Wealth Gap Between Blacks and Whites Increases Fourfold in a Generation

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Monday, May 17, 2010 at 5:19 pm

The gap between the wealth possessed by white and black families grew more than four times larger between 1984 and 2007 — and federal policy is only exacerbating the trend, according to a study released today by researchers at Brandeis University’s Institute on Assets and Social Policy.

Not to be confused with income, wealth is a measure of what you possess minus the debts you owe. In the 23-year span under review, researchers found, the median value of assets among whites jumped from $22,000 to $100,000, while the median value of holdings among blacks rose from $2,000 to just $5,000. And the researchers say that’s no accident.

Instead, they argue, the quickly growing racial wealth gap “reflects public policies, such as tax cuts on investment income and inheritances which benefit the wealthiest, and redistribute wealth and opportunities.”

“Tax deductions for home mortgages, retirement accounts, and college savings all disproportionately benefit higher income families,” they write.

And income levels can be deceiving. Indeed, researchers discovered that middle-income white households are much wealthier than upper-income black families.

[B]y 2007, the average middle-income white household had accumulated $74,000 in wealth, an increase of $55,000 over the 23-year period, while the average high-income African-American family owned $18,000, a drop of $7,000 That resulted in a wealth gap of $56,000 for an African-American family that earned more than $50,000 in 1984 compared to a white family earning about $30,000 that same year.

The findings “make it clear that higher income alone will not lead to increased wealth.”

Consumers of color face a gauntlet of barriers — in credit, housing and taxes — that dramatically reduce the chances of economic mobility.

The findings, researchers warn, have real-world repercussions.

“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,” IASP Director Thomas Shapiro, author of “The Hidden Costs of Being African American” and the co-author of “Black Wealth/White Wealth,” said in a statement announcing the study.

“A U-turn is needed,” he added. “Public policies have and continue to play a major role in creating and sustaining the racial wealth gap, and they must play a role in closing it.”

Food for thought as Congress considers how strong to make its Consumer Financial Protection Agency, and whether all the Bush tax cuts merit extension.

Comments

14 Comments

Now I’m Just Procrastinating « Gerry Canavan
Pingback posted May 17, 2010 @ 10:01 pm

[...] If we weren’t living in post-racial America, a statistic showing the wealth gap between blacks and whites increasing fourfold since 1984 would be pretty [...]


No way
Comment posted May 17, 2010 @ 11:26 pm

If Blacks making more money than whites still have less assets then Blacks should save more and spend less…or is that somehow not PC?

This article is bizarre. It treats Blacks as if they are children, incapible of making correct choices. Those upper income blacks get those same tax deductions….

I think the author and the researchers are just race baiting.


El hispano
Comment posted May 18, 2010 @ 1:13 am

I am hispanic and an immigrant. Was not born here but I have achieved success here in the US. A thriving business, and everything that comes with the American Dream. The problem I see here is not lack of opportunity for anyone, the problem here with both the African American Community and the hispanic community is one of dependency. One that says in order to fix our situation we must do it through Government. Problem is that government hardly ever fixes anything, all you have to do is look at history. People fix problems. The whole system here is set up to keep blacks and Hispanics dependent using the guise of help. Lowering standards and cajoling bad behaviors. Look at schools like The Promise Academy Charter School! This is a school set up by a Black man, who setup to create an environment where all excuses are thrown out the window. Well guess what? This school is putting most of their BLACK students in college. What is his formula? No excuses, no crutches. See the problem with the black community is not going to be solved through government, only the black community can fix its problems. We need more people like to listen to Bill Cosby, and more schools like Promise Academy. Check out http://www.hcz.org/programs/promise-academy-cha…


girammab
Comment posted May 18, 2010 @ 2:27 am

“Instead, they argue, the quickly growing racial wealth gap 'reflects public policies, such as tax cuts on investment income and inheritances which benefit the wealthiest, and redistribute wealth and opportunities.'”

It's not redistribution when people keep more of their own money.


