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The Black wealth gap in Canada

Blockages to building intergenerational wealth have consequences beyond the Black community

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Less capital and less opportunity for Black entrepreneurs and professionals has contributed to less intergenerational wealth in the Black community in Canada.

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This affects all Canadians, those in the community say, as the fallout is less overall wealth and innovation for the country. But some wealthy Black Canadians are contributing to turning the tide by setting up investment funds and teaching their children about the importance of financial literacy.

“While there has been some change in upward mobility, there has been little change in the reflection of Black Canadians’ capability and ability in high-paying senior management jobs,” said Wes Hall, executive chairman and founder of Kingsdale Advisors, and the newly appointed, first Black dragon on CBC’s Dragons’ Den.

“The door has still been closed here, and there is little representation on major corporate boards. There are some stories of Black success, such as Michael Lee-Chin, who created his own opportunities and is the only Black billionaire in Canada, but even this titan of industry has not been able to secure a spot on major boards.”

This issue ripples beyond the Black community.

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“Imagine a world where Bill Gates, Jeff Bezos and Steve Jobs were directed into less lucrative careers because Bill is heterosexual, Jeff is white, or Steve was male,” said Dennis Mitchell, chief executive officer and chief investment officer of Toronto-based Starlight Capital.

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“The loss of productivity, quality of life and innovation would not solely be borne by white, heterosexual males – in these cases, it would extend to virtually everyone on the planet. Now consider that anti-Black racism has systematically prevented Black professionals and entrepreneurs from leveraging their skills and talents to create wealth for their families but also for Canadians as a whole. What inventions or innovations are we missing out on because female, Black, Indigenous, LGTBQ2+ or disabled Canadians find it harder to obtain opportunities and capital?”

Imagine a world where Bill Gates, Jeff Bezos and Steve Jobs were directed into less lucrative careers because Bill is heterosexual, Jeff is white, or Steve was male.

Dennis Mitchell, Starlight Capital

Mitchell further suggests that burdens on the healthcare system and other social safety nets might be lifted if opportunities are more broadly shared across Canadian communities.

“It is important to recognize that anti-Black racism is not a Black problem,” said Mitchell. “It is a Canadian problem that will require a Canadian solution.”

And more Black leaders in the boardroom are making great strides to provide that solution, but they say they are underrepresented and up against a history of adversity.

“We need to understand that it has been difficult for Black families to acquire wealth and investment properties,” said Hall.

He goes on to cite reports by the National Bank affordability monitor, which indicate it would take an average household income of $183,594 and 297 months on average to save and be able to purchase a non-condo, but, according to Statistics Canada’s 2016 census data, the average Black Canadian male income is $37,152, versus $60,437 for non-visible-minority men; the average Black female income is $33,662, versus non-visible-minority women of $40,351.

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“We can see it is difficult for the average Black household to own property – one of the top sources of intergenerational wealth – and that there a limit for Black Canadians to access the Bank of Mom and Dad to fund their down payments, now the norm in the housing market,” added Hall

The problem is also an investment income issue, an area where white Canadians are thriving compared to racialized Canadians. According to a 2019 report released by the Canadian Centre for Policy Alternatives, which drew on 2016 census data from Statistics Canada, a racial gap exists in participation in investment markets. No data was released on Canada’s Black sub-population, but the report revealed that in 2015:

  • 11.9 per cent of non-racialized Canadians reported capital gains, compared to just 8.3 per cent of those in racialized groups;
  • 30.8 per cent of non-racialized Canadians reported getting investment income that year, compared to 25.1 per cent of racialized Canadians;
  • Racialized Canadian investors earned an average of $7,774 in investment income, compared to $11,428 for non-racialized Canadian investors;
  • 60 per cent of Black Canadians fell into the bottom half of the national distribution of economic family incomes, compared to 47 per cent of non-racialized Canadians.

Historically, the highest levels of housing discrimination have been experienced by Black Canadians. A 2002 study conducted by The Centre for Urban and Community Studies  not only confirmed this, but it also suggested that Black Canadians have been effectively blocked from housing investment opportunities due to the very framework of this discriminatory context. Since the first ever waves of immigration by Black families, Black Canadians have been destabilized and unable to invest in land or property due to being placed in segregated locations, denial or unclear ownership rights to land, restrictions on sales and rental property, and destruction of their communities through large-scale displacement, often driven by urban renewal and development.

