[MUSIC PLAYING] [APPLAUSE] SHAWN D. ROCHESTER: It's a
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. So the book is broken
into three parts. It's lot of words. You can focus on me. It's OK. The first part is a look at
the costs 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 US wealth? 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 two 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 two 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. So what is the black tax? The black tax is the financial
cost placed on black Americans by people and our
institutions that have conscious or unconscious
bias against black Americans. Conscious or unconscious bias. Either they are
aware or unaware. This clearly begs
the question, right? Are Americans really biased
against black people, or do we just feel that way? 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. And they found a
couple of things. 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%,
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 three 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 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. The depth of your experience,
the length of your experience, 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 used Brandon and Emily. And they would put, same
resume, black-sounding names. So Jamal, Lekeisha. Right? And they would send them
out to various employers. And they wanted to see
what the response was. So one 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 her
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%. This makes sense, right? 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. Zero incremental interest. Statistically insignificant. Same resume, same level
of quality increase, different names. Well, they also found
was that to overcome this effect of the
name, one might need up to eight 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 actually did a
really smart thing. They went and
spoke to businesses and they said, listen, what
are the skills that you need? Let's just start
with your desires. What are the skills
that you need? Tell us the skills
that you need. Tell us the skills that
you will hire people if they have these
things, right? Smart thing to do. Businesses share
that information. Here are the skills
that we need. So they say, OK, we're
going to put together a year-long training program to
develop an enhance those skills within various candidates. If the people have these
skills are you interested? Yes, we are interested. Of course you're interested. Right? So they go through
this yearlong 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, no takers, no interest. 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 are
white with a felony conviction, you'll get more callbacks
than a black candidate with no record at all. Right? Think about what that implies. So you could say, look, I
hear you, I kind of get it, my best were 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 this kind
of other business. Right? So I hear you. I get it. So another research
study was done by a firm called
[? Nexten ?] So they wanted to get a sense for
discrimination that might be in the legal profession. Right? So here's what they did. So they develop a memo, right? 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, OK? Have you ever presented a memo
to a senior level executive. You can't have these things. But these are
embedded in the memo. And then what they do
is they send this memo off to 60 law firm partners. Right? And they tell one
half of the group the memos written by
a lawyer who is 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 wanted to see what
the response would be. So what was the response? For the partners who
were 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. So a 82, like a B,
kind of B minus. Right? Nothing to write home about. But this is a memo that
has errors in facts, and the analysis of the facts,
and grammar and spelling. Right? That's a pretty high grade. Now, for the
partners that thought the memo was written by a
black lawyer, 3.2 out of 5. That's a failing grade. That's a 64. You do not pass go. And not only did they
receive that failing grade, but their projections of this
person being a good lawyer was much, much lower. Same memo. No difference. Just told you one, 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 why the grammar
and spelling errors. When they thought that it was
a white lawyer that wrote it, they found three out
of the seven errors. Right? When they thought that it was
a black lawyer that wrote it, they found six out
of seven errors. Same number of errors, same
exact paper, just who you think wrote it. That's 100% more errors found. Same information. Nothing different,
nothing changed. 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. Right? That could have a significant
and dramatic effect because you're
saying, listen, I'm not sure that this guy is the
one based on what I've seen. Now, you might still
do OK as an attorney. You can go work someplace else. But you have the skills
and the availability and the capabilities
to be a partner, but you're not going
to 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 a nonprofit
board that they may sit on? So on and so forth. It reverberates, right? Now, a large law firm, it's only
about 3% of lawyers are black. Less than 2% of the
partners are black. Does this have
anything to do with it? Right? 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 because they just
stick to the facts. So the British Medical Journal-- I should have said that
in like a British accent, but I'll do that
next time, right-- they did some research
and what they found was some interesting things. Number one, they found
that black male doctors make about $65,000
less, on average, than white male doctors. 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. Let's just adjust for it so we
kind 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 $3 million of lifetime earnings
that's lost. Now, there are
about 20,000 or so, maybe a little more, black
male doctors in the US. Right? This is a 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? And over a career,
pushing 60 billion. Significant. Again, this is, is
there a cost to it? Right? It's not just does it happen. It's not just do people
mean for it to happen. When it lands, it's their
cost, appears to be a cost. The American College of
Healthcare Executives found that black
healthcare executives earn about $26,000 less. That's maybe a million two
over lifetime earnings. Newly-minted software engineers