Randomguy321
Comment posted May 18, 2010 @ 6:49 pm

I hope that the authors of the study address the complication of the housing bubble in their analysis. A possible complication arises due to the differing ability of those earning average income and their ability to procure favorably (i.e. non-ARM) termed mortgages. Based upon the fact that until 2008, the year following that of the data available to the authors, a house made up the largest share of assets for any income bracket.

Another interesting question arises from considering the $20,000 difference in wealth at the beginning of the time period. I could be suggested that this study only reinforces the tautology “you have to have money to make money.” The initial gap demonstrates that whites already have a solid foundation of inherited wealth that, at the very least, will be accumulating interest, or the corresponding indexed value increase of a given inherited asset. Until fairly recently, blacks were barred from acquiring the high income jobs necessary to facilitate savings and thus wealth creation.

Either way, both the authors and the previous commenters, primarily those concerned with the savings rates of high income blacks, raise interesting critiques of our social attitudes toward saving.


sjd0218
Comment posted May 19, 2010 @ 12:49 pm

The study is disturbing. However, like others who commented I feel like we are missing a piece of this puzzle. I agree generally that most of the tax cuts benefit the wealthiest. However, that does not explain the gap between the income levels of the two races. A lower income white family has more wealth. That would appear to represent something else.
a. Inherited Wealth – it is more likely that the white family had parents who had assets to leave.
b. Is it possible that the sample of the study did not account for age? It is my understanding that the growing middle class of african americans are younger. The older you are, the more time you have had to accumulate assets.
c. Is gap also explained by the difference in numbers. African Americans also represent a smaller percentage of the whole group than white middle class Americans. So their total income would be lower. Although I would think there are statistical ways to account for that – so it seems unlikely to be the problem.
d. Finally there is the possibility of a cultural issue – as noted by others. Is there more emphasis on saving and assets in a white community than in the black community? I don't know the answer to that question.


kenny and charles « me winning in guatemala
Pingback posted May 19, 2010 @ 2:23 pm

[...] living I wanted to share this recent study that can only be interpreted as a fucking bombshell. “Between 1984 and 2007 the median value of assets among whites jumped from $22,000 to $100,000… I really don’t think anyone expected the gap to be so [...]


5-19-2010 The Day in Review | F i a t Lux
Pingback posted May 19, 2010 @ 9:55 pm

[...] Lillis finds a growing gap between whites and [...]


Roger te White Guy
Comment posted May 20, 2010 @ 2:22 pm

I think it's the bling and the hubcaps. Blacks are excellent consumers, wannabes and showoffs. They're always dressed better than me (a white 40 yo guy) and drive more expensive cars even when they make less than I do. This “study” provides LAME explanations for the disparity. It's not the guvmnt. It's the people, stupid!


lincolndemocrat.com » Blog Archive » Our black Prez is the Antichrist of democracy
Pingback posted May 24, 2010 @ 10:45 pm

[...] impeached Warren for the Old South back in the 1960’s Obama would be shining shoes today and black Americans would be the better for it. Instead the South had to hold their noses and take over the Party of Lincoln, end anti usury laws [...]


Wealth Gap Between Blacks and Whites Increases Fourfold in a Generation
Pingback posted July 24, 2010 @ 10:30 pm

[...] during Brandeis University’s Institute upon Assets as well as Social Policy. Not to be co … Go to full stories LIVEROUTINES TO MIND, AUG. 23: BARNES & COURTIER, GAP AND DISCERN SAN FRANCISCO— Among [...]


Kevin Williams
Comment posted July 26, 2011 @ 9:14 pm

I think the article clearly identifies that most tax breaks, which by their nature cause a decrease in Government revenue, have been doled out to primarily wealthy whites. This is clearly a redistribution of wealth when the government then tries to make up for the short falls by taking needed programs from the poor. Primarily minority. Many of these programs are preventative measures that would make people healthier (saving us all money) helping people learn skills (so they can actually contribute, saving us money) Daycare and early learning (yup, you guessed it, saving us money) Etc……Yes, of course I am aware that there are people who take advantage of programs. But, since there is NOTHING in existence that people haven’t taken advantage of, the point is mute.  


Kevin Williams
Comment posted July 26, 2011 @ 9:17 pm

Oooops….MOOT. Gotta rush out to work. Got a little ahead of myself. Sorry.


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