Whites Five Times Richer Than Blacks In U.S

Byrnzie

Interesting article. Seems there's more work to be done than just voting in a black President...

http://www.guardian.co.uk/world/2010/ma ... cher-black

A $95,000 question: why are whites five times richer than blacks in the US?

• Study finds gaping racial divide in household assets
• Economic policies blamed for growing inequality

* Chris McGreal in Washington
* guardian.co.uk, Monday 17 May 2010


A huge wealth gap has opened up between black and white people in the US over the past quarter of a century – a difference sufficient to put two children through university – because of racial discrimination and economic policies that favour the affluent.

A typical white family is now five times richer than its African-American counterpart of the same class, according to a report released today by Brandeis University in Massachusetts.

White families typically have assets worth $100,000 (£69,000), up from $22,000 in the mid-1980s. African-American families' assets stand at just $5,000, up from around $2,000.

A quarter of black families have no assets at all. The study monitored more than 2,000 families since 1984.

"We walk that through essentially a generation and what we see is that the racial wealth gap has galloped, it's escalated to $95,000," said Tom Shapiro, one of the authors of the report by the university's Institute on Assets and Social Policy.

"That's primarily because the whites in the sample were able to accumulate financial assets from their $22,000 all the way to $100,000 and the African-Americans' wealth essentially flatlined."

The survey does not include housing equity, because it is not readily accessible and is rarely realised as cash. But if property were included it would further widen the wealth divide.

Shapiro says the gap remains wide even between blacks and whites of similar classes and with similar jobs and incomes.

"How do we explain the wealth gap among equally-achieving African-American and white families? The same ratio holds up even among low income groups. Finding ways to accumulate financial resources for all low and moderate income families in the United States has been a huge challenge and that challenge keeps getting steeper and steeper.

"But there are greater opportunities and less challenges for low and moderate income families if they're white in comparison to if they're African-American or Hispanic," he said.

America has long lived with vast inequality, although 40 years ago the disparity was lower than in Britain.

Today, the richest 1% of the US population owns close to 40% of its wealth. The top 25% of US households own 87%.

The rest is divided up among middle and low income Americans. In that competition white people come out far ahead.

Only one in 10 African-Americans owns any shares. A third do not have a pension plan, and among those who do the value is on average a fifth of plans held by whites.

Shapiro says one of the most disturbing aspects of the study is that wealth among the highest-income African-Americans has actually fallen in recent years, dropping from a peak of $25,000 to about $18,000, while among white counterparts of similar class and income it has surged to around $240,000.

In 1984, high-income black Americans had more assets than middle-income whites. That is no longer true.

"I'm a pretty jaded and cynical researcher in some way, but this was shocking, quite frankly, a really important dynamic," said Shapiro. "This represents a broken chain of achievement. In the United States context, when we are thinking about racial equality and the economy we have focused for a long time on equal opportunity.

"Equal opportunity assumes that some people who have that opportunity are going to have pretty high achievements in terms of their jobs, their work, their income, their home ownership.

"The assumption in a democracy is that merit and achievement are going to be rewarded and the rewards here are financial assets. We should see some rough parity and we don't."

The report attributes part of the cause to the "powerful role of persistent discrimination in housing, credit and labour markets. African-Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes," the report says.

Although many black families have moved up to better-paying jobs, they begin with fewer assets, such as inheritance, on which to build wealth. They are also more likely to have gone into debt to pay for university loans.

"African-Americans, before the 1960s, first by law and then by custom, were not really allowed to own businesses. They had very little access to credit. There was a very low artificial ceiling on the wealth that could be accumulated. Hence there was very little, if anything, that could be passed along to help their children get to college, to help their children buy their first homes, or as an inheritance when they die," said Shapiro.

Since the 1980s, US administrations have also geared the tax system to the advantage of the better off. Taxes on unearned income, such as shares and inheritance, fell sharply and are much lower than taxes on pay.

"The more income and wealth people had, the less it was taxable," said Shapiro.

There were also social factors, the study found. "In African-American families there is a much larger extended network of kin as well as other obligations. From other work we've done we know that there's more call on the resources of relatively well-off African-American families; that they lend money that's not given back; they help cousins go to school. They help brothers and sisters, aunts and uncles, with all kinds of legal and family problems," said Shapiro.

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Great article - thanks for posting!

Jason P

That was a long article, but I have a few comments. First, I’m not sure what correlation Mr. McGreal was trying to point out with the inheritance tax. If we raise it, will every ethnic group’s prosperity increase? Or does the last paragraph imply that if it is lowered then African-American’s standard of living will increase because more money will be distributed within their families.

Nonetheless, this is my point of view. For all of us that were not born into Daddy Warbuck’s clan, the Inheritance Tax (or “Your Loved One Just Died, Now Give Us Some Money Tax”) = Double Taxation. Several countries have abolished it and the U.S. should be next in line.

cincybearcat

Byrnzie wrote:

There were also social factors, the study found. "In African-American families there is a much larger extended network of kin as well as other obligations. From other work we've done we know that there's more call on the resources of relatively well-off African-American families; that they lend money that's not given back; they help cousins go to school. They help brothers and sisters, aunts and uncles, with all kinds of legal and family problems," said Shapiro.

