Black Wealth Matters, Why We Should All Care About The Racial Wealth Gap
The national media coverage of the domestic terrorism inflicted upon black and brown people in the past couple of weeks has renewed protests, social medial sharing, and even in some cases rioting. We have been inundated with hashtags such as #Blacklivesmatter, #Sayhername, #Nojusticenopeace, and many more. The issue of police brutality is one that so upfront and pervasive, that even some of the quietest voices and corporate brands have begun to speak up. However, there is another issue that directly affects black communities in silent and profound ways. This is the issue of the wealth gap between white people and black people. I am going to call it #blackwealthmatters.
What is the racial wealth gap? It is the extreme and persistent divide in average wealth between white people and black people.
Based on data from the Federal Reserve’s Survey of Consumer Finance, the typical black family has only 10 cents for every dollar held by the typical white family. An average white family has wealth of $171,000. This is nearly ten times greater than the $17,150 for the average Black family. This gap, on a percentage basis, has been stubborn and unshakeable throughout Civil Rights gains, boom times and bust times, Republican administrations, Democratic administrations, and even a black president.
Patrick Mason, an economics professor at Florida State University says “As long as we have racial wealth gap, we’re going to have a problem with race.”
“The wealth gap is one of the reasons there are protests today,” said Linwood Tauheed, a professor of economics at The University of Missouri-Kansas City and the president of the National Economics Association. “I don’t necessarily want to use the phase it was the straw that broke the camel’s back...but we have lots of evidence that this economic system is not benefitting the majority of the population.”
Many when confronted with this information will adopt a "blame the victim" mentality. So let's get this type of counter-argument out of way first.
Main Counter Argument: Black people are lazy, or irresponsible, or otherwise responsible for the wealth gap. If they just worked harder and stopped making excuses they would acquire more wealth and equality. This argument is generally completed with a statement that blacks should stop blaming slavery for their problems and just “get over it”.
However, research does not support the lazy argument. In fact, blacks have shown the ability to overcome immense odds, particularly in the attainment of education. Educational research indicates that blacks attain more years of education credentials than whites from families with comparable resources. In other words, blacks place a premium on education as a means of attaining wealth accumulation and work harder to make it happen.
Additionally, the perception that blacks do not work as hard as whites is also a myth. According to the U.S. Bureau of Labor, in 2019 whites worked an average of 42.6 hours per week, and blacks worked 41.9 hours per week. So when blacks are able to secure employment, it does not appear as if they work less.
So let us take an honest look at some of the real reasons for the wealth gap:
Black have never been welcomed/safe in all neighborhoods. The killing of Ahmaud Arbery showed the world what black people have known from the beginning, that not all neighborhoods are hospitable, or even safe for black people. Historically the neighborhoods we could live in were not serviced by the banking system. This made homeownership, as a medium of wealth creation impenetrable. Homeownership is the ticket to wealth for many white families. This wealth is passed on to generations and accumulated, no matter how small.
Whether because of redlining, or employment discrimination, for decades, blacks were not afforded the opportunity to acquire wealth through homeownership. The United States Federal Housing Administration allowed the use of discriminatory policies and de facto racist rules regarding home sales to Blacks. Redlining, which defined black communities as hazardous areas, thus reducing property values and increasing interest rates, resulted in a significant and current decrease in black homeownership and black wealth. This housing and lending discrimination against black lasted through the 20th and 21st centuries. With no availability of loan products available from banks to invest in these communities, property values declined and produced many of the areas we now refer to as ‘ghettos’.
Government Preferential Policies
Whites have been the overwhelming beneficiaries of government programs such as GI benefits in education, employment, entrepreneurship, and housing assistance. The greatest increase in white wealth in the American middle class, to the exclusion of blacks was the GI Bill. Before 1950, via the GI Bill, the American government spent millions on higher education. But most American colleges and universities excluded blacks applicants or were only open to accepting only but a few in token numbers.
In an article about the racial wealth gap, Fast Company indicates “…. it was never the case that a white asset-based middle class simply emerged. Rather, it was government policy, and to some extent literal government giveaways, that provided whites the finance, education, land, and infrastructure to accumulate and pass down wealth. In contrast, blacks were largely excluded from these wealth-generating benefits. When they were able to accumulate land and enterprise, it was often stolen, destroyed, or seized by government complicit theft, fraud, and terror.”
In closing, wealth inequality is fed and perpetuated by persistent racism in government policy and economic institutions. Until these inequalities and systems that have been in place for decades are fixed, these moments of hashtags and outrage will continue to fade and resume with each tragedy.
In closing, the writing of William Darity seemed to be a fitting conclusion to this discussion:
“The cause of the gap is found in structural characteristics of the American economy, heavily infused at every point with an inheritance of racism and the ongoing authority of white supremacy. Blacks cannot close the racial wealth gap by changing their individual behavior –i.e. by assuming more “personal responsibility” or acquiring the portfolio management insights associated with “financially literacy” – if the structural sources of racial inequality remain unchanged.
There are no actions that black Americans can take unilaterally that will have much of an effect on reducing the racial wealth gap. For the gap to be closed, America must undergo a vast social transformation produced by the adoption of bold national policies, policies that will forge a way forward by addressing, finally, the long-standing consequences of slavery, the Jim Crow years that followed, and ongoing racism and discrimination that exist in our society today.” Darity (2018).