CEO of Good Steward LLC, Financial Coach, and Author Shawn D. Rochester discusses his new book, "The Black Tax: The Cost of Being Black in America". He examines the various costs associated with being Black in America, as well as what the Black community and concerned advocates can do to help close the wealth gap.​

Get the book here: https://blacktaxed.com/

Moderated by Shadan Deleveaux​.

It's an honor to be here with you guys this morning.

I wrote a new book called The Black Tax, The Cost of Being Black in America, and it's about what is the financial cost of discrimination against black people.

Often when people are talking about discrimination, we're talking about the morality of it, we're talking about the injustice associated with it, and I wanted to take a different look at it.

I wanted to look at what is the financial cost, right?

I wanted to look at what researchers have said is that cost and then over time see if we can aggregate that to build a picture of actually what's happening.

It's a lot of words, you can focus on me, it's okay.

The first part is a look at the cost of discrimination across multiple industries.

The housing, automotive, job search, high-end careers, online commerce, business financing, to see what that picture looks like.

The second part of the book, I try to answer a pressing question, which is, how is it that after 400 years, 40-plus million African Americans own just 2% of U.S.

Either we are consistently inept, Or there is something else happening in the environment that we need to take a closer look at.

The third part of the book, we explore an economic framework that I call PhD.

As a framework that individuals and families, corporations, businesses, so on and so forth can employ if they want to address 2 particularly pressing issues.

The first is, we're missing 6 million jobs and 1.4 million businesses with staff.

Not sole proprietors, businesses with staff across the broader black community in America.

Those 2 things combined with $8 trillion of net worth that is also missing, are the single biggest drivers for almost all of the socioeconomic issues and challenges that we are facing.

The black tax is the financial cost placed on black Americans by people and our institutions that have conscious or unconscious biased against black Americans.

This clearly begs the question, right, Are Americans really biased against black people?

So what I wanted to do was take a look at what research has said.

So in 2012, AP, the Associated Press, along with Stanford, Michigan, University of Chicago, did a study to try to ascertain how much bias was across the greater electorate.

They found that the portion of Americans expressing explicit, conscious, they are aware of it, bias, or anti-black attitudes was about 50% of the population, which is a significant portion of the population.

They also took a look and said, how much of the population has an implicit or unconscious bias and that's closer to 56 percent, about 6 in 10 in 2012.

Harvard has been researching this for a number of years.

Their researchers developed something called the implicit association test that they use to tease out unconscious bias in various people who take the test.

And over 3 million people have taken this test.

And what they have found is that 75% of Americans, so it's almost 8 out of 10, have an implicit unconscious preference for white people over black people.

They also found that this automatic preference, as they call it, predicts discriminatory behavior, even for people who earnestly believe that they don't discriminate at all.

As a matter of fact, they say that this is empirical truth.

So if this is the case, then we should be able to see some evidence of this kind of showing up in a marketplace, right, as opposed to just talk about it qualitatively.

So back in 2002, the university researchers at University of Chicago did a study and they wanted to take a look at discrimination in the labor market.

And what they did was they created resumes and they allowed the resumes to vary in quality, what they called quality.

So this was like the prestige of the school you went to, right?

And what they did was they changed the names on the resumes.

So they would put white sounding names on certain resumes.

And they would put same resume, black sounding names.

And they would send them out to various employers.

And they wanted to see what the response was.

So 1 of the first things that they saw was, for the name, the white sounding names, they saw 50% more callbacks than the same resume, very same resume, that just had a black sounding name.

So Emily, 50% more callbacks than Lakeisha, No difference on the resume whatsoever.

The other thing that they observed was as you increase the quality of the resumes, so the schools and the depth of experience and the length of experience so on and so forth, they saw with the white sounding names the callbacks went up 30%.

Stronger candidates, yeah I want to talk to that young lady, I want to talk to that young man, fantastic.

Same resume when the quality was increased but had a black name, no change in callback.

Same resume, same level of quality increase, different names.

