How America Built the Racial Wealth Gap

Straight Up: Will leaders ever step up to fix the mess that social policy and our checkered past created?

  •           |          Posted: April 9, 2013 at 12:31 AM

 

         

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(The Root) -- The cynic might say that except for a small number of exceptional figures like Barack Obama, Oprah Winfrey or Michael Jordan, America is not much interested in truly full inclusion for African Americans. Any fair assessment must concede that the black road to full citizenship in America has been marked by a lot of rough patches and more than a few major detours, and in some important respects remains an incomplete journey.

 

To begin with, one need only think about the most recent era in this journey. Black communities and leadership are deeply preoccupied, even today, with trying to find a path out of unacceptably high rates of poverty and unemployment, as well as unacceptably high rates of school dropouts and poor achievement. The civil rights and black activist communities must, tragically, also remain mobilized to defend an effective right to vote in many places, including before an apparently skeptical U.S. Supreme Court. And, of course, the scourges of racial profiling, arbitrary stop-and-frisk policies, mass incarceration and an utterly failed drug war could be added to this list of major detours and bad stretches still remaining on the path to full black citizenship.

 

None of these, however, would be the top exhibit in the cynic's case for bemoaning the persistently marginalized status of blacks in America. No. As a number of recent reports have underscored, the ultimate marker of the hard road that blacks have traveled in America is the wealth gap. When pioneering sociologists Melvin Oliver and Thomas Shapiro first reshaped the academic and policymaking landscape with their book Black Wealth/White Wealth: A New Perspective on Racial Inequality in 1995, they identified a white-to-black wealth gap, a ratio of roughly 11-to-1. For every dollar of wealth in white hands, blacks had a mere 10 cents.

 

Two recent reports make it clear that the gap has significantly worsened, not improved, since that time. In the wake of the Great Recession, a Pew Research Center reportshowed that the white-to-black wealth gap rose from a dispiriting figure of 11-to-1 in 2004 to 20-to-1 in 2009. In concrete dollars the report showed that blacks lost 53 percent of their wealth as a result of the Great Recession, falling from a median net worth of $12,124 in 2005 to only $5,677 in 2009. For whites, the comparable figures are $134,992 to $113,149.

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The greater proportionate wealth decline for blacks is largely attributable to the fact that a much greater share of black wealth involves homes, many of which lost considerable value in the recession. A more recent report (pdf) out of Brandeis University, based on a representative sample of families who have been followed for 25 years, shows that the 1984 black-white wealth gap of $85,070 tripled to a whopping $236,500!

 

Why does it matter? Social scientists agree that wealth is a key factor in the ability of individuals or families to maintain a particular standard of living and to accomplish important goals in life. Wealth is a material cushion in case of job loss or serious illness in a household. It can provide a foundation for sending children to college, launching a business or making other forward-looking investments (e.g., saving for retirement).

In an economy in which fewer and fewer people have traditional pensions, in which we are all likely to undergo more job changes and therefore potential spates of unemployment and in which higher education and training are essential to job-market competitiveness, having the financial wherewithal to support these adaptations is increasingly essential. A far higher fraction of whites than blacks possess the resources needed to navigate these challenges.

 

Now, here's the rub: Both discriminatory social policy and everyday racial discrimination played the major roles in creating today's gargantuan wealth disparities between blacks and whites. And I'm not even mainly referring to slavery here, though it, too, is part of the story. Savings rates, family structure, even educational attainment amount to small elements of the story. The real issue here is that at numerous points, social policy in the U.S. either openly acted against or short-changed African Americans while privileging whites.

 

Old-age insurance and Social Security initially excluded most African Americans. Agricultural and domestic workers, the great bulk of the black workforce when these New Deal-era policies were first enacted, found themselves expressly sidelined. Likewise, access to unemployment insurance and even to GI Bill benefits was turned over to local administration and discretion, allowing bias at many state and local jurisdictions to severely curtail the provision of coverage to African Americans when introduced.

Characterizing many of the New Deal-era social policies that built today's robust American middle class, distinguished political scientist Ira Katznelson wrote in his important book When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America that " ... Most Blacks were left out. The damage to racial equity caused by each program was immense. Taken together the effects of these public laws were devastating."

 

No arena of policy bias was perhaps more significant with regard to wealth accumulation than how social policy curtailed black access to home ownership and encouraged residential segregation. The tale has been recounted in many places, including in Oliver and Shapiro's award-winning book.

 

Of more immediate relevance today is that residential segregation helped pave the way for targeted predatory subprime lending in minority communities. Indeed, recent scholarly research shows that segregation was a key factor in the extent of predatory lending and risk of home loss and foreclosure in response to the recession. Analyzing patterns in the nation's 100 largest metropolitan areas between 2006 and 2008, sociologists Jacob Rugh and Douglas Massey found(pdf) that the higher "black segregation a metropolitan area exhibits, the higher the number and rate of foreclosures it experiences."

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This history is known, but the real remedies are scarcely voiced, much less seriously discussed and debated, in the public arena. Politics is always a complicated and messy thing, to be sure. Even when handled well, it involves the art of the possible, not the utopian or ideal. But people must not misunderstand or become complicit in a distorted take on their own history and circumstances. America and American social policy built the black-white wealth gap.

 

I am not suggesting that the policy agenda or remedies here are simple and obvious. What I am saying it that there is an unambiguous moral obligation here that cannot be denied, yet in the current social context it can hardly be given political voice.

