Building Wealth While Black

A boy is born Black in hard-times Georgia in 1930. One of eight children, his father has a fourth-grade education, the family is poor and the boy has a speech impediment that will be with him his entire life. Building Wealth While Black: How Atlanta Fueled A Family Fortune

Aspiring to be like the entrepreneurs whose small “Negro” businesses dot Atlanta’s then-thriving Auburn Avenue, he opens a shoeshine stand outside his family’s home.


Herman J. Russell



From that patch of ground, Herman J. Russell went on to become a major construction and real-estate developer, and one of America’s wealthiest and most successful Black business owners. His H.J. Russell and Co. built the Atlanta headquarters of the Coca-Cola Co. and of Georgia Pacific; Mercedes Benz Stadium, home of the NFL’s Atlanta Falcons; and the Smithsonian’s National Museum of African-American History and Culture in Washington.

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More than six years after his death at 83, Russell’s three children, Michael Russell Sr., 56; Jerome Russell, 58; and Donata Ross are in top posts at the company. Five of his eight grandchildren also work there.

The family has prospered thanks to a unique moment: In post-civil rights Atlanta, corporations partnered with newly elected Black leadership. Minority-owned firms were assured a percentage of government contracts. As the city asserted itself as a mecca for ambitious Black Americans, Russell was building wealth that would sustain generations.

White citizens in America have six times the wealth of Black citizens, and the inability to build and pass down wealth is a major reason. In the new season of the podcast “The Pay Check,” Bloomberg explores the racial wealth gap and what it means for our society.

“My father was definitely at the right place, at the right time, with the right personality and determination and drive,” said Donata Russell Ross, 62, who is the chief executive officer of Concessions International, a family-owned airport food and beverage business. “Construction was the core.

My father was a master plasterer, and he learned from his father, who was a master plasterer. But he was always an entrepreneur and he just understood how to make a dollar and the importance of controlling your own destiny.”

Few Black families have managed to parlay such skills into intergenerational wealth, said Andre Perry, a senior fellow at the Brookings Institution in Washington. Discrimination, redlining, racist banking policies and a lack of business capital conspired against them, he said.

“A lot of people say wealth is a reflection of character,” Perry said. “No, wealth is a reflection of policy and who benefits from it.”

Intergenerational wealth has eluded most Black Americans. Some 17% of White households, in a 2019 Federal Reserve Board survey, said they expected to receive an inheritance of about $195,000 at the median, according to the Brookings Institution. Only 6% of Black households were expecting an inheritance, the median of which was $100,000.

White families in 2019 had median wealth of $189,100 — about eight times that of Black families, according to the Federal Reserve. With the vestiges of 246 years of slavery still festering in America, trying to catch-up is like trying to compete against a baseball team that starts each inning on third base.

The Russells are managing to win. Still closely held, H.J. Russell and Co. today employs 1,200 people, and generates about $180 million in annual revenue. The company is managing a $5 billion construction project at Atlanta’s Hartsfield International Airport, where it has been involved in various projects for over 40 years.

It has a $100 million construction project at the Dallas/Fort Worth International Airport, and is building stations for a planned bullet train between Dallas and Houston. There are multifamily homes and entertainment venue projects in the works.

Russell’s descendants who run the firm are focused not only on growth, but on longevity.

“Ninety percent of wealth is lost by the third generation,” said 32-year-old Zane Major, who is operations executive at Concessions International. “Not only do we owe it to our grandfather to be the people that he wanted us to be, but we really owe it to the community and others around us to show positive examples of what is possible.”

Herman Russell represented possibility in Atlanta. When the city’s first Black mayor, Maynard Jackson, was negotiating in the 1970s to build what would become Atlanta Jackson-Hartsfield airport, he insisted on an unheard-of 30% minority participation on contracts.

He also demanded that banks and law firms working on the project have Black people leading their teams, recalled Reuben McDaniel III, then a young banker and later chief executive officer of a securities firm the mayor opened.