What they also found was that to overcome this effect of the name, 1 might need up to 8 years of additional experience if you have a black-sounding name.

They found that the level of discrimination was significant and it was uniform across industries and across occupations even size of the company.

So another study was done by a nonprofit research firm And they also wanted to test discrimination in the marketplace.

So what they did was they went and spoke to businesses.

They went and spoke to businesses and they said, listen, what are the skills that you need?

Tell us the skills that you will hire people if they have these needs.

Smart thing to do, businesses share that information.

So they say, OK, we're going to put together a year-long training program to develop and enhance those skills within various candidates.

If the people have these skills, are you interested?

So they go through this year-long program.

And what they observed was, for women, for Hispanics, for foreign-born participants in the program whose skills developed over the course of that year, their employment rates all went up.

For the African Americans in the program whose skills increased over the course of that year, no change.

Now the level of discrimination in the marketplace is quite significant.

And it's so significant that researchers from Arizona State University found that if you're white with a felony conviction, you'll get more callbacks than a black candidate with no record at all.

So you could say, look, I hear you, I kind of get it, maybe that's for regular people, I'm a high achiever.

Right, what I do is I go to the top, you know what I mean?

Doctor, lawyer, engineer, that's what we do.

We don't do all this kind of other business.

So another research study was done by a firm called Nexton.

So they wanted to get a sense for discrimination that might be in the legal profession.

And in the memo, they proceed to insert errors.

So you can see errors in grammar and spelling, errors in fact, and the analysis of the fact.

Do you ever presented a memo to a senior level executive?

And then what they do is they send this memo off to 60 law firm partners.

And they tell 1 half of the group, the memo is written by a lawyer who's black, and they tell an associate who's black, and they tell the other set of partners it's written by an associate who's white.

They want to see what the response would be.

For the partners who are reviewing the memo and thought it was a white lawyer that wrote it, their grade of the memo was a 4.1 out of 5.

But this is a memo that has errors in facts and the analysis of the facts and grammar and spelling.

Now, for the partners that thought the memo was written by a black lawyer, 3.2 out of 5.

And not only did they receive that failing grade, but their projections of this person being a good lawyer were much, much lower.

Just told you 1, this is a white person who wrote it, this is a black person who wrote it, very different take on it.

Now, another interesting thing was in terms of like the grammar and the spelling errors, when they thought that it was a white lawyer that wrote it, they found 3 out of the 7 errors, Right?

When they thought that it was a black lawyer that wrote it, they found 6 out of 7 errors.

Now if you're a partner, and that's your assessment, then it might be difficult for that person to get the mentorship or to get put on special assignments or the things that you would need to get on a track to be a partner.

That could have a significant and dramatic effect, because you're saying, listen, I'm not sure that this guy is the 1, right, based on what I've seen.

Now you might still do okay as an attorney, right, you can go work someplace else, but you have the skills and the ability and the capabilities to be a partner, but you're not gonna get on that track or it's very unlikely.

And the difference in earnings over a career could be $11 million off of interpretation, not the actual work.

Now if you think about what's the impact on the family of this individual, what's the impact on the community, what's the impact on the church, what's the impact on the non-profit board that they may sit on, so on and so forth.

Now a large law firm, it's only about 3% of lawyers are black.

Well, you can say, well, yeah, yeah, yeah, but I'm going to be a doctor.

So I'm just going to bypass all that kind of stuff.

So the British Medical Journal, I should have said that in a British accent.

They did some research and what they found was some interesting things.

Number 1, they found that black male doctors make about 65, 000 less on average than white male doctors, right?

Or said differently, white male doctors make about 35% more.

Now, this is adjusting for experience and specialty and hours worked, all that kind of stuff, right?

Let's just adjust for it so we kind of get rid of all that noise.

$65, 000 annually, that's real money, right?

If you think about that over the course of a year or over the course of a career, that could be almost 3000000 dollars of lifetime earnings that's lost.