start out about $10,000 less. Right? That could be half a million. That would actually
be a lot more because salaries skyrocket
and 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 a 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. Or the online piece. What did the study say about
commerce on eBay and Airbnb. Or the small business financing. Right? The denial rates, the
cost of borrowing. There's research behind
all of these things that speak to these
incremental costs when you hold things
the same, 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, well,
it's only 2% of US wealth. That's a dramatically
small number for 13-14% of the population. It's a dramatically
small number. Like, how is that possible? How is that the case? 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's a super long time ago. 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. But you guys haven't. And you keep complaining about
it and won't let it go, right? Now, in the absence
of information, that seems like a perfectly
legitimate series of questions. Right? 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. And I want you guys to go
back with me in your minds to roughly about 1860. Right? Now, we're not going
to have enough time to talk about the whole
period of slavery, it was 250 years, volumes and
volumes written about that. We just want to focus on
cost and finance, right? The first thing I
need to understand is that slavery by definition
is a 100% tax on your labor. It is a 100% tax of your labor. Nothing that you generate
belongs to you, not even you. Right? It is by definition a tax. Now, there is 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 millennia, as high
as $24 trillion dollars. Others as high as
97 trillion dollars. Let's say the answer is
somewhere in the middle. And we say it's as high
as 50 trillion dollars. You split the difference,
you're doing comps, right? OK. What would 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, and
we could just kind of move on, right? So let's just for a
minute, let's figure out what were they worth? Like, what did
researchers say was the economic value
of those people because they were
property, right? So you can measure the value
of those roughly four million people, and you have to do it. The numbers are so
big you have to do in terms of total US
wealth or years of GDP or debt income, national income. Right? That's the size and
scales that we're talking about to be able
to get us 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 in
trillion dollars in today, in present dollars, equivalent. 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. Big numbers. If you average those,
it's about $28 trillion. If you look at those
two modes of valuing it, and you say you know what,
it's probably somewhere in the middle. Right? Now we're talking
about $22 trillion, the economic value of those
four million people and kind of today's equivalent. Now, here's the thing. The net worth of black
people, African Americans, today is about $1.5
trillion dollars, 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 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. That never came
through fruition. But let's just think
about the economic size of what you're
talking about there. So 40 acres and a mule
is 160 million acres if you apply that across
four million people. That's a massive amount. I once looked at what's a group
of people buying some land, it was like 400 acres. You got to go up in a
helicopter for 400 acres, right? This is 160 million acres. It's kind of inconceivable size. Now, if you value that which
you can kind of approximate it, right? The average value
of land per acre today is roughly between
$3,000 and $6,400. So you put numbers on it. So you're talking about maybe
a trillion dollars of value on the high end. You say, wow, that's
a huge number. 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. You will not get that, right? Now, at the same time,
three, two and three years before, Congress passes what
they call 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. 246 million acres. Now, if you kind of put that
in kind of today's dollars because it is hard to
conceptualize what that is. Well, you're talking of upwards
of $1.6 trillion dollars. Another way you could
think about that is upwards of a million
dollars a family. The way it worked was you could
get 160 acres for yourself. You stayed on it for five years,
and then it will be yours. By the way, five 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 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 bootstraps. And I get it, man, and I
believe in the whole bootstraps thing and hard work, and all
this kind of different stuff, right? But a million dollars
a hell of a bootstrap. Right? Now, if you're in
this kind of period, you've got to get a sense
of like what's happening? But there was a lot of stuff
happening during this period, right? You've got the Civil War. I mean the Southern economy is
in shambles, it's devastated. Right? You got $22 trillion
of value's gone. Whoo. Emancipation, it's gone. The other thing you
have to understand is that 50% of the full
net worth of the south. 50% with just those people. It's gone. 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 was global. [? Squint ?] upwards of 20
million people around the world were employed in that industry
in one 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. Right? We were supplying the world. We were dominant. You cannot beat free labor. What does that
mean for the world? There's a massive cotton famine. This affects everywhere. 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? 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. And what did they need? They need labor. Land is worthless without labor. So what is the solution? 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, dun, dun dun, right? Like what is that? Right? Who is Jim Crow? What is that? So what it is is a system
of laws and customs reinforced with
extreme violence. And it's designed to reinstitute
100% tax on the sharecroppers 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, right? You've got to be easy. Slow your roll. And I'm saying, you know what? I'm going to let you
decide if it's a 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, right? 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 would share a portion
of the harvest, or any portion of
the harvest, right? Now, here's the thing. The white landowners set
all the terms and conditions on the contract. Here's what I want
you to remember. You don't get crops tomorrow. Right? It takes a long time to till
