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?
(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.
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."
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.