First of three articles.
In her 2018 book, “Give People Money,” the journalist Annie Lowrey delivered a stinging criticism of the ways in which the United States has essentially won the race to the bottom when it comes to distribution of wealth:
“We tolerate levels of poverty that are grotesque and entirely unique among developed nations.”
She was speaking not just about cold hard cash and other forms of wealth, but also about the way race still shapes who is preposterously rich and who remains predictably poor.
It’s likely that you’ve seen the statistics: The median white family has 41 times more wealth than the median African-American family and 22 times more wealth than the median Latino family. And things are getting worse, not better: The proportion of black families with zero or negative wealth rose by 8.5 percent to 37 percent between 1983 and 2016.
Native American median household income is similar to that of black households. Nearly 34 percent of Native American children live in poverty (in contrast to 10 percent of white children), according to the most recent publicly available data.
The economic precariousness among Americans has become notoriously widespread, but it’s the worst for African-Americans without a high school diploma, over half of whom couldn’t handle an unexpected expense as low as $400 with their current income.
But the statistics only tell the surface story. There is real psychological, social and even moral side effects of this enduring gap. Milicent Johnson, the San Francisco planning commissioner who has led many efforts to address economic inequality, describes the daily toll that the racial wealth gap has had in her own life. Even as she has transcended the poverty of her childhood, the weight remains: “The feeling that the bottom could always drop out of your financial life, and the ever-present knowledge that you’re likely not in the same boat as your white peers, even if you appear to have the same level of professional success, takes a daily toll.”
She continued, “It also means that every negotiated dollar in salary, every job title and career move, every financial decision comes with the weight of trying to make up for a historic gap that feels impossible to bridge.”
Feels impossible to bridge. But is it? After talking with a wide range of experts, here’s what I learned about the building of that elusive bridge:
There is no buying your way out of racism
Understanding the racial wealth gap requires stepping back and asking some fundamental questions. First: What is wealth and what is it for?
According to Solana Rice, a co-founder of the nonprofit organization Liberation Within a Generation, wealth is deeply misunderstood in the popular conversation. “No one thinks they have wealth and no one really knows how it’s generated,” she said.
Wealth is technically the value of your assets, minus your debts. You accumulate it by inheriting and earning money, and then doing things with that money that compounds its value — investing in a home, for starters: According to the National Association of Home Builders, primary residences accounted for about one-quarter of Americans’ overall wealth in 2016, more than any other financial asset.
But that’s just the tip of the iceberg. The value of wealth is accurately measured only in how much it improves our quality of life. Can we protect those we love? Can we support them to be healthy? Can we pursue work where we feel respected and find meaning?
The default, when policy wonks and journalists usually discuss these issues, is to assume that wealth accumulation is automatically good. If black people have more money, they will have more options. Problem solved.
Yes and no, say some of today’s most thoughtful experts. If more people of color, particularly black and Native American (who have been the most systematically disenfranchised), get more money but are operating within our current state of affairs, they are still vulnerable.
Can they protect those they love? Money can’t buy an unbiased police force or criminal justice system. Neither can status. The Harvard professor Henry Louis Gates was arrested while entering his own home.
Can they support their loved ones to be healthy? They can probably afford better health care, but as just one example, studies show that even college-educated black women are more likely to suffer severe complications of pregnancy or childbirth than white women who never graduated from high school.
Can they pursue work where they feel respected and find meaning? Theoretically, but with the dramatic weakening of unions over the past few decades and the professional world being so dominated by white norms and networks, they’ll still have an uphill battle. As just one example: résumés with names associated with low-income African-Americans are 30 percent less likely to produce callbacks than those with names that could be assumed to belong to whites, according to researchers.
In other words, racism eats wealth for breakfast.
And what’s more, Ms. Rice reminds us, operating as if having more African-American or Native American “winners” in our current system of capitalism isn’t the point: “Part of the work ahead is actually to develop a new version of capitalism that is functional and fair. That would benefit absolutely everybody, not just people of color.”
Improving individual behavior misses the point
Individually oriented solutions — like financial coaching and increasingly popular children’s savings accounts — are well intentioned but incomplete when it comes to closing the racial wealth gap. They are often based on a false and widely held assumption: that people of color don’t save money as whites do. A preponderance of peer-reviewed articles proves otherwise.
A study conducted by the Institute on Assets and Social Policy, using the 2013 Survey of Consumer Finances, found that at comparable levels of income, whites spend 1.3 times more than blacks. Another study found that black families actually have a slightly higher savings rate than their white counterparts, controlling for income levels.
