Moral Low Ground

Civil Liberties

IASP Study: US Racial Wealth Gap Tripled since Reagan Era

black kids future

What kind of future will they have? (Photo: Samuel A. Love)

A new study has revealed that the wealth gap between white and black Americans has nearly tripled since the Reagan years.

“The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide,” a study by Thomas Shapiro, Tatjana Meschede and Sam Osoro of Brandeis University’s Institute on Assets and Social Policy (IASP), was released on Wednesday. It found that between 1984 and 2009, the gap between white and black household wealth increased from $85,070 to $236,500 among the families studied. That’s just the gap between median wealth. In 2009, the median worth among the white households studied was $265,000, while the median black household worth was just $28,500, or less than 1/9 of the white worth.

“Growing concerns about wealth inequality and the expanding racial wealth gap have in recent years become central to the debate over whether our nation is on a sustainable economic path,” the report’s authors wrote. “All families need wealth to be economically secure and create opportunities for the next generation. Wealth– what we own minus what we owe– allows families to move forward by moving to better and safer neighborhoods, investing in businesses, saving for retirement and supporting their children’s college aspirations.”

“In the US today, the richest 1 percent of households owns 37 percent of all wealth. This toxic inequality has historic underpinnings but is perpetuated by policies and tax preferences that continue to favor the affluent.”

The study examined the same set of 1,700 families over a 25-year period and investigated “a wide range of possible explanations” for the shocking increase in disparity. At the end of the study, the researchers were able to identify key forces behind the racial wealth gap.

“Our analysis found little evidence to support common perceptions about what underlies the ability to build wealth, including the notion that personal attributes and behavioral choices are key pieces of the equation,” the researchers wrote.

“Instead, the evidence points to policy and the configuration of both opportunities and barriers in workplaces, schools, and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated and that continue to permeate the most important spheres of everyday life.”

These factors include:

-Home Ownership: Whites are 28 percent more likely to own a home, and whites have benefited from greater access to credit and family assistance to purchases homes. Blacks are also more likely to have high-risk mortgages and be victims of predatory lending than whites, leading to more foreclosures. Because more whites own their own homes, they are much more likely to build equity, which increases long-term wealth and financial stability.

“Home are the largest investments that most American families make and by far the biggest item in their wealth portfolio…” the report states. “Yet for many years, redlining, discriminatory mortgage lending practices, lack of access to credit and lower incomes have blocked the home ownership path for African Americans while creating and reinforcing communities segregated by race.”

– Income and Employment: Outside the IASP study, the US Census Bureau reported that the average white American earned $29,401 in 2011, while the average black American made just $18,357. As Moral Low Ground reported, a staggering 27.6 percent of black Americans are living in poverty, compared to just 9.8 percent of whites. The IASP study found that for every dollar increase in average income over the 25-year research period, white households added $5.19 in wealth while black households added only $0.69. The study also found that blacks have been devastated by unemployment and employment discrimination.

“The dramatic difference in wealth accumulation from similar income gains has its roots in long-standing patterns in discrimination, hiring, training, promoting and access to benefits…” the report states. “Due to discriminatory factors, black workers predominate in fields that are least likely to have employment-based retirement plans and other benefits.”

“Unemployment affects all all workers,” the study continues, “but due to… discriminatory factors… black workers are hit harder, more often, and for longer periods of time.”

– Inheritance: According to the study, whites were five times more likely to receive an inheritance than blacks during the research period. And “among those receiving an inheritance, whites received about 10 times more wealth than African Americans.”

– College Education: “As a result of neighborhood segregation, lower-income students, especially students of color, are too often isolated and concentrated in lower-quality schools,” the report states. This leads to a lower percentage of blacks attending and graduating from college and, as the study’s authors assert, “obtaining a college degree is vital to economic success and translates into substantially greater lifetime income and wealth.” Skyrocketing college tuition– the study found costs soared by 60 percent in the past two decades– and crushing student loan debt, which affects blacks more than whites, also hamper black success.

– Social and Cultural Factors: Here, the researchers focused on the effect of marriage on the wealth gap, a favorite topic of many conservative commentators. The study found that while getting married increased the median wealth of white families by $75,635, marriage had no statistically significant impact on black households. This is because single white individuals are “much more likely to possess positive net worth, most likely due to benefits from substantial family financial assistance, higher-paying jobs, and home ownership” than blacks.

The ‘social and cultural factors’ portion of the study did not take into account the effects of the nationwide epidemic of mass incarceration of people of color, mostly as a result of the so-called War on Drugs, which has had a devastating and lasting impact on black communities across America.

The study concludes by offering suggestions on how to close the yawning racial wealth gap. These include:

– “Ensur[ing] that mortgage and lending policies and fair housing policies are enforced and strengthened.”

– “Raising the minimum wage, enforcing equal pay provisions, and strengthening employer-based retirement plans and other benefits.”

– Investment in affordable, high-quality child care and early childhood development, and “support[ing] policies that help more students from low- and moderate-income families of color attend college and graduate.” Reduce student loan debt burden.

