Using AI to Create an Inclusive Economy
Next week, I'm helping to lead a discussion about "AI, Futurism, and Equity" for Living Cities' winter retreat. Partly to organize my thoughts given the expanse of the topic and partly to lay out the Center's focus in this area for the upcoming year, here are my thoughts.
Using AI to Create An Inclusive Economy
Artificial Intelligence (AI) is transforming economies, presenting both opportunities and challenges for individuals for whom geography, education (specifically market signaling credentials), gender, class, race, and other factors have been barriers to access. For Black communities in particular, its rise offers new strategies to dismantle historical inequities.
At the Center for Wealth Equity, we see AI as a critical tool to address the racial wealth gap—if harnessed intentionally. In our work with financial institutions, philanthropies, and governments, we are focused on two primary opportunities to leverage for a more inclusive economy while preparing our partners' knowledge capital to protect against risks of exacerbating existing disparities.
Opportunities: Harnessing AI for Economic Inclusion
Reducing Startup Costs for Small Businesses
AI-powered tools are making entrepreneurship more accessible by significantly lowering startup costs. For instance, platforms offering automated marketing, inventory management, and customer engagement can replace expensive professional services. Small business owners can use generative AI to design branding materials or assist in coding low-cost proofs of concept, bypassing the need for costly capital investments—for which historically they have been disproportionately unable to access.
Enhancing Access to Financial Services
Bias in lending—both for housing and business loans—has historically hindered Black Americans' wealth-building opportunities. AI can be a double-edged sword in this space: while it can perpetuate existing biases if trained on skewed datasets, when designed ethically, it holds immense potential to improve equity. For example:
For Lenders: Lenders can use AI to assess creditworthiness through alternative data sources like utility and rent payment histories—data often overlooked in traditional credit scoring. For community-based capital allocators, combining local expertise with these new tools enables better assessment of market opportunities, streamlined underwriting, and identification of promising borrowers who might be missed by conventional metrics. This approach helps institutions deploy capital more effectively in their communities while maintaining sound risk management.
For Borrowers: Small business owners can leverage AI-powered financial advisors to improve their loan applications, identifying areas of weakness and crafting stronger cases for approval. Tools like personalized financial education platforms can help applicants navigate complex processes, boosting their chances of securing funding.
At the Center, we are launching new data projects in the coming year to support innovations in risk mitigation, create a more transparent and equitable financial ecosystem, and enable more entrepreneurs and homeowners to access the capital needed to stimulate an economy that many feel isn't working for enough people.
Challenges: Addressing Inequities and Risks
We also are aiming to counter the known threats to a more inclusive economy.
Re-skilling for AI-Driven Entrepreneurship
Automation and AI pose significant risks to jobs historically held by Black workers, particularly in sectors like office support and production. Targeted re-skilling programs are essential to help displaced workers transition into roles that leverage AI, but we don't want to simply jump further along in a race they will inevitably lose to technology. We consistently hear that entrepreneurship isn't the pathway for everyone, particularly those served by traditional workforce development programs. In a more inclusive economy, we're forecasting that the traditional binary of employer and employee will be replaced with new models of collective ownership that will require all contributors to the economy to have a new set of skills.
Algorithmic Bias and the Need for Ethical Standards
AI systems trained on biased data can reinforce discriminatory practices, such as denying loans or job opportunities. Algorithmic redlining is a significant concern, where Black borrowers may be unfairly excluded from financial services; however, we see potential opportunities in true "color-blindness" where unassisted human decision-making has failed. Addressing this requires intentional efforts by developers and regulators to audit algorithms and ensure transparency. Community engagement and diverse representation in AI development are also crucial to creating systems that reflect the values and needs of marginalized groups.
Ensuring Equitable Distribution of AI-Generated Wealth
Without proactive policies, the wealth generated by AI will likely worsen existing disparities. A recent report projects that generative AI could expand the racial wealth gap by $43 billion annually by 2045 if current trends continue. I support the position that policymakers must focus on redistributing AI-driven gains through targeted investments in underserved communities, promoting inclusive entrepreneurship, and ensuring Black Americans have equitable access to AI-enabled industries. Moreover, I see a compelling business case for capital allocators to attract new customers and unlock growth opportunities by using data to break the historical conflation of risk and race.
Aligning AI with the Goals of the Center for Wealth Equity
At the Center for Wealth Equity, our mission is to ensure that capital flows—including investments in AI—advance an economy within which everyone thrives. By advocating for ethical AI development, fostering inclusive financial practices, and reskilling workers into economic engines, we aim to bridge the gap between innovation and opportunity. These efforts align directly with our broader goal of influencing decision-makers to close the racial wealth gap.
By investing in equitable solutions, we can transform this technological revolution into a force for systemic change, ensuring that no community is left behind. This is a transformative opportunity.
How the Center is Driving Change
Influencing Capital Allocators: We work with financial institutions to adopt AI tools that reduce bias in lending and investment decisions, increasing access to capital for entrepreneurs.
Promoting Ethical AI Development: The Center advocates for transparency, accountability, and diverse representation in the development of AI systems. By partnering with tech developers, we ensure that AI tools are built with equity at their core.
Building Knowledge and Capacity: Through research and data aggregation, we provide actionable insights into AI's economic impacts. This empowers decision-makers to implement strategies that harness AI for closing the racial wealth gap.