land and clear it and do all these kinds of
things before you get it. These people have nothing. At the end of slavery they
have 0.17% of US wealth, effectively nothing. So the farmer, the
white farmer, has to give them shelter and food
and clothes and seed and tool. They had to spot
them all of that for an entire year on
credit at rates up to 70%. Right? And some of these contracts,
if you felt ill or sick they had the right to outsource
your portion of the labor to someone else and
charge you for it. Now, I know what you thinking. I would not sign that contract. Right? I hear you. Like, I feel you. Right? So let's say you
do sign a contract. There is a law for that. These are called vagrancy
laws because you have no land, and you don't have a
means of employment. And if you cannot prove that
you're gainfully employed, if you are idle, and
you are not a landowner, you can be charged with a crime
and put in the state or county jail. And you can say look,
you guys are super smart. You say, all right,
that's not going to work, here's what I'm going to do. I'm going to sign it, but I'm
just not going to do the work, I'm going to break
the contract, right? And lo and behold,
there is a law for that, they're called a contract
enforcement laws, which means that if you
break those contracts, that you'll be charged
with the crime, and you'll be placed in
a state or county jail. Right? But you guys are beyond smart. You say I get that. But here's what I'm going to do. I'm going to jail, and
I'm not doing nothing, and they going to
give me three squares. And I'm going to be straight. They're going to get tired
of that, and I'm out. They have something
for that, and it's called convict leasing. Right? Which means that
as a prisoner, they lease you out again to
the very same farmer that you didn't want to work
for or to a private corporation. Now here's the thing
with convict leasing that's even potentially
much, much worse than slavery in this one respect. A slave owner actually
has an interest in your residual value. They would kill you if need be. They would beat you into
an inch of your life, but they really
would rather you be around for the next 20 or
25 years working, right? Under this lease agreement
they had no interest in your residual value. I care not about you
15 years from now. What I care about you is
six months, eight months, 18 months, 13 months,
whatever that time is. Right? The impact of that is
mortality rates up to 50%. Mortality rates. So you don't sign
the contract, you get put in state
and county jail. You break the contract, you
get put state and county jail. You decide to sit
in the jail, you get convict leased
to the same person that you want to
do it for, and now your life expectancy is now
50% risk of you being dead. And you have a family, and
you have wife and children, and so on and so forth, right? Now, that sounds like
100% tax on your labor. I set your income, your revenue. I set your expense. That means I
control your profit. And because I don't want you to
go any place else for somebody who's generous, I'm
always going to make sure that your expenses are
far more than your profit. And I'm going to roll that over. That's called debt servitude. Now convict leasing,
50% death rates. By the way, it's very lucrative. Very lucrative. Because as a small farmer,
you can afford a whole slave, but now you get to rent
one for like two years. Right? Much more affordable. The state made so much
money that in 1914 the state of Alabama,
20% of their revenues were from convict leasing alone. Right? Now, this system
of laws and custom lasted for 75 years
during which time 4,000 black people were lynched. That's a public execution
in an extremely brutal way. You can run the math on it. 4,000 is equivalent to one
person executed publicly every week for 75 years. You going to get the hint. Your children going
to get the hint. Your neighbors are
going to get the hint. Everybody's going
to get the hint. Right? Nobody has been prosecuted
for any of those. Right? That is the condition under
which they are surviving. That is why it's a 100% tax. That is why people call
it as slavery, but just by another name. It was legal. So at the value
extracted with 250 years was approximately
50 trillion. Right? And this lasted a third
of that whole period, and it was a 100% tax
on their labor, that could be $15 trillion
dollars extracted over that 75-year period. If that is the case, then
I want you to ponder this. At emancipation they
lost $22 trillion dollars when those people were freed. And over the next
75 years, they would go and claw back
$15 trillion of it from the descendants
of those people. That's an extraordinary tax with
nothing you can do about it. Now, I want to talk also
about education, human capital development, critical
and important. Now, what you will find is
when the land was returned to the planters,
as we talked about, they needed an abundant,
ready supply of people to work the land. They made a deal
with white farmers because they wanted to
expanded public education for their children. And they said listen,
we will expand it, but we will divert the
resources from black students towards the white students. And separate but equal in
1898 became a perfect vehicle to do that. What were some of the
ramifications of that? Number one, by 1900, you had one
black teacher for every 1,000 students, 1,000 students. By 1917, we had just
64 public high schools across the entire South
for black students. 44% of all the buildings
that were schools were constructed and
owned by black people. And many of the buildings
that were owned by the public had been gifted to
them, but were actually built by black
people so that they could get recognized and get
funding associated with it. William H. Baldwin,
the President of the General Education Board-- kind of like the Department
of Education back in the day-- stated that the South
needs Negroes educated so that they can be directed to
be the best possible laborers. With the right
kind of education, the Negro will willingly
work menial jobs and will open up an
opportunity for Southern whites to perform more expert labor. So a couple of quick things. When we talk about separate but
equal to put this in a context. New, York City,
1920, 50 times more is spent on children
in New York City, 97% of whom are
white, than are spent on children in South Carolina. Migrants who came to
New York, immigrants, so are getting an education that is
significantly more well-funded. In the South, for every dollar
invested in a black child, you've got five to eight
invested in a white child. For every white student,
received 50% more years of education, and black
