 All right, welcome back. We are here Wednesday morning. We're here to, we were going to start our day with Stephanie, but we're going to finish our morning with Stephanie. Stephanie, welcome back. Thanks. General Housing and Military. We invited you back in to do kind of a, you testified last year on age 232, which is very similar in some respects to age 273, but we want, I wanted you to come back so that you could share with us again, some of the economic information that this bill in, that makes an impact on how we should be considering age 273. And so with that, I just welcome you back. We are, you weren't here for introductions, so we're going to do a quick round of introductions for you no longer on Zoom. So we have to just sort of let you know who's here. We'll start with Representative Howard. Good morning. I am Mary Howard. I represent Rutland City 53, the Southwest District. Thank you. Good morning, Stephanie. I think we met last year possibly, but I'm Chip Toriano and I represent the Hardwick Standard in Walden in the Northeast Kingdom. Thank you. Thanks. How you doing? Good morning, Stephanie. Again, Representative Matt Byron, Virginia's representing Northwest Anderson County. Good to see you. You too. Dick Lumley, Chittenden 65 in Burlington South and your district. Morning, Stephanie. John Black, from South Burlington. Nice to see you. One of the persons that represents Droughton-Toxham in Newberry. Thanks. My name is John Block, I represent Milton. Good morning. I'm Tommy Walsh representing Berry City. Barbara Murphy serving Fairfax and District 2, Franklin 2. And Representative Tom Stevens from Waterbury representing the Waterbury-Bolton-Huntington and Neal's Corps. Welcome. Thank you so much. Thank you all for helping me change the schedule dealing with an emergency I had this morning. I'm here to speak to you about H273 from an economic perspective, not so much about the mechanics of the bill, but to give you a sense of the way economists think about this. And just to say that my research has been on issues of inequality. And amongst that types of inequality, I look at and teach on racial inequality. So I'd like to, as I indicated, I strongly support this bill. And I think it is very innovative relative to what we have seen in other parts of the country. I think the bill does a great job of talking about historical discrimination, whether that is in private markets or the role of government that has resulted in the significant racial inequality that exists today. One of the things that I don't think that people perhaps emphasize enough is the role of ongoing discrimination in our institutions and in the private sector. And I'll offer you some data on that. And I'd also like to talk about what's the impact of a bill like this on racial inequality. So if I might start first, in my view, what this bill really does is to deal with wealth inequality. And scholars who are looking at racial inequality have come to realize that wealth inequality is much more significant, a problem to address even than income inequality. Why is wealth inequality important? Because wealth in any kind of savings are the way that households smooth income during a recession, during COVID, any kinds of crisis. Families with means can fall back on their assets to smooth their income. But those without means that have low incomes and few assets, the result of these crises for them is homelessness, is bankruptcy, and significant impacts for the long-term in their lives, not just a short-run effect. Wealth can help families smooth medical emergencies. They smooth care emergencies like having to take time off to care for a sick relative and so forth. So wealth is fundamentally important as a component of racial inequality. I think the data that you have seen in this bill and elsewhere is widespread and I won't belabor it too much on the vast difference in wealth accumulation by black Latinx and white families. And just as a way to put it into perspective, for every dollar of wealth that white families have, black families at the median have 12 cents of wealth and Latinx families 19 cents. So the disparity is great. I think that sometimes people don't understand that this doesn't have to do with just education and income. Wealth inequality is extremely high even for people with a postgraduate degree. So for example, black households in which the adults have a postgraduate degree have roughly $115,000 wealth compared to 600,000 for white families. So it can't be explained by features such as educational differences. For me, the more I've worked as an economist, the more my concerns are deeply around the impacts on children. So I'm gonna just read you a quote from Heather McGee that wrote a book called The Sum of Us and the Impact of Racial Inequality. And what she says is, wealth is where history shows up in your wallet, where your financial freedom is determined by compounded interest on decisions made long before you were born. And that is the case today. The future of children today depends on today's racial wealth inequality. Wealth inequality is, in this generation, perpets racial wealth inequality in the next generation either through in vivo transfers, that is transfers when parents are still alive or through inheritance. And so there is what we observe as a sedimentation, a layering of wealth inequality generation after generation after generation. And so if you were to pass this bill, you were not only affecting current generation of BIPOC Vermonters, but you're also addressing racial inequality between BIPOC Vermonters and white Vermonters in the future. And I think that's significant important. I will say too that it also affects education. Many BIPOC children are unable to go to college because of lack of income or assets that their parents can use to fund their education. And one of the impacts of this is that Black children in particular and Latinx children have much higher college debt than do white children because of these wealth inequalities. The most significant place that Americans accumulate wealth is through home ownership in the United States. And home ownership rates differ substantially due to not only past discrimination, but current discrimination. I