 

The great scholar, activist and writer W.E.B. Du Bois understood the tragedy of this circumstance all too well. Writing in the Souls of Black Folk in 1903, he characterized the depth of disprivilege that blacks faced. "He felt his poverty," Du Bois wrote, "without a cent, without land, tools, or savings, he had entered into competition with rich, landed, skilled neighbors. To be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardship." Indeed.

 

What sense are we to make of the contrast of conspicuous success on the one hand -- witness Obama, Winfrey and Jordan -- and the abysmal depth of the fundamental black-white wealth divide on the other hand? I think the cynic would say that America has found it necessary to make a viable path to success for those extraordinary talents of any race to rise. But inasmuch as the numbers don't lie, America never intends to do right by those it has wronged and marginalized for generation after generation. I don't want to be cynical. Yet it seems that for some, membership has its enduring disprivileges!

 

Lawrence D. Bobo is the W.E.B. Du Bois Professor of the Social Sciences at Harvard University. 

 

 

 

 

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"I'm just trying to make a way out of no way, for my people" -Modejeska Monteith Simpkins

 

AFRICAN AMERICA IS AT WAR

THERE IS A RACE WAR ON AFRICAN AMERICA

THERE IS A RACE WAR ON AFRICAN AMERICANS

THERE IS A RACE WAR ON BLACK PEOPLE IN AMERICA

AMERICA'S RACISTS HAVE INFILTRATED AMERICAN POLICE FORCES TO WAGE A RACE WAR AGAINST BLACK PEOPLE IN AMERICA

THE BLACK RACE IS AT WAR

FIRST WORLD WAR:  THE APPROXIMATELY 6,000 YEAR WORLD WAR ON AFRICA AND THE BLACK RACE

Original Post

Social scientists agree that wealth is a key factor in the ability of individuals or families to maintain a particular standard of living and to accomplish important goals in life. Wealth is a material cushion in case of job loss or serious illness in a household. It can provide a foundation for sending children to college, launching a business or making other forward-looking investments (e.g., saving for retirement).

This is why you change the "social contract" of a society.  I can name several countries where the above paragraph is a false statement.  These places understand the insanity of making the above necessities (for any community to be healthy and functional on basic levels) to be dependent on the "wealth" of said community.

 

Black people in this country are quickly becoming the last holdouts of this dying system.

 

Originally Posted by Muhammad Cipher:

Social scientists agree that wealth is a key factor in the ability of individuals or families to maintain a particular standard of living and to accomplish important goals in life. Wealth is a material cushion in case of job loss or serious illness in a household. It can provide a foundation for sending children to college, launching a business or making other forward-looking investments (e.g., saving for retirement).

This is why you change the "social contract" of a society.  I can name several countries where the above paragraph is a false statement.  These places understand the insanity of making the above necessities (for any community to be healthy and functional on basic levels) to be dependent on the "wealth" of said community.

 

Black people in this country are quickly becoming the last holdouts of this dying system.

 

In other words we are becoming the permanent underclass. Where have I read that before?

If the racial wealth gap is what is so important then why are so many White folks so bad off recently?

 

The system is designed to screw the majority of non-rich people.  Race is irrelevant. 

 

This is from 1974.

THE SCREWING OF THE AVERAGE MAN

https://www.kirkusreviews.com/...-of-the-average-man/

 

That book pointed out then that college degrees for everybody was not the answer because supply and demand would just devalue the degrees.  So education was just another scam.

 

It is so curious that with all of the different ideologies none of them suggest mandatory accounting for EVERYBODY.  This cash flow consumer economy is bullshit.  But companies selling stuff want to avoid market saturation.  Why couldn't all Americans have homes paid for and no one pay rent or mortgages?  But that is no what banks and employers want.

 

It only makes sense analysed as a wargame where most people are not even supposed to know how to play.  When do Black leaders or educators mention accounting and planned obsolescence?  The White economists don't talk to White folks about the depreciation of all of these cars.  America has invented automobile slavery.  Get some Black women talking about what cars they like.  LOL

 

Xum

If it were just the average man Xumbrachist. This country has had it in for black people through the law since 1638. Follow the legal trail. Its just NOW somewhat hitting the rest of the non-black population. They are the limited collateral damage, while we are the main targets.

I could say that we should learn how to apply equality in ourselves.Did you know that there's a video went popular of over the very first weekend of March. Its name, "Wealth Inequality in America," claims it all. It explains, in obvious, accessible images, that the space between the wealthiest and the poorest Americans is far vaster than most people have even imagined. With a personal finance you can pay things instead of taking money out of savings.

Welcome Rianna!

 

Unfortunately, finance, personal finance and economics is something that most Americans learn at an older age rather than at a young age.  African Americans in particular, (IMO), often are just surviving financially, and often thatis the primary financial focus, surviving and making ends meet until the next paycheck.  It is usually people who were taught from a very young age, the value of money and the importance of saving over spending, manage their finances prudently.  However, many in the African American community have no other choice but to spend instead of saving because there is usually nothing left to save. 

 

On the other hand, there ae plenty of us that squander whatever we do have left to save on instant gratification/unnecessary spending.  African Americans fall into the same money trap that most Americans find themselves in, and that is satifying the materialism culture in America first, over any possible saving. 

 

Most of us do not grasp the broad picture of the true circumstances of our survival and existence in America until we are much older and a little wiser, if at all.  If African Americans could be made to see, or made to accept, from a young age, the fact that we are the last hired and the first fired, average less on the dollar in wages compared to that of Whites in the first place, or that our economic existence as a whole in this country is predicated on the whims of those and that which is out of our control, then, we may do better in saving, financial prudence, and financially preparing ourselves for the very 'racial wealth gap' that we live exist in. 

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