teachers often got 25 to 34% of what white
teachers were paid. Researchers say
that if you had just invested the children equally,
kept all the other stuff the same. Just invest in the
children equally. Do what the law says. That would have closed
the earnings gap by 50%, just that one thing alone. Keep all the discrimination,
keep all that kind of stuff in place. Right? By 50%. For a generation, that's
over $600 billion. For multiple generations,
from 1898 to almost 1955, that could be north
of 3 trillion dollars. Then a quick thing I want
to talk about, real quick, is what happened to
all the black teachers? This was always something
that was curious to me. At one point, all black students
got taught by black teachers. Now, it's very hard to have
to find black teachers. So in 1954, right before
segregation became illegal, you had a 82,000 black teachers
for two million students. They were 50% of the
black professional class. Within a decade of Brown
v. Board of Education, 40,000 of those
teachers were fired wiping out 25% of the
black professional class. Researchers say that
90% of black principals lost their jobs in
11 southern states. The number of black students
applying to be teachers dropped within 20,
25 years after that. And currently, 18% of
the public school system are African American, 7%
of the teachers are black. Just 2% of those teachers, of
all teachers, are black males. Now, if you look at that
from a different perspective it means proportionately,
we're missing 352,000 black teachers,
public school system today, proportionally. If you looked at what
they would be earning on average, average
teacher salary, across that number
of people, 350,000, you're talking about
$20 billion that is not going to those
teachers, that is not going to the black
community this year and last year and
next year, and that's been going on for 60 years now. What is the impact of
that on those families? So we're not going to talk about
discrimination of labor market, we don't have time. We're not going to talk
about housing discrimination, we don't have time. We're not going to
talk about the GI bill, we don't have time. We're not going to talk
about the black tax from 1965 to the present, we
don't have time. It is all, of course,
available in the book. [QUIET LAUGHTER] Right? So. But the answer is
always just try harder. 65%, 63% of white Americans
say look, you know, blacks just not trying
hard enough to get ahead. Keep blaming racial
discrimination on everything. 60 percent of white
Americans say look, you got the same or
better opportunities than everybody else, you're
just not making it happen. 70 percent say you're just
using this as an excuse. Now, before you
have information, before you have
context, these things seem like they
might be reasonable. But in light of information
in context they seem absurd. Right? So I'm going to pause
here, all right? And we'll do some Q&A because
I don't want to kind of hog the whole thing. We can have some questions
associated with it. And I'll let Shadan
take it over. SHADAN DELEVEAUX: Absolutely. First of all, can we have just
round of applause, please? [APPLAUSE] What prompted you
to write this book? SHAWN D. ROCHESTER: Wow. So there was a couple
of different things that went into it. One, over time, I
just kept reading about these various studies
that would come out, would talk about discrimination. And it would come out like drip,
drip, drip, to me over years. But it always seemed
like it was a tax, right? And I always said,
you know, I'm just going to kind of keep track
of some of these things, and I'm come back to
it one of these days, and I see if I'm
going to tally it up. And what wound up being
the ultimate trigger is so I work with, like,
individuals helping to put their financial
plans together, right? And we focus on the
importance of cash flow, we focus on the
importance of assets, we focus on the importance
of leaving a legacy and how you break
those things down. Anything that reduces cash flow
reduces your asset ownership of assets and reduces legacy. This seemed to me, and it is
in fact, a reduction to legacy. If there is a cost,
a cash flow cost, it is reducing our
ability to leave legacy. So I decided to
take a look at it, go into what
research was saying, and see if I could uncover
some really interesting things. SHADAN DELEVEAUX: Awesome. One of the things
from reading the book, and you touched on it
during the presentation that really struck me was
the study with regard to the legal briefs. And in tech, as you
as you're well aware, one of the things
that we struggle with is essentially very
low percentages of minorities in the
technology industry overall. And when I think about the legal
briefs and the result of that, I wonder if you have
some thoughts on maybe just potential connections
between those two things. SHAWN D. ROCHESTER:
Yeah, I think the data says that there is
significant subconscious bias. The data says there's
significant conscious bias across. It's a matter of how is
it manifesting itself? The fact of the matter is
wherever and whenever there is a trigger, the bias flows. Right? They used to have these
problems in the music industry, in orchestras, right? And it was with women. It was dominated by men, right? So what they did over time
was put up some screens where they could just hear the
music and not see the person. And when they could just hear
the music and focus on that, the percentage of
women went way up. Right? So it's the triggers for bias. The first thing is just
accepting that it exists. The second thing is accepting
that it's significant and it's unconscious. Like, you don't know
what you're doing, or what I'm doing
or whatever, right? There's no level of
introspection and reflection that's going to show you this. It's subconscious. The key thing you have to
focus on is the effect. Does it have an effect? Right? You can't say, well,
I'm doing this, I'm doing that, it's
beyond your ability to know what is being
done, but it has an effect and it has of cost. There was a study that
was done on eBay, right? Baseball cards. I don't collect baseball cards. But it's a noble pursuit. Please baseball fans don't-- noble pursuit, right? And they were taking a look at
it, and they were just saying, all right, various baseball
cards and they have, like, white Americans selling it,
black Americans selling it, and they would see
what would happen. So it turns out that you have
a huge price differential between when black
people are selling it, when white people
are selling it. It's like 35%,
something like that. But the question's
like how would you-- like what, how do you
