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Wealth Gap Nearly Quadrupled for Whites, Blacks
Measured in 2007 dollars, the disparity in assets increased $75,000 on average, from $20,000 to $95,000 over the 23-year period. At least one in four black households had no assets.
According to the study, such an increase in negative wealth among African-Americans means they depend more frequently on credit and other forms of high cost debt, but many low-income and minority households are subjected to costly lending products as a result of their burgeoning debt.
"Our study shows a broken chain of achievement," said Thomas Shapiro, director of the Institute and co-author of the study. "Even when African Americans do everything right - get an education and work hard at well-paying jobs - they cannot achieve the wealth of their white peers in the workforce, and that translates into very different life chances."
The study found that even as white families saw their financial assets grow from a median value of $22,000 in 1984 to $100,000 in 2007, black families experienced only the slightest growth in wealth during this same period.
This was true even at higher income levels, with middle-income whites seeing their wealth levels increase from $55,000 to $74,000, while high-income African-Americans saw their wealth decrease $7,000 in the same period, to $18,000 in 2007. The study defined middle income as $40,000 to $70,000, in 2007 dollars. In general, wealth produced during this period "accrues primarily to highest income whites."
The authors say this shows higher incomes alone will not lead to increased wealth and security for African Americans, since consumers of color are subjected to "systemic bias that operates in racialized ways" in credit, housing and taxes - dramatically reducing their chances of achieving economic mobility.
One way around this problem, he said, is the establishment of a consumer financial protection agency that would ensure fairness for consumers of all financial products by "equaliz (ing) and regulariz(ing) the terms on which cash-strapped families are borrowing to make ends meet."
Shapiro said while he is in favor of the "general ideas that frame" the provisions for such an agency in the proposed financial reform bill, he hopes the agency would take on more of an advocacy role and have more autonomy than contained in the current proposal. Wealth building policies, he recommends, should carry provisions to "target...families of color."
27 Comments so far
Show All"Years of deregulation that led to an increase in high-cost loans is indirectly responsible for the quadrupling of the wealth gap between white and black Americans between 1984 and 2007"
I take umbrage with this "statistic"; although statisticians, politicians, and other "-icians" focus on middle class whites 99% of the time, there IS a LOWER CLASS consisting of hard-working Americans struggling just to get by in an economy from hell.
I, and many, MANY others are in this lower economic class and are treated as if there is no one "down here". Alan Grayson's new bill, #5353, would look out after us "lowlings" in a way that would be a real benefit BUT, because, by definition, it aids us in the economic cellar, I can't imagine it having a snowball's chance in August for it to get any media attention much less a chance at passage.
Yes, Virginia, there IS a lower economic class struggling to survive and causing financial hardship and a stifling of growth.
"I take umbrage with this "statistic"; although statisticians, politicians, and other "-icians" focus on middle class whites 99% of the time, there IS a LOWER CLASS consisting of hard-working Americans struggling just to get by in an economy from hell."
Yes, there is a lower class. That tends to be black. There is absolutely no assumption in these study that all whites are middle class. You can take umbrage as much as you want. It is still reality.
Hint, even when adjusted for education, blacks have lower income than whites. Across ALL levels of education.
"Yes, Virginia, there IS a lower economic class struggling to survive and causing financial hardship and a stifling of growth."
Yes, Virginia, there IS a lower economic class struggling to survive. That lower economic class tends to be black.
"That lower economic class tends to be black."
Where the hell do you live? Must be a city.
"the quadrupling of the wealth gap"
at least something is still growing in the economy...
Thanks, CD for posting this article.
Anyone still want to deny that racism is still a powerful institutional force in US society?
Thanks SaboCat. Was about to say the same.
Nope, I can't and won't deny that there is racism, BUT since I see so much information that black men are the majority in prison, then that leaves the black women holding the "cash poor" bag in the workplace.
Don't forget that the majority of working women of all classes and races make on average 77 cents to every male 1 dollar.