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“From the earliest arrival of Black individuals in Canada, whether they were slaves or free, there have been restrictions on where they could live,” said Hall, referring to the arrival of Black people to Nova Scotia in the 1700s. “As early Black communities settled in Nova Scotia, they were not given appropriate title to their land. This also occurred after the Halifax Black individuals were also not given the same land claims as their white counterparts. This meant they couldn’t own or sell the land on which their houses were or build houses and redevelop lands. This limited economic security and security of tenure in Black communities. Fast forward to 2021, in some Black communities people don’t have clear title to their land and there are still many outstanding land claim issues to resolve.”

In order to circumvent these historically entrenched barriers, many Black families are aiming to secure property investments for their children, but rebuilding the historic framework also has to include teaching families financial literacy where they have previously been unable to access this in order to build wealth.

“Black populations work hard but often in lower paying jobs,” said Mitzie Hunter, Scarborough-Guildwood MPP. “The ability to save and put away for retirement is often more challenging. For Black entrepreneurs and businesses, access to credit and capital is also more challenging. Banks and other traditional lenders often decline credit facilities or make it more costly for Black individuals.”

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As the former Minister of Education, Hunter was able to introduce financial literacy as a permanent part of Ontario’s education curriculum in Grade 10, which she feels will help future generations of Black families trying to build wealth.

“Teaching students about money, debt and saving early on helps them to make better choices for their future,” said Hunter.

For Black entrepreneurs and businesses, access to credit and capital is also more challenging.

Mitzie Hunter, Scarborough-Guildwood MPP

Through financial literacy, Charmain Emerson, a marketing and communications executive and co-founder of the Black Opportunity Fund, is building on her parents’ strategy for success and teaching her children to how to build intergenerational wealth by example.

Emerson’s parents were born in Jamaica and came to Canada in the mid-1960s. She says that, while her parents put an emphasis on education, her father also taught her the value of real estate, and she witnessed many Black families doing the same.

“My father was a real estate agent who sold so many Caribbean immigrants their first and second homes. They came from all over the Caribbean – Jamaica, Barbados, Trinidad, Nevis, Grenada, Guyana. Every Black family I knew owned a home, had parents working, kids in school. I’m not saying it was an easy road to achieving middle-class status because it wasn’t. The racism and systemic barriers my parents faced were unacceptable, but they came to Canada to ensure that the life their children lived would be much better than their own.”

The trouble with imparting the value of property and building on it for future generations, however, continued to be entrenched in the racial barriers Hall referred to, whereby owning a house might be the glass ceiling for some Black families, due to lower-paying jobs and limited opportunities to build real wealth.

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Emerson says she and her husband have taken risks with stock market and property investments, learning and becoming more confident over the years. They started with the purchase of the home next door to theirs, taking money from safe investments they had and putting them towards the purchase of a second property. They now have three apartments, with Emerson’s 92-year-old mother living in the main floor unit. The couple is also investing in laneway residential developments, on which they plan to build two laneway homes to provide an investment income that will be sustainable and eventually managed by their sons.

“Unlike my parents, I have an increased understanding of financial literacy,” explained Emerson. “I’m also not afraid to take risks like investing in stocks. Real estate, however, is an area that my husband and I view as a path to creating a legacy for our children and perhaps one day, their children too.”

In addition to increasing intergenerational wealth opportunities through financial literacy, Black Canadians are developing initiatives to solidify change. In addition to the Black Opportunity Fund, a partnership between businesses, philanthropists, foundations, and the Black community to combat the impact of systemic anti-Black racism in Canada, there is Hall’s BlackNorth Initiative (BNI), signed by more than 400 companies to publicly confirm their focus on equity and inclusion. The BNI Homeownership Bridge Program aims to bridge the gap between racialized and white Canadians in home ownership.

The Government of Canada recently announced new investment of $40 million to create 200 home ownership opportunities for Black Canadians.

“The media and pop culture has painted a negative picture of my communities of Black people,” said Emerson. “We are not only athletes, movie stars and performers. We’re doctors, entrepreneurs, teachers, lawyers, accountants, journalists, homeowners, investors etc. Black success is not a fictional tale. It is real.”