know, it's a baseball card, like, how do you know? And what that would
do is really clever. They would take
pictures and just have of the tip of the
person's fingers in it. That's it. That's all it took, triggered
a price differential. Like, it's this real,
and it's this serious. And you can't deal
with it unless you admit that it exists. And admit that it could
possibly exist with you. And not that it's possible,
that it's probable. Right? And then you can
start dealing with it. Like, you guys got some of
the super smartest people in the whole world
working here, right? I mean, you could build
software to track this stuff, do it, and view it as
helping decision makers. You know what I mean? It can be addressed. You know. In the book I quote
[? Sun Tzu. ?] Seems kind of cliché, but he's
really awesome, right? And he says, listen,
man, anything that has a form can be
named, and anything that has a name can be conquered. Give it a name, give it
a form and address it. SHADAN DELEVEAUX: And
then last question, and I'll open it
up to the audience but can you speak about the
opportunity or the ability for black community
as well as allies to address this tax and these
huge, huge, huge massive deficits that you're
addressing and highlighting. SHAWN D. ROCHESTER: Yeah,
so there's a framework that I proposed, right? I just I call a PHD. And PHD stands for
purchase, higher, deposit because we're really
thinking deeply about how do you affect things. And I think that I'm
trying to effect, really, are the six million
jobs that are missing, and the $1.4 million
businesses that are missing because so much
is emanating from that. And if you want to
affect those things, it's all about how you're
purchasing, how you're hiring, and how you depositing, right? Now, when you think about it
from a purchasing standpoint, at the individual is how and
where you spend your money. You have total
control over that. And that's both for
people who are black and people who were not black,
how we spend our money is super important, right? African Americans,
unfortunately, spend about 98% of are spend on
non-black enterprises. So small changes in that
can have a massive impact because it stimulates
demand, and demand stimulates the
need for employees, and so on and so forth. From a corporate or
organizational standpoint, you're talking
about supply chains. That's where the purchasing
is happening, Right? So in addition to
cutting the check for various nonprofits,
which I encourage you to do and to keep doing. But if you're sitting on top of
anyone, right, an $18 billion supply chain, having more black
firms in those supply chains is what's going to drive
that jobs [INAUDIBLE].. You can create 10, 15,
20,000 jobs by doing that. Right? And it's incredibly powerful. Why? Because generally, about 75% of
folks employed at black firms tend to be black,
African American. That means 25% are not,
which by definition means that we're the most
diverse companies in the world. Right? And then hiring, obviously,
you guys work on that, right? There's some things that I would
say that goes along with them that I say like be careful of. Let the numbers kind
of tell the story, like, be careful of, right? Because we got to
this point where we say like diversity, and
minority, and inclusion, I think is the other word. Typically euphemism
for not white male. OK? Typically euphemism
for not white male. Let me explain to
you who that is-- 90 percent of people on Earth. That's who not white male is. Like, that's targeting the
world to address issues. Now, when I'm talking
about try to address the gap of the six
million people, right? Employees that are missing and
the gap of these businesses that are underpinning
of communities. I'm talking about
being specific. Right? And so we have to
look at those things. If you say, listen,
man, you know, we're going to focus
on ensuring that we have more women involved. Fantastic. God bless them. Do that all day
long, super critical. Right? But when you get
into the numbers, if you look at women
businesses with employees, they're $1.2 trillion of revenue
that they are generating. If you say, of those women, how
many of those are black women? Less than 2%. So if you're driving
programs, spend to increase the presence of
women which you should do, it's not until you're
99th dollar that you're going to affect a black woman. So you're not going to
affect that gap that's there, and you're not going to effect
all the issues associated with it. You have to be specific. Right? If you say, all
right, well, you know, I want to make sure that I
empower Latino businesses. Absolutely wonderful. Do it, keep doing
it, expanding it. And you look at the total
spend for those businesses who have employees. And those are mega
businesses, right? They have employees. It's almost about $400 billion. If you look at how many of
those are black, it's like 2%. Like, that's not how
you're going to affect it. So you could have a
thriving minority program and have marginal to no effects
for black Americans Like, this is what I want
us to be cognizant of and be laser focused on. Right? When we talk about minority
and diversity and inclusion, you're not speaking
about black people, you're talking about everybody
who is not a white male. Right? That's not very specific. SHADAN DELEVEAUX: Then deposit. SHAWN D. ROCHESTER: Deposit. Thank you for the
reminder there. So deposit's super critical. What is the primary
function of banks? It's commercial lending. If you look at the
US banking system, lending to commercial
enterprises, lending to agribusiness,
lending to consumer, lending to government,
that's where the money is going, right? Now, when you look
at black businesses, again, there's only
104,000 black businesses that have employees
in America, so that's why I'm alluding to the 1.4
million that are missing. Supposed to be 1.5. Those businesses are starved
for lending and credit. 80% say that they
would hire if they had access to the resources. Researchers say that those
few businesses need up to $9 billion of capital today. They're the most likely to
hire us, network effect. Right? And they're extremely
undercapitalized. What do I mean by that? Of all the deposits that African
Americans have in general, only about 2% are in black
financial institutions. It's a historical
issue and challenge that we've been
dealing with, right? If you look at the
total US banking system, only four out of every
$10,000 is in a black bank. They simply don't
have the deposits to do the lending
that is necessary and that they want to do. And, by the way, they have
the same regulatory expense. Extremely small base. Right? That is powerful. Corporations where
