Preckwinkle urges businesses to help fight 'cost of segregation'

In a speech today at the Schaumburg Corporate Center, Cook County Board President Toni Preckwinkle said that businesses, communities and minorities all pay a “cost of segregation” that businesses, as well as government, can help reduce.

“In fact, the Metropolitan Planning Council put out a report in 2018 which calculated that Chicago loses $4.4 billion dollars annually in lost income due to segregation,” Preckwinkle told a gathering sponsored by Bisnow, a digital media platform concentrating on commercial real estate.

She touted the robust economy of the Chicago region in general, but said a significant portion of the community suffers because of a lack of “equity.” To address this, she urged businesses to concentrate on three areas: hiring policies, prioritized investments and innovation.

Here is the full text of her address:

Good morning.

Thank you for inviting me today. I appreciate opportunities to connect with the business community and talk about how we can all work together to make Cook County thrive and prosper.

Today I want to talk about racial equity, why it matters to me — and why it should matter to all of us.

I've talked before about racial equity several times over the past year, and I usually begin with a stark fact. Chicago has the biggest life expectancy gap of the 50 largest cities in the US.

For an example, in Englewood on the south side of Chicago, it's 60 years, and in Streeterville — downtown — it's 90. A difference of 30 years.

Health is just one of the inequities that Cook County residents face. It deeply troubles me. But another inequity that more closely relates to the economy is the racial wealth gap.

For example: the median household income for a white household in Cook County is $71,000 dollars. For a Latinx household, it is $49,000 dollars. For a black household, it is $36,000. That means a black household earns 50 cents on the dollar compared to a white household.

Another statistic that affects all of us — white or black — is the cost of segregation. You might not think of what segregation has cost you, especially if you live and work in the parts of the Chicago region that seem to have benefited from segregation.

It is important to understand that even if you live or work in an affluent neighborhood or suburb, we all pay the cost. And it's billions of dollars per year in lost income, lost profits, and lost opportunities.

When it comes to lost income, this “cost of segregation” is paid by people of color who don't have access to jobs because they can only afford to live in neighborhoods where few jobs are available, and public transit is scarce. This means that, while Cook County has a low unemployment rate of only 4%, that rate is much higher for people of color — in fact, it is more than three times that for black people: 15%.

When it comes to lost profits, the “cost of segregation” is paid by businesses and homeowners who have lower property values, less access to capital, and fewer customers.

Homeowners lose value on their homes due to segregation. According to another investigation by the Brookings Institute, a home in a black neighborhood is worth an average of $23,000 less than a home in a predominantly white neighborhood.

And when it comes to lost opportunities, the “cost of segregation” is paid by the region as a whole — especially as we suffer a dramatic population loss. The cost is one reason why we are seeing the opposite of a Great Migration.

We see a black exodus, because it's just too hard for families and businesses to afford live and work here.

In fact, the Metropolitan Planning Council put out a report in 2018 which calculated that Chicago loses $4.4 billion dollars annually in lost income due to segregation. $4.4 billion.

Ultimately, whether you live in a black neighborhood or not, this segregation burdens all of us. Our studies of regional economic growth show that regions with the least inequality are the most vibrant. We all have a stake in advancing racial equity.

Before I go any further, I'd like to talk about the difference between equality and equity, and how that difference can result in unintended outcomes. I'm going to speak on this from my own lens in government, but it truly applies to all of you as well, especially as industry leaders and entrepreneurs. You wield a lot of power.

When it comes to distributing resources or crafting policies, equality and equity have vastly different consequences. Government has been operating under the assumption that everyone deserves fairness, and that an equal distribution of resources will lead to equal outcomes. On paper, that makes sense.

But let's talk about reality.

In reality, equal distribution of resources, and policies that seem fair on the surface, do not lead to equal outcomes.

Why?

Because the playing field is not level.

In America, the playing field has never — ever — been — level.

If you are a woman, if you are black, if you are Latinx, if you have a disability, if you speak another language, if you were born in another country — in other words, if you are most of the people of Cook County — the playing field has never been level.

So instead of using the principle of equality, government must instead focus on equity.

Equity ensures that the playing field is made level, by providing resources according to need, by finding root causes of unequal outcomes, and by carefully examining and understanding, that seemingly sensible policies and operations, oftentimes have unintended consequences.

Though equity should permeate all our institutions, I focus on what government can do because it's where I can make an impact and, frankly, we must acknowledge that government has been responsible for much of the inequity we see today.

We know about the history of redlining in Chicago, and the racist loan practices that made black homeownership all but an impossibility.

Redlining has especially shaped your industry, as I am sure you know, although you may know it mostly by absence, because those neighborhoods that suffered from redlining are not neighborhoods where commercial properties are being built.

Those are not neighborhoods where commercial property values have risen, as they have downtown, in the West Loop, and on the near North Side.

Racist government policies led to the segregation, disinvestment, hyper-policing and lack of economic opportunity we see today in communities across Cook County.

The result of these decades of racist policies is that in health, wealth, education and life expectancy, black and Latinx communities have far worse outcomes than white communities. That is why you can drive through large swaths of Cook County and see nothing but empty storefronts.

As an elected official, I believe we have a moral and fiscal responsibility to change that narrative, and close the opportunity gap, the wealth gap, the health gap — and we start by calling it what it really is: the race gap.

For too long we have seen neighborhoods on the South and West sides of our county stall while areas to the north and in the heart of the city have thrived. We are grateful for the neighborhoods that do well. We want them to continue to grow and prosper.

But we are one county, and the whole region suffers when communities don't have the opportunity to thrive.

As the late Minnesota Sen. Paul Wellstone famously said, “We all do better when we all do better.”