Now there are about 20, 000 or so, maybe a little more, black male doctors in the US.

This is the average number across those doctors.

So across that broader group, you're talking about $1.3 billion a year, last year, this year, next year, right?

It's not just does it happen, it's not just do people mean for it to happen, it's when it lands, is there a cost?

The American College of Healthcare Executives found that black healthcare executives earn about $26, 000 less.

That's maybe a million 2 over lifetime earnings.

Newly minted software engineers start out about $10, 000 less.

That could be half a million, that would actually be a lot more because salaries skyrocket.

They can broaden quite a bit but just conservatively.

So the question of is there a bias seems to be yes, the question of is it significant it seems to go from high to kind of like really high and it appears to have an effect.

Now we don't have time, I don't have time to go through all of the areas that we looked at.

So, I haven't gone through housing, right?

The search process, the financing process, the equity appreciation, right?

We don't have time to go through the automotive piece in terms of the purchasing, the financing, the insurance associated with it.

What do the studies say about commerce on eBay and Airbnb?

The denial rates, the cost of borrowing, it's research behind all of these things that speak to these incremental costs when you hold things the same, right, all of which are covered in the book.

What I want to do, though, is kind of double back and go to a broader question.

And it's this question of, how is it that after all this time, it's only 2% of US wealth?

That's a dramatically small number, right?

And then there's also other questions that come up.

Like people say, listen, I don't understand why you guys keep talking about slavery as though it was a super long time ago.

Like at some point, you need to get over it.

Other people have come here, they have faced hardships, They have faced difficulties, they have worked through it, and they've done pretty well.

And you keep complaining about it and won't let it go.

Now, in the absence of information, that seems like a perfectly legitimate series of questions.

So as we would say when I was an undergrad as an engineer, let's go to the blackboard.

Let's just look through it and see what the context is, and if we can start seeing some patterns, if we can start putting some numbers next to it.

So to do this, we're going to need to go back, right?

I want you guys to go back with me, like in your minds, to about, roughly about 1860, right?

Now, we're not going to have enough time to talk about the whole period of slavery, 250 years, volumes and volumes written about that.

We just want to focus on costs and financing.

The first thing I need you to understand is that slavery by definition is a 100% tax on your labor.

Nothing that you generate belongs to you, not even you, right?

Now, there's so much of that period that is difficult to quantify.

But what you can look at is the labor extracted, because economists have looked at this.

They've come up with different numbers as they've been trying to tally it up.

So some researchers peg the number, the value of labor extracted from millions of people over 250 years, quarter of a millennium, as high as $24 trillion.

Let's say the answer is somewhere in the middle.

And we say it's as high as 50 trillion dollars.

What were the people who were enslaved and were property, what were they worth?

Because if it wasn't a big deal, these should all be really small numbers.

So let's just for a minute, let's figure out what were they worth?

What did researchers say was the economic value of those people?

So you can measure the value of those roughly 4 million people.

The numbers are so big, you have to do it in terms of total US wealth or years of GDP or net income, national income.

That's the size and scales that we're talking about, to be able to get a sense of it.

So if you do in terms of wealth, well, US net wealth is about $85 trillion.

Annual GDP is about 19 trillion, Pretty big numbers.

So if you value those people in terms of wealth, you're talking between 14 and trillion dollars in today, in present dollars, right?

So about 15 and a half, you split the difference.

If you value it in terms of GDP, now you're talking about the difference between 19 and 38 trillion.

If you average those, it's about $28 trillion.

If you look at those 2 modes of valuing it, and you say, you know what?

Now we're talking about $22 trillion, the economic value of those 4 million people in kind of today's equivalent.

Now here's the thing, the net worth of black people, African Americans today is about $1.5 trillion, all 40 plus million.

Which means that the worth to the country in today's equivalent was about 15 times more then than now after 150 years later.

Something to ponder and to think through.

I think most of us has heard something about this issue of 40 acres and a mule, right?

So I just want to add a little context to that.

This was discussed as a potential remedy, right, for slaves.