they deposit their [INAUDIBLE] with their money. Businesses, governments, where
they deposit their money. Individuals, where you
deposit your money. Right? And the other thing
that's very powerful is that you have something
called a money multiplier effect. You guys remember this
from economics, right? So every dollar you put in
is $10 of economic activity that goes with it. Put in a dollar, Federal
Reserve requirement, $0.90 get lent out,
so on and so forth, till you have a $10 impact. That's huge, that's powerful,
that's not happening in this banking system. And the idea of PHD, really. I don't know if you guys
hear, but people will often talk about how long money
circulates in communities. Some communities it's
six days, some it's 100 days, some it's
like 35 minutes, all that kind of different stuff. What they are talking about-- I'm telling you how to
calculate that by the way-- is PHD. You have individuals who
are depositing and spending and hiring in ways that create
jobs and expand businesses within their communities. Just from the little bit of the
walk-through that we did just now, you can see that there
was no real opportunity for us to do that in a significant way. Right? You got 250 years
of slavery followed by another 75
years of extracting every nickel from you. Very often what you see today
are miracles walking around. It's amazing that you have
this level of achievement despite that. And I haven't finished
telling all the other stuff. Right? So. SHADAN DELEVEAUX:
The one thing just to dovetail with what you
just said on that in terms of the miracles, that you
literally have miracles walking around which I want to
highlight that because speaking to so many people of color,
especially in tech, especially here at Google, so many
of them are experiencing imposter syndrome which
we spoke about before. And when you go through the
book in some of the things that you've outlined
and through the layers of the systemic barriers
that were intentionally put into place to extract wealth,
to extract opportunity, to extract all these things, and
you see that despite all that, you have people who
are here, could you talk a little bit about what you
think of an imposter syndrome? SHAWN D. ROCHESTER: Yeah, so
we spoke about this earlier, and I'll kind of
be honest with you, it was hard for me to relate
to because I had never felt like an imposter. I think what is very
difficult is now it's you against the world. When we were growing
up, it was us against people in our circle. Now, the circle is the world. It's like anybody who has
access to communication, right? And you have people that are
truly amazing and show that. I think you have
a lot of people-- we kind of talked about
this a little bit-- that pretend to be amazing. But it looks very
authentic because you can be anybody, James Bond
if you want, kind of, online. But part of the
problem is everything needs to be within context. Right? And that's what we don't have. We don't have context. Like, if you're coming
from a community that has 50 to 100 times
more economic resources, and I'm not being hyperbolic,
than another community, what is happening in your sphere is
that success becomes probable. When you are coming
from a community that has one one hundredth of
what you're dealing with, success is merely possible. Anything is possible. I could disform and reform
in the room next door. I mean, quantum mechanics
says that that's possible. You can look at the numbers
and see the probability of that happening. It's particularly low. If you're going to build your
strategy on that happening, that's not going to
work very well, right? It's the issue is
of the context. You know, people come
and they say, listen, I just don't get it. Like, I look around I just see
all this opportunity people are not taking advantage of it, and
it's because the same barriers, and I'm being so kind
with the word barriers. You could literally be
killed for economic, for starting a business. You could literally be murdered. There's nobody to complain to. I think Congress didn't even
pass anti-lynching laws. People were lobbying forever. They didn't even pass it. Can't do it. So it's the context, right? I read someplace or
something at Harvard call like the bottom third. Which is like super smart people
at Harvard feel like not smart because they're competing
with other super smart people, so they want to be
in the bottom third. And so you're like on Krypton. You're like, oh, I could
only lift three mountains, you know what I mean? Right? And this guy can lift 10. I'm so not worthy, right? Other people are like, dude,
I'm trying to lift bricks, and you're up in
the third mountain. Right? They need context, right? They need to see, listen, man,
on a broader scheme of things, you're amazing. This place just doesn't
have enough seats for all the amazing people. And that's the context-- I'm sorry, I'll
come to you-- that's the context that we don't
have and that we don't get, so we can't measure
it appropriately. SHADAN DELEVEAUX: I'm going
to pass the mic to questions. AUDIENCE: One of the challenges
of doing this kind of work or trying to transform
within organizations, is that one, a lot
of the people I see in the white
community who step up to work with you are willing
and mean extremely well. But one of the things
that can sometimes work against those
efforts is that I'm not sure most people are
even aware that there is a very implicit demand
from the white community to be validated and to have
to feel good in whatever is being discussed. And where that
comes into conflict, I think about the statement
that you made about specificity. Because we've had that
discussion internally about-- you know, don't
just say inclusion, if you're going to battle sexism
then name it and battle that. And the strategy for
that versus a strategy for new or diverse
people who are artistic and the strategy
for white supremacy and the effects on
the black community, those are very
different strategies, you can't put them all together. But when you become
specific, when the leaders in the room who are
going to be the majority white, don't feel good
about it, everything gets pushed back on it, and
you can spend an entire year creating programs,
giving speeches, giving impassioned pleas, standing
ovations, rolling on the floor like Patti LaBelle,
and at the end of it, it will come back to being
smushed like Play-Doh into a very general,
innocuous term that people feel
good about, and that is exasperating to go through. I'm interested in
hearing your perspective on how you move in
organizations where even in the most well-meaning