“Too many interventions conflate aspirational behavior with solving something that is deeply structural,” said Anne Price, president of the Insight Center for Economic Community Development. “It perpetuates the lie that there’s no role for the public sector to play, that the solution is individual.”
Nonpredatory financial institutions, and the wealth-building mechanisms they provide, are critical. Self-Help Credit Union, for example, specifically aims to serve those “underserved by conventional lenders.” In its 38 years, it has financed over $8.5 billion to borrowers, 82 percent of whom are from low-income backgrounds and 61 percent of whom are people of color.
According to the F.D.I.C., 16.9 percent of black Americans are entirely unbanked. (For comparison, only 3 percent of white Americans are unbanked.) Thirty percent of the unbanked said they don’t trust banks, and another quarter said they want to avoid fees that they see as too high, too unpredictable or both. Unsurprisingly, 52 percent cited “not having enough money to keep in an account” as the top reason.
Reparations aren’t just an economic prospect but also a moral one
Why don’t people of color, particularly black and Native American, have more money?
All roads lead back to what Americans might think of as their country’s original economic sins: colonization and slavery.
The call for reparations has widened in recent years — first and most convincingly by Ta-Nehisi Coates in his 2014 Atlantic magazine cover story, and more recently by the self-described “slow convert” David Brooks, a few 2020 presidential hopefuls and even Trevor Noah, host of “The Daily Show,” in a viral video in which he explains to a member of his audience why they’re necessary.
Closing the racial wealth gap is not just about addressing these historic injustices monetarily, but also morally. “While we’re devising new economic formulas to equitability redistribute wealth, we must also address the required shift in hearts and minds,” said Edgar Villanueva, author of “Decolonizing Philanthropy.” “We have to be willing to examine the dark realities of what led us to this imbalance in the first place.”
But if reparations feels far-fetched — only about a quarter of the American public is in favor — a moral healing of some sort feels outlandish. The only models that experts point to are truth-and-reconciliation commissions, most famously operating in South Africa from 1995 to 2002. The commission there recommended that victims of apartheid receive 2‚000 rands per month, equivalent to $142, for a period of six years, but many of the applicants still haven’t received a dime.
Closer to home, the opening of the National Memorial for Peace and Justice a year ago in Montgomery, Ala., has struck many as a first step in the United States’ nascent attempt to reckon with our collective past, but it involved no economic component. The Institute for Policy Studies recently published a report calling for a congressional committee on reparations, among other policy solutions.
Before we can heal, we have to stop the bleeding
Another important reason that closing the racial wealth gap is not simply a matter of improving incomes for people of color is “wealth-stripping.” This is an academic term for a hidden scourge: payday and corrupt mortgage lenders, rent-to-own stores and all the other entities that prey on people experiencing poverty.
In 1996, the economist John Caskey wrote a book,” “Fringe Banking: Check-Cashing Outlets, Pawnshops, and the Poor,” that popularized the term “wealth-stripping.” Over 20 years later, he reflects: “Reforms following the financial crisis have largely eliminated some of the most egregious practices related to subprime lending. Aside from this, things are about the same.”
The Consumer Financial Protection Bureau, which was created in 2011 — a big win for those fighting “wealth-stripping” — has been gutted in the Trump era. What’s more, the bureau doesn’t have anything to do with one of the most pernicious “wealth-stripping” systems in America: the courts.
The well-documented rise in mass incarceration throughout the late 1990s didn’t only contribute to high unemployment rates among black men. A lesser-known consequence has been the debt incurred by poor families because of fines and fees.
According to an analysis by NPR, since 2010 48 states have either increased their criminal fees. One example: According to researchers at the University of North Carolina, fees have risen by 400 percent in the state. A full 20 percent of people incarcerated in a county jail in North Carolina are there for failure to pay their fines and fees.
It’s easy to feel despondent after digging into this issue, and yet there are a wide-range of responses right now in the United States aimed at addressing it. In the coming weeks, I will explore some of these, starting with an unprecedented effort in San Francisco to end one of the country’s most pernicious forms of “wealth-stripping.” Meanwhile, please add responses to the racial wealth gap that you think deserve coverage in our comments section.
Courtney E. Martin, a co-founder of the Solutions Journalism Network, which supports reporting about responses to social problems, is the author of five books, including “Do It Anyway:The New Generation of Activists.”
To receive email alerts for Fixes columns, sign up here.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.
Source: Read Full Article
Home » Analysis & Comment » Opinion | Closing the Racial Wealth Gap
Opinion | Closing the Racial Wealth Gap
First of three articles.