won't belabor the information about the home ownership rate differences. You've heard that's outlined in the bill, but I would like to talk to you about mortgage denial rates by race. The data are quite significant and clear and extensive about mortgage home denial rates. So when you compare groups of people, let's say Black Americans to white Americans who have the same income, the same education, same credit history, Blacks are 80% more likely to be denied alone. That is through a variety of factors such as implicit bias in the lending process. Nevertheless, the loan denial rate is very high. In fact, it's greater in New England than it is in the rest of the country. The denial rate for Latinx applicants and just to give you a sense of this, the denial rate for Black applicants and for Black applicants whose incomes are over, let's say 80 to $100,000 is actually the same as whites who apply whose incomes are between $31,000 and $50,000. So again, income can't explain this. In fact, the much higher income groups that are of color have higher loan denial rates than much lower income whites. And I think that we don't have specific information for bond, a lot of the issues around small sample size, but I was able to obtain some information for Burlington and South Burlington. And what we find here is that BIPOCs, BIPOC Burlingtonians and South Burlingtonians are denied a rate that is four times greater than white applicants. Now that study doesn't control for income. So the difference in access to mortgage loans is in part due to income that is income inequality but then also discrimination in loan denial rates. On top of that, BIPOC families, when they do obtain loans, they pay significantly higher interest rates. So lenders charge Latinx and Black American borrowers roughly eight percentage points more than white borrowers for mortgages. And this amounts to roughly almost $800 billion a year nationally in terms of extra interest that is paid. All of this, of course, inhibits wealth accumulation and hence the importance of a bill like this that it will allow BIPOC for monitors to access funding for mortgages, for example. Let me speak just briefly also about businesses which this bill also addresses as the access to lending for entrepreneurs. And that is that more than half of US companies that have Black owners were turned down for loans in 2017, a rate that is twice that of white applicants. So here too, I think there's a significant importance to this bill to address Black and BIPOC business ownership. I might add that when they do get loans, it's not perhaps surprising that they also pay higher rates for those loans that is entrepreneurs. And even when they apply for credit cards, they are denied at a rate that is much higher. So in short, some form of policy intervention is required. It is to address both the failures of government to curb racial discrimination and mortgage and lending markets, for example, but also due to the role of government in its own policies. Just give you one example. The mortgage interest deduction that those of us who are homeowners are allowed to deduct on our income tax gives us a leg up over people who are renters. And to the extent that the BIPOC community disproportionately has not been able to own homes, they don't have access to what amounts to a subsidy for largely white homeowners. So there is, I wanna just make clear the obligation here is a current one because we have policies at the government level and we have provided insufficient oversight of financial institutions and labor markets to curb discrimination. And so I wanna say that in fact some of the evidence shows that if this bill were able to contribute to the narrowing of racial inequality, I'm sorry, home ownership and business act, business entrepreneurial startups and so forth, that there is evidence from some reputable studies that the wealth gap could be, if the wealth gap could be closed by roughly 30%. And so I think this makes a significant dent in it if this bill were to be passed and it's important to consider. There are also many benefits and I think this is one of the areas that I study a great deal is what are the benefits and what are the costs of inequality? Inequality by race and by gender is highly costly to the economy. In other words, it's not just people of color and women who suffer from inequality, but actually the economy as a whole functions better, significantly better when there's greater intergroup inequality. And more specifically, for example, a bill like this would contribute to greater human capital, more wealth for families would allow them to fund their children's education. It would lead to increased entrepreneurship, it would lead to a healthier labor force, would lead to smaller stock of student loans, which has significant impacts on the ability of families, people to start families and to invest in their children. And it would also lead to reduced social spending and it would lead to increased tax revenues. So in some ways, bills like this actually pay for themselves because of the benefits of greater equality, I mean, higher living standards that generate tax revenues that are used to fund a program such as this and also because the social spending that we use to support people who are deprived is reduced as a result of this. So I wanna just stand there just to say that I strongly support this bill and I'm happy to entertain any questions. Dada Barra. A few minutes ago, you referred to the interest data on being 8% higher on mortgages. I was just curious if that was something you could share with us. I would love to like read into that a little deeper. Sure, I actually, in my testimony, I cited the study of this and it is, and it's actually done by a very interesting organization, the Institute for Assets and Social Policy at Brandeis University and all of their work is how to close the asset and wealth gap. So it is in my testimony and the link is there. And if you have any trouble finding it, just let me know, I'd be happy to share it. I am sure that's more than enough for me to navigate that, thank you. Okay. Stephanie, if you can step back to the beginning of your testimony, and we've heard this statistic before about per