organizations with the most well-meaning people,
because a lot of times people who are more liberal are
actually more offended when you become specific because they
often feel that their presence and well-meaning should mean
that we shouldn't be having conversations that are as heavy. Interested in hearing
what you think about that. SHAWN D. ROCHESTER:
Yeah, so there are a couple different
things there, right? The first is it's important
that people are kind of all have the same amount of information. See, what we have is
lack of information. What we have is strong
feelings combined with lack of information and
then asymmetric distribution of power. So I'm shutting down
this conversation. It's a wrap. If you want to keep it
popping in your bank account than it should
be a wrap for you. Right? Part of reason I
wrote the book is so that we can have more
productive conversations. When you're ignorant,
nonsense makes perfect sense. So the idea is to
provide context. Like, people react to it. The first thing it's like I
didn't know, I had no idea. I didn't know, right? So one of the things that I'm
interested in doing and trying to do and encourage
people to do is this idea of doing more business
with black enterprises because it creates jobs. And communities,
families are supported by jobs and communities
supported by families, so on and so forth. I don't start with leading
with that discussion because everybody has
opinion already formed on it. What I start with is
like the discussion that we're having
because it causes people to think differently. Because you're,
like, I didn't know. You know I'm saying? Like, I didn't know,
like, no one told me. We all have similar
curriculums, we don't learn this stuff
at any of our schools, we don't learn at church. So if there are people
who say, listen, I'm interested in having
these type of effects. They don't have to
be, but if they are, then one of the things
that they need to read is get access to
that is information. Took me a long time to
pull it together, right? To be able to kind of tell a
story because it compounds. This all is happening
at the same time. And what you will find is if
these individuals read this, it starts to shift
people from why are we having this conversation,
and why is this a big deal, because that's where people
are right now, right, to how do we resolve it? See, the fundamental
problem is we try to solve problems that
aren't problems for people. If I just start
leading with me, I do this or black
people be oh, my god, it's another minority program. I'm banging my head on the wall. You know what I'm saying? But when you say, wait a
minute, let's kind of walk through this, let's kind
of talk about this stuff, you get exposed to it
for the first time, you see how it's building. You're, like, good God
almighty, like, no one told me that this stuff
was the case, you start to shift and evolve to
wow, what do we do about it? Now, X program becomes
important, right? Now, you see there's
a difference. What we have is
someone is, like, man I didn't eat in five days. OK, so I think you're getting
into the starving realm, right, certainly in the ketoning phase. And somebody else is, like,
I haven't eaten in 55 days. And they say, well, we're the
same, we both haven't eaten. So my solution is I'm going
to have a box of crackers, and I'm going to be good. And you should have a
box of crackers too. And you have a box of crackers
and you're still dying. Like, I don't understand
what's matter with this person. The issue isn't it's degrees. It's not binary. It's not whether or not
you have to struggle. It's what's the struggle and
the context of the struggle and information behind it. So for these individuals
who are open to this, then I say, start with this book. Walk through it, discuss it, see
the extent to which that helps. Democrats they're
explicit bias is like 35%. Right? So it's low. I can be generous
and say, they know what the right things to say. They're implicit
bias is like 55%. Subconscious. So it's there. They don't mean it, is there. So you wind up running
into those things. But faced with information
that kind of compounds, it tends to have an effect on
people who say, listen, let's really talk about what programs
could actually be effective. And now I kind of get it. You know what I mean? So that's what I would say. It's kind of a long
answer, but necessary. AUDIENCE: What is
the earliest age we should make black kids aware
of the societal bias against-- for example, at what age
should we tell black boys that they may be followed in
stores because of their color. Could making the kids aware
of these things too early be less optimal? SHAWN D. ROCHESTER:
That's a great question. We have two kids ourselves. You know, we live in a
predominantly white community, like, predominantly. Right? So these things come up
whether you want them or not, and our kids are really young. I say talk to them early. Let them know. Right? Society is not waiting
for them to mature to break the news to
them about how they feel and how they're valued,
so on and so forth. We've been dealing
with those issues since our kids were
in kindergarten. Right? So we've had really
frank discussions. You know what I mean? Even along the
lines of, like, you know talking about
slavery in school. It can be a very shameful
experience, right? People looking at you and all
this kind of different stuff. And what we tell our kids,
it's, like, you have nothing to be ashamed. Like, what did you do? You did nothing. Right? Things were done to you. I mean, it's for other
people to be ashamed, right? And it's important that
they have that perspective. Right? You're other. Why are you like this, and all
those kind of different things. And it's important that you
instill a sense of, like, feel awesome about yourself
even if others don't. Right? Like I teach, we teach our
kids about black history. We teach them about
history long before America so that it's normalized to them. Like, they get it and can feel
good about the contributions that you've made. Right? It's so, so important
for young people. So that's what I would say. Have the conversations
early because society is not waiting for them to mature. AUDIENCE: OK. Thank you. Another question I kind of had
floating on the back of my mind as you were talking
about buying black, essentially, buying
into black businesses and being more intentional
about including black business owners in our supply chains
and all those things. So I was wondering
if we can quantify to profit of doing that. So for example,
let's say if we had a 10% increase of the population
buying in black right now, what would that translate into