In her 2018 book, “Give People Money,” the journalist Annie Lowrey delivered a stinging criticism of the ways in which the United States has essentially won the race to the bottom when it comes to distribution of wealth:
“We tolerate levels of poverty that are grotesque and entirely unique among developed nations.”
She was speaking not just about cold hard cash and other forms of wealth, but also about the way race still shapes who is preposterously rich and who remains predictably poor.
It’s likely that you’ve seen the statistics: The median white family has 41 times more wealth than the median African-American family and 22 times more wealth than the median Latino family. And things are getting worse, not better: The proportion of black families with zero or negative wealth rose by 8.5 percent to 37 percent between 1983 and 2016.
Native American median household income is similar to that of black households. Nearly 34 percent of Native American children live in poverty (in contrast to 10 percent of white children), according to the most recent publicly available data.
The economic precariousness among Americans has become notoriously widespread, but it’s the worst for African-Americans without a high school diploma, over half of whom couldn’t handle an unexpected expense as low as $400 with their current income.
But the statistics only tell the surface story. There is real psychological, social and even moral side effects of this enduring gap. Milicent Johnson, the San Francisco planning commissioner who has led many efforts to address economic inequality, describes the daily toll that the racial wealth gap has had in her own life. Even as she has transcended the poverty of her childhood, the weight remains: “The feeling that the bottom could always drop out of your financial life, and the ever-present knowledge that you’re likely not in the same boat as your white peers, even if you appear to have the same level of professional success, takes a daily toll.”
She continued, “It also means that every negotiated dollar in salary, every job title and career move, every financial decision comes with the weight of trying to make up for a historic gap that feels impossible to bridge.”
Feels impossible to bridge. But is it? After talking with a wide range of experts, here’s what I learned about the building of that elusive bridge:
There is no buying your way out of racism
Understanding the racial wealth gap requires stepping back and asking some fundamental questions. First: What is wealth and what is it for?
According to Solana Rice, a co-founder of the nonprofit organization Liberation Within a Generation, wealth is deeply misunderstood in the popular conversation. “No one thinks they have wealth and no one really knows how it’s generated,” she said.
Wealth is technically the value of your assets, minus your debts. You accumulate it by inheriting and earning money, and then doing things with that money that compounds its value — investing in a home, for starters: According to the National Association of Home Builders, primary residences accounted for about one-quarter of Americans’ overall wealth in 2016, more than any other financial asset.
But that’s just the tip of the iceberg. The value of wealth is accurately measured only in how much it improves our quality of life. Can we protect those we love? Can we support them to be healthy? Can we pursue work where we feel respected and find meaning?
The default, when policy wonks and journalists usually discuss these issues, is to assume that wealth accumulation is automatically good. If black people have more money, they will have more options. Problem solved.
Yes and no, say some of today’s most thoughtful experts. If more people of color, particularly black and Native American (who have been the most systematically disenfranchised), get more money but are operating within our current state of affairs, they are still vulnerable.
Can they protect those they love? Money can’t buy an unbiased police force or criminal justice system. Neither can status. The Harvard professor Henry Louis Gates was arrested while entering his own home.
Can they support their loved ones to be healthy? They can probably afford better health care, but as just one example, studies show that even college-educated black women are more likely to suffer severe complications of pregnancy or childbirth than white women who never graduated from high school.
Can they pursue work where they feel respected and find meaning? Theoretically, but with the dramatic weakening of unions over the past few decades and the professional world being so dominated by white norms and networks, they’ll still have an uphill battle. As just one example: résumés with names associated with low-income African-Americans are 30 percent less likely to produce callbacks than those with names that could be assumed to belong to whites, according to researchers.
In other words, racism eats wealth for breakfast.
And what’s more, Ms. Rice reminds us, operating as if having more African-American or Native American “winners” in our current system of capitalism isn’t the point: “Part of the work ahead is actually to develop a new version of capitalism that is functional and fair. That would benefit absolutely everybody, not just people of color.”
Improving individual behavior misses the point
Individually oriented solutions — like financial coaching and increasingly popular children’s savings accounts — are well intentioned but incomplete when it comes to closing the racial wealth gap. They are often based on a false and widely held assumption: that people of color don’t save money as whites do. A preponderance of peer-reviewed articles proves otherwise.
A study conducted by the Institute on Assets and Social Policy, using the 2013 Survey of Consumer Finances, found that at comparable levels of income, whites spend 1.3 times more than blacks. Another study found that black families actually have a slightly higher savings rate than their white counterparts, controlling for income levels.