– “Diminish the advantages passed along to a small number of families” by addressing “preferential tax treatment for large estates.”

income inequalityAs bleak a picture as the IASP study paints, figures from the US Census Bureau tell an even more alarming story. In 2011, the Bureau placed median white household net worth at $113,149, Hispanic net worth at $6,325 and black net worth at just $5,677. According to the government, the average white household is worth 20 times as much as the average black household.

“It is time for a portfolio shift in public investment to grow wealth for all, not just a tiny minority,” the IASP study concludes, echoing figures from the Congressional Budget Office that showed income for the top 1 percent of Americans soared by 275 percent since 1979 while remaining more or less stagnant for the bottom 20 percent. “Without that shift the wealth gap between white and black households has little prospect of significantly narrowing. A healthy, fair and equitable society cannot continue to follow such an economically unsustainable trajectory.”

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12 Comments

  1. Capt_dommMarch 15, 2013 at 12:35 pmReply

    It’s not their fault! It’s not their fault! The deck is stacked against them! Why don’t blacks listen to Kevin Jackson, Bill Crosby, and Thomas Sowell? Ok, well some may but most choose to deify Snoop Dogg, Ice-T, Lil Wayne, and DMX. So much for family values and hard work. Millions of people live to buy the next albums of these crooks and the cultural toilet continues to swirl lower and lower.

    Is this article a surprise to anyone? I do find the the suggestions at the end especially ridiculous. Here it is in a nutshell: Give them more money. Take from others and give it to them. This was tried already in the 70’s. It’s called welfare. How is that working out as some welfare recipients are in the third generation. Welfare should be called, “Let’s give them just enough to live on and we can keep them lazy, stupid and voting for us.” 40 years later this article says give them more money. Thanks Einstein.

    Finally, I love the part about drugs and people in jail. Let’s just let them do all the they want. That would really help the situation.

    • Brett WilkinsMarch 15, 2013 at 12:57 pmReplyAuthor

      You just don’t get it, do you?

      • Capt_dommMarch 15, 2013 at 1:17 pmReply

        Do you mean that Kevin Jackson, Bill Cosby and Thomas Sowell don’t get it or just me?

  2. MikeApril 14, 2013 at 9:06 pmReply

    Brett,
    The war on poverty was lost long ago. The blacks have had opportunities to improve their lot but teacher’s unions refuse to allow vouchers. That program put the poorest children in the finest schools but it put pressure on public schools to perform. Good black roll models are out there but what happens when a black man encourages young blacks to follow his example? Black community leaders call him UNCLE TOM!! What about responsible black women who would be great roll models for young black women? They are called AUNT JEMIMA!! by leaders of the black community. The black Americans we should be trusting to help lead America in the future are being destroyed by their own leaders…like you Brett. Shame on you.

    • Brett WilkinsApril 14, 2013 at 9:59 pmReplyAuthor

      IN all my 39 years, this is the first time I have ever heard “Aunt Jemima” used in reference to anything but pancake syrup.

  3. MikeApril 15, 2013 at 5:28 pmReply

    Brett,
    This must be the first time you’ve ever heard the name Dr. Condoleezza Rice.
    There is so much good in this world, it’s a shame you only show black kids your dirty dark side of it.
    They deserve much better from you.

    • Brett WilkinsApril 15, 2013 at 7:04 pmReplyAuthor

      Condoleezza Rice is a war criminal who should be on trial for approving torture and being an accomplice to the deaths of more than 100,000 Iraqis killed during Bush’s war of choice.

  4. MikeApril 17, 2013 at 9:16 amReply

    Deflecting by calling Dr. Rice a war criminal will not work with me. Your willful participation in the destruction of young lives is nothing short of a crime against humanity
    .
    You sir are in a position to do some good work saving children. You squander the opportunity and untold young lives, that is tragic.

    Are those people’s lives so without value to you? Every year hundreds, maybe thousands of young people die unnecessarily as a result of crime and drugs, will you just shrug your shoulders and blame lack of government money or will you actually make an effort to save them by putting them on a course toward a long, healthy and rewarding life?

    Put up or shut up Mr. Wilkins

    • Brett WilkinsApril 17, 2013 at 10:48 amReplyAuthor

      … and how do you suppose I do that?

  5. MikeApril 18, 2013 at 1:08 pmReply

    Open your mind, re-read my posts. Ask yourself, how can I give those kids a positive image of themselves and give them hope for tomorrow.
    Telling them the deck is stacked against them is wrong, it’s a lie.
    I enjoy sitting down over a cup of coffee with people I have disagreements with but I believe you may be to invested in victimhood to be good company.

    • Brett WilkinsApril 18, 2013 at 2:35 pmReplyAuthor

      Of course the deck is stacked against them. To deny this is to deny one of the most fundamental truths about our society. That does not mean they cannot excel– witness our president, or even conservative figures like Herman Cain or Dr. Benjamin Carson. Education and opportunity are the keys to success. Instilling youngsters with a health understanding of history and socioeconomic truth and giving them “a positive image of themselves and hope for tomorrow” are not mutually exclusive. Pity you’re limiting yourself, and being intellectually dishonest to boot, by ignoring a significant portion of the black experience.

  6. MikeApril 22, 2013 at 9:46 pmReply

    Unfortunately Brett, the “Black Experience” frequently becomes a self inflicted wound.

    Thanks for an interesting exchange.

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