In my administration, we are working hard to close these gaps by using an equity lens in all our policies and practices. We examine who will benefit and who will be burdened by what we do. Doing this will benefit not just black and brown people, but all of us.

We do this with our transportation investments, the way we distribute grants, increasing access to health care — it permeates everything we do.

So, here's the real question: what can YOU do to close this gap, and make all of Cook County thrive?

I'm going to focus on three things that you can do that would make a huge impact: hiring policies, prioritized investments and innovation.

Attracting and nurturing a diverse workforce is crucial. And much like the benefit of lowering inequality, hiring diverse employees only serves to benefit your company. Research has consistently shown that more diverse teams outperform less diverse teams — and that's everywhere from Google to a nonprofit of six employees, to a department within my own government.

Diversity is not just a buzzword — increasing the diversity of your workforce will make your company perform better.

In my own administration, I've practiced this, because I know it works, and that includes leadership positions. Five of my six bureau chiefs are women or people of color. My senior staff is incredibly diverse, and their unique perspectives and backgrounds bring innovative new ideas, process improvements, and connections to the table. You just can't achieve that when everyone in the room comes from the same background. It doesn't work.

And this doesn't just relate to government. John Rogers, the Chairman and CEO of Ariel Investments, is one of my most trusted advisers. He leads my Council of Economic Advisers, and has been addressing the need for diversity in all sectors, including finance, where he works. John doesn't just talk the talk — he hires diverse candidates and embraces diversity at Ariel. He will be the first to tell you how successful that has made his company.

So, my recommendation to you is to think about diversity, not as a buzzword, but as a chance to outperform and make your firm even more competitive. Hire diverse candidates, mentor those candidates and promote them into leadership positions. By creating and feeding that pipeline, the entire commercial real estate industry will profit.

The second thing I would like to discuss is how we prioritize investments. As I mentioned before, we can all applaud that Chicago is thriving. Downtown is booming, and there are outstanding commercial opportunities, especially on the north side of Chicago and in the Northwest suburbs.

But there are still plenty of missed opportunities, and I think you can capitalize on those opportunities, especially in the South Suburbs.

If you've heard me speak before, you may already know that I've made economic development in the South Suburbs a priority. When I was elected, Cook County government didn't even have a Bureau of Economic Development. So, we created one, and have targeted the South Suburbs for several reasons.

Chicago's Southland is a rich subregion. It has many assets, including a skilled workforce, rail and highway infrastructure, and a great deal of existing commercial and industrial properties. The South Suburbs suffered during our last several economic recessions and the decline in manufacturing, but the region still has much to offer.

As a commercial broker, I urge you to give the South Suburbs a serious look: invest in commercial properties there, explore the market, and know that my Bureau of Economic Development is willing to partner with you to make the South Suburbs thrive again. My Bureau Chief of Economic Development, Xochitl Flores, is with me today. Xochitl, please stand.

In fact, this past November we launched an exciting new initiative to help spur investment: the Southland Development Authority. We launched this Authority to maximize investments, catalyze growth, and increase opportunities for development in the Southland.

I encourage you to explore partnership opportunities with the Southland Development Authority as it begins work in 2020.

The last point I'd like to make today is that innovation is critical, and that we can't be satisfied with the status quo.

In my own administration, we've innovated in many ways to make Cook County government more efficient, more effective, and a better steward of taxpayer dollars. We've presented balanced budgets every single year of my administration, and in this past year, we had the lowest budget gap yet — only $19 million dollars, out of a $6.2 billion dollar budget.

Additionally, we've made huge strides to deal with our pensions. Cook County regularly pays more than the statutory pension contribution to ensure that we don't pass this burden on to our children.

We've reached huge milestones reforming the criminal justice system and safely lowering the Cook County Jail population by more than 40% since 2011 — a reduction that has saved lives, and is poised to save millions of taxpayer dollars. It costs more to detain an inmate in the jail than a year of college tuition at most private universities —$59,000 dollars.

It's important to emphasize that, while our jail population has been reduced by almost half, this has been achieved safely, and crime has continued to steadily decrease.

When I started this work, the jail was a modern-day poorhouse, full of black and brown people — but we are working hard to change that. Cutting the jail population almost in half could not have been achieved without innovating, and rethinking the way we envision justice.

It wouldn't have happened without working together to end the cash bail system — which has had the greatest impact. It also required investing in community-based providers, presenting alternatives to incarceration, and providing access to mental health and substance abuse treatment.

We've made the Cook County Health and Hospitals System a provider of choice, as well as expanding health care access to more than 300,000 residents through CountyCare, our Medicaid managed care plan. We achieved this by innovating — we saw a huge opportunity with the Affordable Care Act to become more than a system of hospitals and clinics. We became a comprehensive health care provider, and now residents can go to a Cook County Health location to receive preventive care, dental care, and behavioral health treatment. That wouldn't have happened if we didn't think big.

Instead, we were ambitious. We innovated. And I am proud to say that each of these initiatives, from responsible financial stewardship to expanded health care, reduces inequities in Cook County. We all benefit from that.

We couldn't have made these innovations without the diverse and incredible staff who brought these ideas to the table. My staff reflects the rich diversity of the County. We couldn't have made these innovations without collaborating. And we couldn't have succeeded at any of this without prioritizing our investments where they can make the most impact.

Embracing and empowering a diverse workforce, prioritizing investments, and innovating will only make your industry stronger, and doing so with an equity lens will only make Cook County an even greater place to live and work, for all of us.

I hope you will consider Cook County a willing and enthusiastic partner in making this economy grow and thrive. As we look forward, we have amazing opportunities ahead of us, and I hope that together we can capitalize on that exciting possibility.

Thank you.