It's not just racism that affects income, but in the case of many workers, it's gender, and not just their class. or race.
Lily Ledbetter, how quickly you have forgotten her. ( almost as fast as the courts did!)
However, since the robbing of the middle class ( all races, classes and genders) I doubt that many of the statistics in this report are really accurate anymore.
When I read of corporations cutting salaries and experience, while shipping all kinds of jobs off shore, then we are soon to be left with 2 classes; those that GET, and the most populous class( which is most of us,) those who have BEEN HAD!
Just to be clear, the reason so many black men are in prison (typically on drug charges) is itself due to racism. Blacks are proportionally no greater drug users or dealers than white people - but the police focus on them lazer like in enforcement. Then, black men routinely receive prison sentences where whites in exactly the same circumstances get jail-time-served sentences and probation.
The statisticians, politicians, and other "icians" focus on middle class whites 99% of the time bedause this class evidences White superiority over the Blacks, Hispanics, Asians, and Jews. The lower class White population was, is, and will always be far more representative of this country than the middle-and upper middle class Whites. But the power elite never did, never does, and never will acknowledge you as a "brother." So if you are "down here," on the economic scale, you are simply not as White as you could be...whose fault is that?
That's why White people never help their own...if you were really White, you wouldn't need it. Use your privilege, use your power, use your superior traits and qualities to be among the elite. If you can't, then you are no better than the Blacks...
Trick is, how the least among us it treated determines how the most among us is entitled. When poor whites join the struggle for economic parity for minorities in this country, they will find themselves at a great advantage...
when you live like the Blacks do, why wouldn't you want them to live better?!?
"That's why White people never help their own...if you were really White, you wouldn't need it. Use your privilege, use your power, use your superior traits and qualities to be among the elite. If you can't, then you are no better than the Blacks..."
This is where the expression "white trash" comes from. It's about being white, but somehow not being connected to white families with money who can hire your offspring at high-paying cushy jobs.
Racism is a force in American society that is still very much with us (spend a day at work with me) but so is classism which still seems to be a far more taboo subject.
Nontheless, I wouldn't be a proponent of reparations if I believed that racism was dead. It's about more than slavery too.
"Even when African Americans do everything right - get an education and work hard at well-paying jobs - they cannot achieve the wealth of their white peers in the workforce, and that translates into very different life chances."
How many Americans in general are actually doing that, at least not without accruing large amounts of debt?
Where is all this "wealth building"? What "financial assets"?
Isn't all lending rather unfair? I really don't know why anyone should be encouraged to take on more debt, blacks included.
This is class war.
Without a doubt, the blacks have been systematically held down. Same as the reds, the yellows, and the majority of whites. It is all about wearing people down to submission. The blacks have as much cause for revolt as anybody. When I was born, they couldn't vote. They are tolerated as long as they stay in the inner cities/ghettos. The reds, as long as they don't wander off the reservation. The po' white trash as long as they stay in the trailer parks.
We are in this together and these divisions must be bridged if the chains of capitalism are to be thrown off.
The MSM won't report this story and NPR(Non-Performing Radio)is just as worthless since going corporate to stay afloat. We must support net neutrality and keep some channels open. Too, too many are willing to sit on the fence. The would rather lose their money to the rich in increments than rock the boat. So many cowards, so many low-info voters and so little time to turn things around. Good post.
There's a massive wealth transfer going on as we lose the WW2 generation. But, because of race and sex discrimination, it's mostly going on among White families who were in a position to take advantage of the US's complete post-war economic hegemony.
That wealth transfer creates an almost permanent advantage, an advantage that can *never* be overcome by hard work.
Which is why, in fairness, we need to permanently level the field. Classism should never be a factor in whether someone gets what they need in life.