in how many years in terms of money? SHAWN D. ROCHESTER:
That's a great question. It's kind of like a business
school professor might ask that kind of question, right? This is how I would speak to it. The first thing is we don't
have to boil the ocean. Right? Small moves can have
massive effects. There's 104,000 really
large black businesses with staff and employees. They generate about $150
billion a year in spend. Before you get to
the whole world, if you're just focused
on African Americans, like our total spend
is $1.2 trillion. So shifting how that's
spent in even small ways could have enormous
impacts on demand. Now, take it a different way. That $1.2 trillion is
generating about 24 million jobs across the US economy. Very, very few of those are
within our own communities, right? I think it's
important that we do what we expect other people to
do because we get to control how we spend and when we spend. Nobody else gets to do that. And I want people
to say, listen, man, I, too, am interested
in economic development because I kind of get it. You know what I'm saying? Nothing gets better when
there's economic deprivation. So I want to march with you. I love it, march. But don't just march, right? Deposit. Right? Don't just march. And you have a $150
million business, think through who are you buying
products and services from, and where do these
businesses fit in into that because those
businesses are employing people who are generate
income for families, and that's creating the
resources to cover today, have some for tomorrow, to
do the enrichment, and all the kind of other things that
we're talking about, right? If you have a certain
kind of economic profile, you get to move if you
don't like what's going on. You're not stuck in that spot. But if you don't, you're stuck,
you're just along for the ride. So it isn't to be to
be more specific, there are important things that we
can do with our resources. People will open up a
$500,000 bank accounts, so things like that. We got over $100
billion in a bank. Black banks only have
4.9 ish billion that kind of the last time I checked. I mean, we could
oversubscribe them in no time. If you move that money
into those banks, they'd have a hire 31,000 people
today to be able to manage it. And It would generate another
$70,000 in the supply chain to be able to help that. That would be $100,000. Just that. That's before we even get
to all the lending and stuff that they would be doing. We have a lot of
stuff in our control, we just need to
do a little more. Yes sir. AUDIENCE: I have a
really basic question. What do you mean when you
say like black business? And how do you as a consumer,
just like Google searching, figure out what that is? SHAWN D. ROCHESTER:
So great question. So typically, it depends on
who's defining it, right? So when you think
of black business you think of a business
owned by black people, but ownership varies
quite a bit, right? So for governmental
purposes, it's generally like 51% or more. For purposes in
general, it's people who have like a substantial
equity position in the company. That's very, very helpful. There are various
directories that try to aggregate black businesses. There are online
sites that do that. I don't think there is
a universal one that ties everything
together at this point. Here's something else I want to
say about this concept of PHD real quick. So PHD is like, purchase,
hire, deposit, right? So it's not just about
black businesses, it's not exclusively
black businesses, right? So purchasing is about
your supply chain if you're a business. Hiring is about your payroll. So it's to what extent are
we showing up in your payroll and in your supply chain
in representative ways. You know what I mean? Because those people
are creating jobs. They're executing PHD
which is powerful. Why is that important? Because 80% of all spend is
going through those two areas. That's generating a lot
of economic activity. AUDIENCE: So my
question is related to what you're talking about. I was wondering if you had
created any sort of perspective on your numbers on what's
the negative impact of the black taxes to
like US economy period? Like, to all this
under-investment, right? It's not only affecting
black people, right, there's some bottom line
being impacted on the US overall in the short-term
and the long-term. So I was wondering if you
had told that story, kind of with your own numbers
or extracted that story. SHAWN D. ROCHESTER: So
that's a great question. The short version is I
have not quantified that. Right? That's the opportunity cost. You know what I'm saying? Because we operate in
a zero-sum game, right? My gain is your
loss kind of thing. Part of what this
is costing, you've got a million black
men in jail today. It's not even
possible to get that in like a natural environment. You know what I'm saying? Like from the beginning of time. It costs $30 billion a year
to keep them in prison. If they were
working, $15 an hour, they'd be making
$30 billion a year. That's a net $60
billion dollar cost just to the country
for those people. Right? Why are folks in jail? Like, when you kind
of go through it, and you see like the
economic hollowing out that's happened to the
community over and over again, what happens is you wind
up having depression, people self-medicate,
do it with drugs, right? You're economically deprived. You're trying to make
money, economic activity. You're doing it with drugs. It's something that's
available to you. You're not doing
because you love it, you're doing it because you
need economic resources. Right? And then that starts a
negative feedback cycle. And the response to that
is incarceration as opposed to, OK, I have a medical
issue here to address, or I have economic
issue to address, right? So that's a $60 billion cost. Like, all of these
incremental-- it all comes back-- all these
incremental supplements that they wind up having
to do with food all kind of different support,
it's because we've had double the employment
rate for white Americans for 60 years. Right? If you don't have
that problem you don't need to make
all those investments. People are above
sustenance, right? So the short answer
is, I haven't compiled that in one
kind of aggregate number. I think that's an assignment
for me to take on. I got the marching orders. SHADAN DELEVEAUX:
Again, thank you so much for just putting
the effort into this to allow a platform
for people to be able to have
informed discussions and data-backed
discussions instead of opinion-backed discussions. So one more round
of applause, please? SHAWN D. ROCHESTER:
Thank you, guys. [APPLAUSE]
