Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Businesses ignore racial equity at their own risk, Brookings researcher tells Pittsburgh executives

The Downtown Pittsburgh skyline with two yellow bridges in the forefront.
Katie Blackley
90.5 WESA
Pittsburgh has posted exceptionally low rates of Black business ownership, compared to the rest of the region’s population. But Brookings Metro research shows that Pittsburgh's Black population outpaces 80% of Black communities elsewhere in the U.S. on this metric.

Wilkinsburg native and noted scholar Andre Perry told corporate executives in Pittsburgh Thursday that the private sector hurts itself by failing to invest in minority-led ventures and racially diverse communities. But he said companies can break that cycle by recognizing the lost opportunity and responding with deliberate action.

“Businesses are leaving money on the table by not diversifying their employees, by not committing to diverse communities, by not making a welcoming environment,” Perry said at a breakfast program hosted by Vibrant Pittsburgh, a nonprofit that seeks to advance diversity, equity and inclusion, or DEI, in the workplace. In a media advisory earlier this week, Vibrant Pittsburgh said 170 local executives would attend the event, representing companies such as UPMC, Highmark, Giant Eagle, and Thermo Fisher.

“The challenge for DEI has always been to show the benefits of diversity,” Perry said. “But now it's becoming very apparent [that] if we do not invest in Black, brown, Asian communities, you're losing market share.”

Perry is a senior fellow at Brookings Metro, which is part of the Washington-based think tank the Brookings Institution. His research shows that assets in predominantly Black neighborhoods, such as housing and businesses, are systematically devalued. The market assigns them prices, he said, that do not capture their full worth.

For example, the average home in a majority Black neighborhood is valued at $45,000 less than a comparable property in a community where fewer than 1% of residents are Black, Perry’s analysis shows. That disparity represents a 23% difference in price and persists even when levels of educational attainment, crime and neighborhood amenities do not differ between communities, he said.

WESA Inbox Edition Newsletter

Want more stories about economics and business? Sign up for our newsletter and we'll send you Pittsburgh's top news, every weekday morning.

To assess such patterns in the business realm, Perry reviewed customer review data from the website Yelp. He found that establishments receive lower average ratings when they are located in areas where Black residents make up a larger share of the population. Within neighborhoods, however, Perry said minority-owned businesses tend to rate higher than their competitors. Even so, he noted, minority-owned firms lose between $1.3 billion and $3.9 billion in annual revenue because they are devalued.

“Those five-star Black businesses are losing [up to] $4 billion a year,” Perry said. “But that's not the real story. … Cities are losing that [tax] revenue. Counties are losing that revenue. This [unrecognized loss] is what drives me nuts about the DEI conversation.”

Pittsburgh has gained notoriety for posting exceptionally low rates of Black business ownership, compared to the rest of the region’s population. But on Thursday, Perry noted that the Black population in Pittsburgh owns businesses at a higher rate than 80% of other Black communities nationally. Locally, 0.4% of Black adults own a business, according to Brookings data.

Perry said the private sector can boost that figure by targeting its investments to high-performing enterprises in minority communities. He also praised a mortgage program that Bank of America launched last summer to expand Black and Latino homeownership. It allows first-time buyers to purchase homes in designated neighborhoods without making a down payment.

“There are many thousands of people in Pittsburgh that pay rent at the equivalent of a mortgage for years — never miss a payment. But they never could get a home because the way the lack of wealth shows up is the lack of down payment,” Perry said.

“Bank of America is understanding,” he continued, that “they're going to get a new generation of customers that the other banks won't by being inactive.”

Perry said places such as Pittsburgh could try to bolster minority communities in similar ways. Such measures, he said, might actually promote prosperity in the face of continued population declines.

“Those trends are hard to budge,” he noted. “But what is true is that you can create an environment in which the people who do stay actually can thrive and set up a context where that will recruit new people moving forward and bring people back.”