So the idea is you have land, you have a mule which can help you create cash crops from the land, so on and so forth, you get a start in life.

But let's just think about the economic size of what you're talking about there.

So 40 acres in a mule is 160 million acres if you apply that across 4 million people.

I once looked at a group of people buying some land.

You've got to go up in a helicopter for 400 acres.

Now if you value that, which you can kind of approximate it, the average value of land per acre today is roughly between 3, 000 to 6, 400.

So you're talking about maybe a trillion dollars of value on the high end.

Now, if you compare that to the $50 trillion that was extracted, that's barely 2% of the total value that was extracted.

Not even getting a return of 2% was sufficient.

Now at the same time, 3, 2, and 3 years before, Congress passes something called the Homestead Act, which you may be familiar with.

And what the Homestead Act is, is over the course of the next 60 years, they go out the process of distributing 246 million acres to 1.5 million white families.

Now if you kind of put that in kind of today's dollars, because it's hard to conceptualize what that is, right?

Well, you're talking of upwards of $1.6 trillion.

Another way you could think about that is upwards of a million dollars a family.

Right, the way it worked was you could get 160 acres for yourself.

You stayed on it for 5 years, and then it would be yours.

By the way, 5 years is about how long in the early days it would take for you to become a citizen.

So you could come here with nothing, be given 160 acres, right, and then leave owning the whole thing, having exchanged no value for it other than being on it.

And up to 93 million Americans are direct beneficiaries according to research of this kind of massive wealth building program, right?

It just puts context to it because people are talking about boot straps and I get it man and I believe in the whole boot straps thing and hard work and all this kind of different stuff, right?

But a million dollars is a hell of a boot strap.

Now if you're in this kind of period, you've got to get a sense of what's happening.

Because there's a lot of stuff happening during this period.

I mean, the Southern economy is in shambles.

The other thing you have to understand is that's 50% of the full net worth of the South.

Now, people say, well, you know, was it a big deal?

You know, cotton was the biggest industry that the world had ever seen.

It's when upwards of 20 million people around the world were employed in that industry in 1 way or another.

A million people across Europe and other cotton producing countries lost their jobs with the Civil War.

We produced 61% of our exports were cotton.

This affects Europe, it affects Russia, it affects Egypt, it affects India, it affects Japan, it affects all of these places.

And a central question is what is America going to do to put her newly freed people back to work, right?

And the land that was confiscated, that all the Southerners lost as a result of fighting and breaking from the Union, because it was all confiscated, none of it was theirs, was all given back to them.

The solution is what we call this Jim Crow system.

Now, Jim Crow is amazingly not descriptive.

Right, it's like the Sean Rochester period.

So what it is, is a system of laws and customs reinforced with extreme violence.

And it's designed to reinstitute 100% tax on a sharecropper's labor.

Now you can say, listen, I think you're getting a little hyperbolic.

I know they didn't make that much, but they got something, and you're talking about this 100% tax business.

I'm going to let you decide if it's 100% tax.

So just walk with me through the process.

So the crux, the foundation of this society is sharecropping, which is based on a contract.

The way this worked is the large mega plantations, a lot of them were broken into smaller pieces, and black families would settle on those pieces.

The idea would be they would work a portion of the land to produce cash crops and then they will share a portion of the harvest or any portion of the harvest.

Now here's the thing, the white land owner set all the terms and conditions on the contract.

It takes a long time to till land and clear it and do all these kind of things before you get it.

At the end of slavery, they have 0.17% of US wealth.

So the farmer, the white farmer, has to give them shelter, and food, and clothes, and seed, and tools.

See all Talks at Google transcripts on Youtube

Shawn Rochester | The Black Tax: Cost of Being a Black American | Talks at Google

See all Talks at Google transcripts on Youtube

Shawn Rochester | The Black Tax: Cost of Being a Black American​ | Talks at Google

Shawn Rochester | The Black Tax: Cost of Being a Black American | Talks at Google