If the politicians have their way and campaigns are not publicly financed 70% of whites will soon be sayin' " We are all poor black Americans now! " The rich have bought the gov't and as Bob Dole said, during an election no less, " the poor don't have lobbyists. " Obama has done nothing to address this disparity and Congress continues to cut tax rates and deals for guys who risk our money and not their own. We must have more Sanders and Feingolds and Sherrod Browns in the Senate and fewer Liebermans and Nelsons. The Senate must be changed and pronto. Civil protests and rallies can change things. Insurgent candidates are making some difference. Don't get arrested, just get angry, really angry.
Good post Buck.
I sympathize with all you commondreams readers struggling to get by. It's not an easy struggle to earn a living wage in these hard times. Still, this poverty is nowhere near as bad as systematic racism. The slurs and demeaning treatment may have mostly left, but the communal attitudes are deeply ingrained against African Americans. Their wealth is a fraction of whites', and has been trending strongly downward since 1980 or so, a time when America retained most of its manufacturing jobs, a situation that benefited AAs.
America's financial elite have been shorting the Middle Class for years. They pushed for the "globalization" which decimated our manufacturing sector. The ultrawealthy have seen their slice of the pie expand hugely --see these astounding graphs here:
http://globalresearch.ca/index.php?context=va&aid=19060
Meanwhile the rest of us must feed our families on whatever scraps fall from our economic masters' tables. We're going feudal and the working classes are the new serfs/peasants.
The poor need to educate themselves and unite in opposing their exploitation. I don't mean grabbing traditional degrees, which can help, but rather a self-education in the art of political and economic self-survival. By combating ignorance, the disenfranchised have a chance at a better life. By taking collective action, we the people who are far more numerous can assert our rightful position atop the political hierarchy.
The master class will divide us in order to control us. Fear will be a weapon that will keep people vulnerable and easy to manipulate. So DON"T BE AFRAID. Knowledge can overcome ignorance, and we're going to need a lot more teaching and listening. TIme to open up the writing of Martin Luther King and Malcolm X. Their knowledge and advice can prevent a great deal of suffering and give renewed focus and direction once put into a way of living.
We'll need to rely more on each other. Barter. I've been reading a lot about urban gardening. And avoiding poor dietary choices is a vital part of self-sufficiency. Exercise, Take full responsibility for what you can control and tap something bigger than yourself--spiritual, friends, partners, etc.--when it gets too hard to manage all alone, because we aren't alone. We're in this together. Namaste.
"Even when African Americans do everything right - get an education and work hard at well-paying jobs - they cannot achieve the wealth of their white peers in the workforce"
I could see racism as making it harder for black to get well paying jobs, but once they have them, how is it that they can't achieve wealth? Things like PayDay loans, ARM mortgages, and other low income scams shouldn't apply when they are educated and have well paying jobs.
Could it be the African American culture needs to put more emphasis on spending less and saving more? The hip hop culture emphasizes materialism (flashy cars, living large) somewhat more than their white counterparts. No I am not a racist, as I don't think one race is superior or deserves less respect than any other, just pointing out differences (in my opinion) in cultures that may be part of the reason for this discrepancy. Perhaps fear of being labeled a racist is why no one discusses this aspect.
As a friend of mine once put it: if you're Black, nobody's going to steer you away from or red-line you out of buying a flashy car. But buying a house in an upscale neighborhood? Different story.
It's well-documented that Black folk, regardless of class, pay more and get less. This is a frequently-reported scandal in healthcare, but it also applies to every other area, from mortgage rates to car repair. As with healthcare, from time to time some new researcher will discover and report one or more areas of discrimination, but somehow it never stops. Simply put, the cost of living is higher if you're Black. (In the '70s, women noted that a similar phenomenon affected us: we paid more than men do for comparable goods and services. Sometimes *much* more.)
And Black folk tend to have larger networks of family and friends, who statistically will often stand in need of, and expect, financial help to pay for medical care, fee a lawyer to defend against a "...ing While Black" roust, fill in the gap in unemployment comp, etc.