dollar, for a dollar of a white person's wealth that the number is extremely low for a black person's wealth. Can you delve into that in ways that, I mean, I can make illusions of my own mind through my own reading to try to understand that. But from an economist perspective, can you just share with us how that never came to be? Well, I think it's accumulated over a long period of time. As I think even if you just take home ownership, I think the data for Vermont, as I recall, are roughly 40% of black households on their homes compared to 78% of white from honors. I might be off a bit, but there's a, it's almost double. And I'll just take it, if I take a case of what happened in the recent housing fire, if you will, in the mid-2000s, if you remember, housing prices were just climbing astronomically. And in my own case in Burlington, I bought a house for $135,000 and seven years later, the value would increase to $325,000. And so there's roughly $200,000 of assets that I generated through no hard effort on my own, but people who don't own homes don't have access to that. So what happens with that? I have saved resources as a result of that, the inflation, if you will, of housing prices. And that is income or wealth that I could pass on to my son when he wants to buy a house. So I could be in a position to pay for his mortgage and he is then able to buy a house that again appreciates some value. That's just one way that this wealth inequality occurs. Obviously it occurs also through entrepreneurship. And if you're not able to get a loan to start a business, then you're not able to build wealth. And many of those avenues have simply been blocked for Latinx and BIPOC families in general. And I might just say that it's intergenerational, right? So as I said, what we're seeing here is the layering of generation after generation after generation of these inequalities. Well, I think that speaks to last year when you talked to us, you talked a lot about redlining about the concept of not just redlining, but also the availability. So my father was, but parents were low income, but my father qualified for a GI loan to buy a house, which was not available to a person of color, right? I bet in late 1950s, is that what you're talking about in terms of layering about where there's a chunk of time where certain financial instruments, even though there was supposed to be inequality involved, that there were certain financial instruments that were not available. Is that what we were talking about with layering? Yeah, that's absolutely right. That's exactly right. So that is a layer that happened 80 years ago, but and it is ongoing. Yeah. I might just add the Homestead Act in the 1850s, which opened up the West to white settlers was a place that was one of the factors that led to vast differences in land ownership in the United States as well. So that we really could rehearse a number of policies, government policies throughout history, as well as the government turning a blind eye to discriminatory practices. I'll just tell you a brief story. If I might, I don't often relay personal information, but I think sometimes it's important to understand how these things are still with us today in Vermont, where we like to believe that we're different. My son applied for an apartment in Burlington a few years ago and he identifies as African-American and the landlord turned him down. He said it wasn't so much that he was opposed to an African-American renting there. He said, but the people downstairs would be bothered. This goes on every single day. So having government take a firm stand about the unacceptable of racial discrimination and barriers to people being able to get access to assets that help them leave a dignified and decent life and to support their children is fundamentally important. This is the way that we are gonna move forward is when government takes a stand, such as this bill does, to undermine those practices that daily happen to BIPOC from Rogers. Yeah, thank you very much, Stephanie. I am, you cited data from Burlington and South Burlington and the denial, the mortgage, denial rates. But you said, I wanna make sure they understand. So you were saying that it wasn't further broken down by income so that you would know, because the statistics that you quoted earlier noted that there was a real difference in, oh gosh, that the approval rate based on income for blacks and for whites. Okay, does that make any sense? Totally, yeah, I got it. Yeah, so. Is that something that can be done or is that information not available? You just froze on me. You just froze on me. I'm sorry, so, yeah. Well, I was just wondering, is that data that one can get, that income sensitivity to, and the correlation with the denial and then broken out by race, gender, whatever? Yeah, so yes, it can. So it's from the Federal Financial Institutions Examination Council. I actually came across this in a city of Burlington study. I wasn't able to access the data in time for this testimony. I tend to be careful in these things. Most studies that look at denial rates try to compare apples to apples. In other words, people with the same credit history, same income, same educational background, some other factors like that. This one may have, but it wasn't obvious to me in the data. So because the denial rate was so much higher than even New England, my sense was that it probably did not control for income. But they certainly do have the data. Thanks very much. All right, any further questions for Stephanie at this time? Stephanie, thank you for providing the testimony verbally and for the written testimony. It's really, we're still just gathering this information about understanding. What we talk about when we talk about wealth disparity, basically, or wealth inequality, I think it's important for us to just take in as much information and try to understand it from a historical and local perspective of what it means. So thank you for filling us in. And if we have further questions, we may invite you back over the course of the bill for some clarification stuff too, some background stuff too. So thank you for being an element of that. You're very welcome. Thanks so much and thanks for all your work. Bye.