Testimony of

John W. Rogers, Jr.

Chairman, Co-CEO, & Chief Investment Officer

Ariel Investments

Before the

Committee on House Financial Services

U.S. House of Representatives

My name is John Rogers. I am the Chairman, Co-CEO and Chief Investment Officer of Ariel Investments,

the first Black-owned Asset Management firm founded in 1983. It was my honor to testify before the

Subcommittee on Diversity and Inclusion one year ago and I particularly want to thank Chair Beatty for

her leadership and efforts to increase diversity in the financial sector.

I am here today with one core message – Black Wealth and Black Businesses Matter. As the proud great

grandson of J.B. Stradford, a pioneering entrepreneur who owned the Stradford hotel in Tulsa,

Oklahoma, this is personal. His hotel was torched during the 1921 Tulsa race riots and the opportunity

to pass down wealth through generations like many other white families went up in smoke.

The existing wealth gap in America between Blacks and Whites is well known. But few realize that the

gap has widened since segregation was legally outlawed. Research by Dean Kerwin Charles at the Yale

School of Management found that while the wealth gap did shrink between 1940 and 1970, it is now

wider than in 1950. Similarly, Ray Boshara at the St. Louis Federal Reserve found that between 1992 and

2016 college-educated whites saw their wealth soar 96 percent while college-educated blacks saw theirs

fall 10 percent.

If you look at the revenue of the 353 largest privately held companies in my hometown of Chicago,

Crain’s reports that there are no black companies in the top 150. Ariel is number 351. The combined

Most of these are low-margin, service sector companies survive on foot traffic. They are also far less

likely to have significant savings or quick access to capital to stay afloat. As an investor, I can tell you that

this has a massive ripple effect across the economy.

We know that most frontline workers – the heroes bagging our groceries, cleaning hospitals or working

in meatpacking plants are Black and Brown Americans who have been more likely to get sick. We also

know that the virus exacerbates underlying health issues. In major cities with a Black population of 25-

30%, Blacks represent a staggering 70-75% of all COVID-19 deaths. A recent study showed that more

than half of Black America was unemployed. These disparities link back directly to the wealth gap.

(PPP) beneficiaries in Cleveland, painting a dark picture for the country. Small businesses in a

predominantly white zip code received 343 loans of less than $150,000 totaling $11.9 million. Black

owned small businesses just a few miles away received 83 loans totaling $2.8 million.

The HEROES Act includes many terrific ideas that, if enacted, will make a difference. Relief for state and

local governments will ensure that first responders can continue to save lives. Helping people stay in

their homes and put food on the table will prevent a humanitarian catastrophe. Lastly, strengthening

and extending the PPP with specific benchmarks for Community Development Financial Institutions

(CDFIs), Minority Development Institutions (MDIs), and SBA microlenders will limit the damage and help

pave the way towards a stronger recovery.

Floyd demands that we go further. While access to capital is crucial, access to customers is also

important. As you continue to meet this unprecedented crisis, I offer three themes that we developed at

our Black Corporate Director’s Conference – we call them the Three P’s – People, Purchasing and

Philanthropy, that could lead to real change that shrinks the opportunity gap.

Corporations have turned first to charitable contributions, but we have it last on purpose. I do not

discount the positive intent, but charity will not solve generations of inequality. We need immediate

action that attacks the wealth gap.

My experience as a long-term value investor supports recent research which found that diverse

companies outperform non-diverse companies. At Ariel – we can point to more than 45 occasions where

we pushed management teams of our portfolio companies to add diversity on their boards. We don’t do

this for charitable reasons, although it is the right thing to do. As shareholders, we believe this enhances

long-term business performance.

Second, I encourage you to press companies you oversee, and the anchor institutions in your districts to

measure all spending with minority businesses by category and focus on high-margin professional

services and technology fields where wealth, power, and jobs are created today. We must replace the

obsolete term ‘supplier diversity’ with ‘business diversity,’ and encourage partnerships with minority-

owned companies. Unconscious bias training will also help facilitate this change.

I’ll close by noting that late in his life, Dr. King talked about how achieving true equality in this country

would require economic repair and economic justice.

The last few months have made it painfully clear that we have a long way to go to win the battle Dr. King