As Biden Gives First State Of The Union, African-American Voters Want A Focus On Solutions

As President Joe Biden (D) makes his journey down Pennsylvania Avenue for his first State of the Union (SOTU) address, millions of Americans will be listening keenly to hear what solutions he lays out for curbing inflation and getting the country out of the pandemic. One of those Americans will be Adam Layne, the newly appointed treasurer for the city of St. Louis.  

Layne, a millennial and former high school math teacher that made his way to city finance and politics, will be listening to the president with the ears of a city official and an African-American millennial citizen– both of whom will be looking for answers from President Biden. 

“We know by now how this pandemic has further illuminated the harsh realities for Black people, especially those falling into the category of low-to-moderate income,” said Layne, also a former St. Louis Board of Education member. “In St. Louis, the stark economic and racial divide is represented by a north-south dividing street called Delmar Blvd. In the north side of the city, there is a high concentration of Black people living at or below the poverty line in communities that lack resources, investments, affordable housing options and commercial development.” 

As a leader whose job requires the monitoring of prices, Layne is well aware of how inflation will impact the bottom line of a city trying to make it out of the pandemic and meet the needs of residents experiencing the impacts of deindustrialization, divestment and disparity.  

“Prices of goods are increasing but pay for minimum wage employees fails to keep pace. Many businesses have reduced hours and cut back on staffing assignments because of the pandemic, hitting hourly workers the hardest,” said Layne. “Coupling rising prices with decreasing take-home wages puts those who were already struggling to make ends meet in an even worse position, and these struggles further tear at two key aspects of a high quality of life: health and wealth.” 

Layne said these changes have caused Black-owned construction firms to miss out on larger city and private contracts because of supply chain delays, increasing prices due to high demand, and smaller profit margins to make community investments. 

Last Friday, the core personal consumption expenditures [PCE] price index, a primary inflation gauge monitored by the Federal Reserve, rose 5.2 percent year over year. With the inclusion of food and energy prices, the PCE was up 6.1 percent, the most substantial gain since February 1982. The Federal Reserve and its authority to raise rates are critical parts of any government response to inflation in the U.S. marketplace. 

These gains have spurred price increases and caused some real pain for big box retailers and consumers at the grocery store. Additionally, the current conflict between Ukraine and Russia has hit the gas pump and home heating. 

According to HIT Strategies, a millennial and minority-owned public opinion firm, 86 percent of Black Americans had concerns about rising inflation in November 2021. That figure represented a three-point jump from September of the same year. African-American consumers are also profoundly concerned about the cost of living increasing by almost 90 percent,  said Roshni Nedungadi, HIT Strategies founding partner. 

The anxiety about rising prices and inflation directly connects to the reality that many Black families have not recovered from the effects of the COVID-19 pandemic. Nedungadi said this global event disproportionately devastated the Black community due to underlying health and economic disparities.  

“We found that there is overwhelming concern about inflation and rising prices. Fully 89 percent of Black voters are concerned that the cost of living will rise in the next year, with a majority – 57 percent – saying they are very concerned,” said Nedungadi, an expert in multi-cultural research and analysis. 

In that same survey, Nedungadi found that one-third of Black respondents reported that their household couldn’t afford to make a full rent or mortgage payment in the last three months. 

According to Adam Layne, these concerns have pushed St. Louis Mayor Tishaura Jones (D) and his office to be laser focused on local equitable solutions. 

“As is always the case, Black communities and businesses are hit the hardest and have to work even harder to emerge from under the burden of these economic times to realize some semblance of normalcy and success,” said Layne, a former researcher at Washington University in St. Louis. 

“At this moment, Mayor Jones and the St. Louis government is committed to changing these realities by taking an intentional approach to equitable resource allocation and development–ensuring the community is at the center, and Black and women-led businesses are centered,” Layne added. 

The coronavirus put global supply and demand patterns on a rollercoaster ride, causing an upside-down equation that has made prices higher and supply arrival dates questionable. In response to this trend, the Biden White House has advanced a bipartisan infrastructure package, made regulatory changes at America’s largest ports, and touted its role in job creation and wage growth. 

Biden’s first SOTU will be geared toward uplifting economic accomplishments and using said accomplishments to lay out the economic road ahead.  Private equity firm owners and investors Carrington Carter and Calvin Butts believe this road has to be paved with more than just nicely worded speeches. 

 ”As President Biden speaks, the African-American community would like to hear more in addition to policy announcements. We need more action. More metrics and some tangible success stories and instances where they put their money behind it,” said Carter, co-founder of East Chop Capital and former Big Pharma brand manager turned wealth strategist. 

East Chop Capital, owned by Carter and Butts, specializes in private equity offerings for underserved communities. To date, their client base is 85 percent African-American and 20 percent women, said Butts, co-founder and general partner of East Chop Capital and Board of Trustee member at Hampton University. 

“For us, returns come in multiple forms. There are capital returns. And more importantly, we must provide educational returns–especially unique for our community is the need for education and financial literacy,” said Carter, whose firm has real estate holdings in Martha’s Vineyard, the Pocono Mountains, Belize and Ohio. 

With a large part of their portfolio invested in vacation and luxury real estate, Butts believes there are some small upsides to an inflationary market, especially given the amount of Black wealth that is tied to homeownership. 

“Because asset prices are home values, an increase in prices means that homeowners and real estate investors will see increases in value while also having a pretty flat monthly mortgage payment creating more equity,” Butts said.   

These upsides are mixed with some of the drastic impacts that inflation can have on African-American working families who don’t own homes. According to Brooking Institute Senior Fellow Dr. Andre Perry, inflation hurts low-income people because they have fewer resources to withstand higher prices. For African Americans, inflationary pain is worse. 

“Due to past and present discrimination, higher shares of Black populations are impacted the harms of inflation,” said Perry, author of the book, “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.” “Being poor is already expensive, but the higher price of energy and food can make life even more difficult.” 

And with pending rate hikes predicted for the next economic quarter, Perry foresees difficulties in accessing capital for African Americans. 

“The Federal Reserve’s plan to increase interest rates to combat inflation will likely cause low-wealth entrepreneurs and homeowners to see the cost of capital increase, making it harder for Black Americans to achieve the American Dream,” Perry said. 

In St. Louis, Layne and the newly elected Mayor Jones are trying to make the American Dream reachable for their residents. These are residents Perry believes will benefit from bold action from Biden in his first State of the Union. 

“The Biden administration must help low-wealth Americans by canceling student loans and medical debt,” said Perry. “Higher interest rates can be countered by removing debts that saddle low-wealth individuals.”