401(k) investments in private equity could be a transformative opportunity to support the growth of Black-owned businesses. If implemented with intentional safeguards and equity goals, this policy could channel long-overdue capital into the hands of Black entrepreneurs while helping Black workers build stronger, more secure retirements.
African American families deserve the opportunity to build generational wealth whether they work in the public or private sector. A key part of that pathway is retirement security.
Expanding access to private market investments through 401(k) plans is not just a financial policy, it is a civil rights issue. It is about economic justice and equity for Black workers and Black-owned businesses.
Current system limits opportunities to grow nest egg
Credit: PPOSEY N2P
Credit: PPOSEY N2P
Historically, only a select few, primarily those with access to public pension systems or high-net-worth investment options have reaped the benefits of private market returns.
Public pension funds have long invested in private equity, real estate, and private credit, generating stronger and more stable long-term returns. These investments have helped ensure that pensions for firefighters, police officers, and teachers across states like Nevada, Ohio, Oregon, and Rhode Island continue to pay out without shortfalls.
Yet, the vast majority of African Americans working in the private sector who rely on 401(k) retirement plans, have been excluded from these higher-yielding opportunities.
They remain limited to investing in publicly traded stocks and bonds, even as the number of public companies has dropped by nearly 50% since the mid-1990s. This exclusion has not only affected their retirement growth—it has also blocked capital that could be circulating back into the Black economy.
Private markets thrive by investing in growth, and the Black business community is full of untapped potential. There are over 3 million Black-owned businesses in the U.S., yet 97% have less than 20 employees. That’s not due to a lack of innovation or ambition; it’s a direct result of limited access to capital.
Private equity investments have historically passed over Black entrepreneurs. These businesses are too often seen as “risky” despite their proven resilience. But with more funding flowing into private markets through 401(k) retirement plans, there is an unprecedented opportunity to redirect some of that capital into scaling Black-owned firms, creating jobs, and building intergenerational wealth in Black communities.
We don’t just need to push private investors to consider Black businesses; we need to expand the pool of investment and open the gate to millions of Black retirement savers and Black founders alike.
A small increase can take families from vulernability to stability
The Department of Labor (DOL) has a unique opportunity to empower Black families by introducing proposed rules that would safely expand 401(k) access to private market investments.
By doing so, the DOL can empower working Americans by allowing them to enhance their 401(k)s. The potential DOL rulemaking would provide safeguards needed to increase choice and help all Americans reach their financial goals. This would enable Black and working-class Americans to access private markets, which they have previously been denied.
Expanding these options to the 63% of Americans who rely on 401(k)s will particularly benefit the Black community. According to a report from the Urban Institute, for individuals born between 2001 and 2010, white people are expected to be “13 percent more likely than Black people to have held some retirement savings in [private equity].”
That is unacceptable and avoidable. A proposed rule by the DOL would make it easier for our community to gain exposure to higher-yielding private assets for their retirement funds and could ultimately enable Black businesses to see more private investment.
Expanding access to high-performing private markets can help close the retirement wealth gap and improve outcomes in working-class communities across the country.
According to research from Georgetown University, including private investments in retirement plans can increase a retiree’s annual income by $2,400. This is a game-changing difference for working-class Black Americans. Cambridge Associates also found that a 10% allocation to private markets can provide the same benefit as increasing a worker’s savings rate by 1%. That additional growth can be the difference between economic vulnerability and stability in retirement and the ability to leave something behind for the next generation.
Empower Black communities for generations to come
Private equity access through 401(k)s has the potential to do more than grow retirement accounts it can grow Black businesses and Black wealth. We must not let this moment pass without ensuring Black communities are front and center in its design.
Whether in the private or public sector, we deserve the same choices and opportunities when building for the future.
If we truly believe in economic mobility, we must ensure all have equal access to the same investment options that have long benefited the public sector.
This is about empowering the Black community to decide how to grow its wealth and securing retirement with the safeguards needed to strengthen our nest eggs for generations to come.
Markee Tate is the president and chairman of Advancing Black Businesses Foundation and board chair of the Atlanta Black Chambers Inc.
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