price, or it's almost like a cost or a burden. I you know, what I mean by I'm gonna do something with you, right? I'm worried about your quality. I'm worried about all this kind of stuff, but it's a burden or cost on me, but I'll do it. I'll take one for the team. Right. And I'm like, if you see it as a cost in any way, shape, or form or a burden, then I want to show you what the cost is now, and has been to juxtapose that.

Shawn Rochester 70:51

The other piece of it was that you know how every six months eight months there's an article written about some study where they uncovered discrimination in some marketplace. And it's almost remarkable. Whenever I read those studies, they always seem like a tax to me to black people, whether it was in housing or automotive, you know, and I was just always like, I'm going to track these things. And I'm going to come back. And I'm going to look at this and aggregated, and it just made sense to put those two things together. So I approached it as a tax. And then you know, it's like when there is a loose thread on your sweater and you start pulling on it. It starts to unravel and some pretty amazing ways. So the, the story that I started to see was it was pervasive, it was longitudinal, it was cumulative. And the realization that you will get is that the it never stopped. The story is told there was this bad event, slavery, Jim Crow, whatever. And it ended. And it's like, no, it changes form, right. It never stopped. That was kind of the the motivation was behind like a two step part, which is how do we put ourselves in a better financial situation and then and then when we've done that, and as we're doing it, let's do our best when possible where possible to just do business with high quality black businesses because it just creates jobs. It's just a wonderful economic impact to the communities and to our to our families.

Jamila Souffrant 72:22

Wonderful. Okay, so Shawn, please let everyone know where they can find more about you and get the book and I'll try to link as much stuff as possible but just tell people where they can follow you and what you're doing.

Shawn Rochester 72:34

The book is called the Black Tax: The Cost of Being Black in America. You can get that at www.blacktaxed.com. That's with an "ed," past tense dot com. So that's www.blacktaxed.com. You can follow me on on Facebook, as well as I just started Twitter and and on Instagram and also on LinkedIn as well.

Jamila Souffrant 73:01

Okay, I will definitely be linking all of that in the show notes, everyone. So Shawn, thanks so much again for this powerful conversation that is necessary. I'm so thankful that I could bring you on my platform to share this because I think everyone in the world needs to hear this. I'm grateful for the work you've done so far. And I'm looking forward to more people uncovering and having the conversations and not just the conversation, but being educated first, and then having the conversations about this stuff. So thank you.

Shawn Rochester 73:29

Thank you so much for for having me on. I greatly appreciate it and for this conversation.