Mairead you make good points. I'd be interested if you have any links, or I will attempt to research it myself. My last mortgage broker was black, so perhaps shopping around for a black mortgage broker, mechanic, etc, will help alleviate any such racial based price hiking. Though admitingly its easier said than done, especially in health care since most hospitals are white run.
Here're 3 to bumpstart you, GG:
http://blackhomeownernews.com/nlblackspaymost.html
http://www.blackenergy.com/amandla/blacks-pay-more-for-utilities/
http://www.thegrio.com/opinion/blacks-and-latinos-not-out-of-the-woods-yet-on-health-care.php
This one is on the racism-mediated intergenerational-transfer differential:
http://economix.blogs.nytimes.com/2010/05/17/wealth-race-and-the-great-recession/
Thanks for the links, I've checked out the first two.
http://blackhomeownernews.com/nlblackspaymost.html
"For many reasons black homeowners are less likely to negotiate, bargain or comparison-shop. Failing to negotiate and comparison shop is a formula for paying the highest prices when it comes to purchasing home improvements and repairs. According to the study, black homeowners who settle for the higher price wanted to get it done as quick, convenient and affordable as possible. The cost resulted in a higher price for the home improvement and/repair...They often pay higher prices than Whites, Hispanics and Asians, who are more willing to negotiate, bargain and comparison shop before making a buying decision."
That doesn't seem to be a racial price hiking issue, but of a cultural or personal preference issue.
http://www.blackenergy.com/amandla/blacks-pay-more-for-utilities
"Blacks do pay more for utilities, but not because we get different rates or a special energy tax. It’s because, since the 1980s, we use more. "
Then they go on to say its because of the higher prevalence of living in cheaper housing which are less well insulated, requiring more heating / cooling energy. But that's true for any low income people regardless of race.
I'm not saying there isn't a strong bias against blacks in this economy, I just think sometimes we say its a black issue when its more of a low income issue or cultural difference. The second two areas for improvement are often neglected when we concentrate solely on the race issue.
Interesting that we take such different messages from the articles.
I'll read the rest of the articles later tonight, but from my skimming of the first two, they gave other reasons besides racism for the higher costs to Black folks in those cases.
Not that I don't believe racism is a big part of the overall price differences, but as those two articles show, there can be other non racist reasons as well. That's the only point I'm trying to make, while I still concede the validity of yours.
http://www.universityofcalifornia.edu/news/article/6398
http://www.medicalnewstoday.com/articles/158828.php
http://www.medpagetoday.com/PublicHealthPolicy/Ethics/19030
"Could it be the African American culture needs to put more emphasis on spending less and saving more? The hip hop culture emphasizes materialism (flashy cars, living large) somewhat more than their white counterparts. No I am not a racist, as I don't think one race is superior or deserves less respect than any other, just pointing out differences (in my opinion) in cultures that may be part of the reason for this discrepancy. Perhaps fear of being labeled a racist is why no one discusses this aspect."
Hip-hop has its underbelly just like everything else, and many Americans, not just blacks, suffer from the same problem.
There was (or its coming up) a "Hip Hop Summit" fairly near me where the issue of materialism was slated to be one of the topics discussed.
Lower-income and working-class people often want to feel accepted, to put on appearances, so they buy big trucks, fancy clothes, etc.
I went to an urban high school, and the poor and blue-collar kids were usually the biggest fashionplates since their parents would rack up credit card bills getting them the latest clothes. People want to make impressions and have some joy in their lives. Poorer people drink more, smoke more cigarettes. They have more stress in their lives and need to feel good here and there to keep going.
I was happy with my long hair, heavy metal tees, and jeans. I wore my dad's old army jacket for a time.
I get annoyed with the whole Suze Orman "save not spend" lecture. The more money you make, the easier it is to set some of it aside. Not that people shouldn't save their money and spend less, but I don't think you can tell people that until you change the system first, so that it's easier for them to save money.
It's not about discipline. It's about economic justice.