“Herman is a great example of how this benefited Black businesses, because this was his first big public infrastructure project,” said McDaniel, who is now chief executive officer of New York’s Dormitory Authority. “It just changed the narrative on how Black owners built their business financially, because they made a lot of money on these projects, and it also changed the narrative on how they built their client base.”

More than 2 million African-Americans now live in greater metro Atlanta, and there are more than 7,600 Black-owned businesses, according to U.S. Census data. Only New York City area has more.

In Atlanta’s Castleberry Hill, an arts district whose lofts and lounges are popular with young Black professionals, the Russell company’s past and future can be found.

A giant mural of Herman Russell looms over a major intersection, and the company’s former 54,000-square-foot headquarters has been transformed into the Russell Center for Innovation and Entrepreneurship, a business incubator whose mission is to provide young people with resources “to innovate, grow, create jobs and build wealth.”

“For my father, it was always about how could he develop a protocol or a system where the wealth in the family could be perpetuated?” said Michael Russell Sr., chief executive officer since 2003.

Updated: 4-21-2021

Four Numbers That Explain Racial Disparities In Homeownership

Episode 4 of The Pay Check Podcast takes on the persistent inequality in one of the main sources of intergenerational wealth: homeownership.

Buying a home is the one of the primary ways that the average American accumulates wealth to pass down to their children. But it’s something White families have been able to capitalize on far more than Black families.

You can’t understand the racial wealth gap in America without grappling with the historic federal housing policies that led to profound disparities in homeownership rates. In Episode 4 of The Pay Check, we explore what some of those impacts look like today, and delve into some of the history that led to them.

2019

The Year Black Homeownership Hit Its Lowest Rate Since The 1970S

In the 1960s and 70s, the federal government enacted policies to outlaw incendiary practices like redlining, the government-sanctioned program that routinely rated entire Black neighborhoods as the riskiest investments. That practice meant that very few people in Black neighborhoods were able to purchase homes, or even get loans to improve homes that were already purchased.

But despite federal reforms, in the last several decades, disparities between Black and White homeownership haven’t gotten better.

In fact, in the second quarter of 2019, Black homeownership hit the lowest rate since the 1970s, at 40.6%. Meanwhile, White homeownership climbed in the beginning of 2019 to 73.1%. The following year ended with slightly higher rates but a similar disparity: 74.5% for White Americans in the final quarter of 2020, and 44.1% among Black Americans.

$48,000

The average amount that homes in Black neighborhoods are undervalued compared to White neighborhoods, according to a Brookings analysis.

Home sale values, too, have grown only further apart. One recent study from sociologists Junia Howell and Elizabeth Korver-Glenn found that between 1980 and 2015, the gap in appraised value doubled between homes in majority-White neighborhoods and those that are predominantly Black or Latino.

Another study from the Brookings Institution found that homes in Black neighborhoods are underpriced by 23% compared to White neighborhoods, or an average of $48,000 per home. That’s even after controlling for neighborhood, income and education factors. And it has cost Black families a tremendous amount of wealth.

$156 Billion

The cumulative amount of equity Black families lost in a single year due to undervaluation of their homes.

That same Brookings Institution study quantified the amount of money lost from this racial appraisal disparity. In just 2017, it found that Black families lost a total of $156 billion due this undervaluation. The author of the study, Andre Perry, quantified what that money could have paid for:

It would have financed more than 4.4 million black owned businesses based on the average amount Blacks use to start a business. They would have paid for more than 8 million college degrees based on the average amount of a public education.

It would have covered the pipes in Flint, Michigan, 3000 times over. And it would have covered all of Hurricane Katrina damage. And it’s double the annual economic burden of the opioid crisis. Now this is money that is really robbing people of the opportunity to lift themselves up.

9/10

The ratio of U.S. counties where unfair calculations have meant higher property taxes for many Black Americans.