“Too many interventions conflate aspirational behavior with solving something that is deeply structural,” said Anne Price, president of the Insight Center for Economic Community Development. “It perpetuates the lie that there’s no role for the public sector to play, that the solution is individual.”
Nonpredatory financial institutions, and the wealth-building mechanisms they provide, are critical. Self-Help Credit Union, for example, specifically aims to serve those “underserved by conventional lenders.” In its 38 years, it has financed over $8.5 billion to borrowers, 82 percent of whom are from low-income backgrounds and 61 percent of whom are people of color.
According to the F.D.I.C., 16.9 percent of black Americans are entirely unbanked. (For comparison, only 3 percent of white Americans are unbanked.) Thirty percent of the unbanked said they don’t trust banks, and another quarter said they want to avoid fees that they see as too high, too unpredictable or both. Unsurprisingly, 52 percent cited “not having enough money to keep in an account” as the top reason.
Reparations aren’t just an economic prospect but also a moral one
Why don’t people of color, particularly black and Native American, have more money?
All roads lead back to what Americans might think of as their country’s original economic sins: colonization and slavery.
The call for reparations has widened in recent years — first and most convincingly by Ta-Nehisi Coates in his 2014 Atlantic magazine cover story, and more recently by the self-described “slow convert” David Brooks, a few 2020 presidential hopefuls and even Trevor Noah, host of “The Daily Show,” in a viral video in which he explains to a member of his audience why they’re necessary.
Closing the racial wealth gap is not just about addressing these historic injustices monetarily, but also morally. “While we’re devising new economic formulas to equitability redistribute wealth, we must also address the required shift in hearts and minds,” said Edgar Villanueva, author of “Decolonizing Philanthropy.” “We have to be willing to examine the dark realities of what led us to this imbalance in the first place.”
But if reparations feels far-fetched — only about a quarter of the American public is in favor — a moral healing of some sort feels outlandish. The only models that experts point to are truth-and-reconciliation commissions, most famously operating in South Africa from 1995 to 2002. The commission there recommended that victims of apartheid receive 2‚000 rands per month, equivalent to $142, for a period of six years, but many of the applicants still haven’t received a dime.
Closer to home, the opening of the National Memorial for Peace and Justice a year ago in Montgomery, Ala., has struck many as a first step in the United States’ nascent attempt to reckon with our collective past, but it involved no economic component. The Institute for Policy Studies recently published a report calling for a congressional committee on reparations, among other policy solutions.
Before we can heal, we have to stop the bleeding
Another important reason that closing the racial wealth gap is not simply a matter of improving incomes for people of color is “wealth-stripping.” This is an academic term for a hidden scourge: payday and corrupt mortgage lenders, rent-to-own stores and all the other entities that prey on people experiencing poverty.
In 1996, the economist John Caskey wrote a book,” “Fringe Banking: Check-Cashing Outlets, Pawnshops, and the Poor,” that popularized the term “wealth-stripping.” Over 20 years later, he reflects: “Reforms following the financial crisis have largely eliminated some of the most egregious practices related to subprime lending. Aside from this, things are about the same.”
The Consumer Financial Protection Bureau, which was created in 2011 — a big win for those fighting “wealth-stripping” — has been gutted in the Trump era. What’s more, the bureau doesn’t have anything to do with one of the most pernicious “wealth-stripping” systems in America: the courts.
The well-documented rise in mass incarceration throughout the late 1990s didn’t only contribute to high unemployment rates among black men. A lesser-known consequence has been the debt incurred by poor families because of fines and fees.
According to an analysis by NPR, since 2010 48 states have either increased their criminal fees. One example: According to researchers at the University of North Carolina, fees have risen by 400 percent in the state. A full 20 percent of people incarcerated in a county jail in North Carolina are there for failure to pay their fines and fees.
It’s easy to feel despondent after digging into this issue, and yet there are a wide-range of responses right now in the United States aimed at addressing it. In the coming weeks, I will explore some of these, starting with an unprecedented effort in San Francisco to end one of the country’s most pernicious forms of “wealth-stripping.” Meanwhile, please add responses to the racial wealth gap that you think deserve coverage in our comments section.
Courtney E. Martin, a co-founder of the Solutions Journalism Network, which supports reporting about responses to social problems, is the author of five books, including “Do It Anyway:The New Generation of Activists.”
To receive email alerts for Fixes columns, sign up here.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.
Source: Read Full Article