Compounding the burden on Black Americans is another disparity that’s just coming to light. It lives in our taxes. A Bloomberg investigation uncovers how property tax assessments across the U.S. have systematically overtaxed the lowest-value homes, disproportionately burdening Black Americans.

In an examination of 2,600 U.S. counties, more than 9 out of every 10 reflected the same pattern of unfairness, “a textbook example of institutional racism,” says Christopher Berry, a professor at the University of Chicago who conducted the study. High taxes escalate the cost of homeownership and cause many people to lose their homes.

Nowhere in the country has this been a bigger problem than in the predominantly Black city of Detroit, where a quarter of all homes have been foreclosed on for failure to pay taxes, according to Berry. On Episode 4 of the Pay Check, Bloomberg reporter Jason Grotto speaks with one Black resident, Di Leshea Scott, about her tax ordeal. She lost her home over an inflated tax bill, and is now renting the home she used to own.

To understand how this happened, listen this episode. And subscribe to The Pay Check for a deep dive into the racial wealth gap.

My Family’s Long-Gone Texas Land Shows How Black Wealth Is Won And Lost

When I searched my ancestral history, I found clues to a legacy of land redistribution.

For anyone who ever wondered how — and why — America ended up with the racial wealth gap it has, or what it takes to close it, consider a little town in East Texas.

That’s where I searched in an effort to unpack the wealth divide. The story stretches back to the late 1800s, involves a plot of land, abandoned children, and taxes. Lots and lots of taxes. It’s my family’s story. Gilmer, Texas is the scene of an inheritance gone awry, and a portrait of how Black wealth is won, and lost.

To be clear, I never gave a lot of thought to my own circumstances as a Black American, or tried to dive into the reasons why there is a racial wealth gap, one that stubbornly persists long after slavery. We know that Black people make up around 13% of the population, yet hold just 3.8% of all the wealth. Beyond that, I never deeply investigated the racial wealth gap we have today.

That’s precisely what my co-host, Rebecca Greenfield, and I set out to do in the latest season of The Pay Check.

When we started thinking what The Pay Check, a series that examines the intersection of money and inequality, should cover in its third season, the protests unleashed by George Floyd’s killing were filling streets from Seattle to right outside my living room window in New York City.

Add to that a global pandemic that continues to drive racial disparities in health, wealth and death. Even as restaurants, businesses and retailers shuttered at the height of lockdowns, Black Americans were losing their jobs faster than their White peers. Not much has changed: In February 2021, Black unemployment climbed to 9.9%, the highest among all race groups tracked, according to the Labor Department.

Jobs are one metric, but property ownership is also an important means by which Americans accumulate and pass on wealth. The reality is, most people acquire wealth from their parents or grandparents. By one measure, 40% of Americans’ wealth comes from inheritance. Another factoid: Nearly three-quarters of White Americans own their homes, compared to less than half that for Black Americans. So owning property means a lot when it comes to narrowing the wealth gap.

That’s where my family story comes in.

My great great aunt and uncle, Will and Barbara Broadies, came into a chunk of land off a major highway that runs through a little town called Gilmer, in East Texas. It’s about a couple hours drive from Dallas. The land was originally used to farm things like corn, okra, and beans, and was split up between multiple families as the Broadies aged and passed away — a little piece here, a section there. It was a mess.

But that was a very common way for Black families back then to pass on wealth to other generations, which allowed their children to pass it on, leverage it for other investments, or simply profit from a sale.

Well, it didn’t quite work out that way. I would come to learn how, over a period of decades, what could have been an asset turned into a liability. Holding onto that land was just more trouble than it was worth.

In the first episode of The Pay Check, season three, I peel away the layers of my family’s journey through land ownership, and find a story that explains how so many other Black families found themselves separated from land their ancestors had owned. From there, we explore a city that’s considered a mecca for Black wealth, and find that it, too, is rife with disparities.

Building Wealth While Black,Building Wealth While Black,Building Wealth While Black,Building Wealth While Black,

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