Interesting.

I believe the above is also part of the normal culture for people from Mexico. For example, a friend of my wife's is Mexican, works in Mexico for a good company, and is from a middle to higher class family. His sister was studying to be a doctor (I believe some sort of eye specialist). He paid for her higher education, and it was pretty much assumed that since he had a good job and she was family that it was his obligation.

It sounds nice, but it can also lead to problems. But it is certainly admirable to help others out.

So the question is, how much is due to an inability to get wealth (lower pay, jobs unavailable, etc.) and how much of the disparity is due to the culture of sharing your wealth with a MUCH extended family?

I'll have to read again if it was comparing families of the same size as well.

catefrances

whites 5x richer than blacks......... how many times more whites are there than blacks in the US??????????

mikepegg44

Some real discussion needs to be done about this without the fear of being called racist. Without that, our government leaders will never be able to do anything to ensure that the racial divide gets smaller and that all Americans are encouraged to take advantage of all the opportunities that come their way. I would love to see the 2000 random families they chose for this and in what areas of the country they were from, would be interesting to see if it was a sample from only major metropolitan areas or if they hit the out state areas, or simply if they just chose completely randomly. Do you have a link to the actual study?

know1

Good article, but my question is did they say how they identified people as white or black? I've still never seen a quantifiable definition.

Jason P

Below is the link to the Brandeis University page on the report

http://iasp.brandeis.edu/pdfs/Racial-Wealth-Gap-Brief.pdf

The report was headed by Thomas Shapiro, head of the IASP (Institute on Assets and Social Policy) at Brandies. Their main point was that “Discrimination persists in housing, credit and labor markets“. He defines wealth as what you own minus what you owe. In the report it states that “by 2007, the average middle-income white household accumulated $74K". But in another report, (http://iasp.brandeis.edu/pdfs/bat_2000-2006.pdf), the IASP claims that “76% of American middle class households are not financially secure.”

So that does raise questions on who their test group consisted of. If white middle-class Americans have $74 - $95K in wealth, how could 76% of middle-class households not be financially secure?

gimmesometruth27

nope....no racial inequality in this country..... :roll:

mikepegg44

gimmesometruth27 wrote:

nope....no racial inequality in this country..... :roll:

I don't think anyone would argue against that point, I think the bigger question is why

LikeAnOpeningBandForTheSun

you have to have money to make money. i dont think it has much to do with race. thats the way its always been, why would it change in the last 50 years?

plus its probably skewed by the huge and disproportionate earnings of the top 1% or so, which is almost entirely white I'm sure.

Eliot Rosewater

mikepegg44 wrote:

gimmesometruth27 wrote:

nope....no racial inequality in this country..... :roll:

I don't think anyone would argue against that point, I think the bigger question is why

Because humans are disgusting and greedy animals. Really, we have the ability to be better than this....it's fucking ridiculous.

cincybearcat

Again, this is about the accumulation of wealth, so not just making money, but keeping it.

know1

cincybearcat wrote:

Again, this is about the accumulation of wealth, so not just making money, but keeping it.

Good point. Most of my co-workers make salaries similar to mine but seem to be living paycheck to paycheck due to overspending and debt. It actually takes some self-restraint to accumulate wealth.

Kel Varnsen

mikepegg44 wrote:

gimmesometruth27 wrote:

nope....no racial inequality in this country..... :roll:

I don't think anyone would argue against that point, I think the bigger question is why

I would also be curious how african-americans compare to people with other ethnic backgrounds. So whites are 5 times richer than blacks, but how do blacks compare to say chinese americans?

Byrnzie

mikepegg44 wrote:

Do you have a link to the actual study?

No, just got it from the Guardian page.

mikepegg44

Eliot Rosewater wrote:

mikepegg44 wrote:

gimmesometruth27 wrote:

nope....no racial inequality in this country..... :roll:

I don't think anyone would argue against that point, I think the bigger question is why

Because humans are disgusting and greedy animals. Really, we have the ability to be better than this....it's fucking ridiculous.

that is not the reason. Sometimes it is outside factors, and sometimes it is internal, but I can tell you your answer is more part of the problem than it is the solution.

Byrnzie

mikepegg44 wrote:

Do you have a link to the actual study?

Here it is: http://iasp.brandeis.edu/pdfs/Racial-We ... -Brief.pdf

rebornFixer

know1 wrote:

Good article, but my question is did they say how they identified people as white or black? I've still never seen a quantifiable definition.

In most studies, race is self-identified (whatever you think you are). There is no more objective definition, in part because no one is actually "pure". Obama is "black", even though he's at least half Caucasian.

mikepegg44

Byrnzie wrote:

mikepegg44 wrote:

Do you have a link to the actual study?

Here it is: http://iasp.brandeis.edu/pdfs/Racial-We ... -Brief.pdf

thanks, but i couldn't find in there how they actually went about their study and got their participants. I will find it. I think that is the most important part of all studies, the methods they use to gather the info. All too often the press we see the results and conclusions that were made but never how they actually gathered the info.

rebornFixer

mikepegg44 wrote:

Byrnzie wrote:

mikepegg44 wrote:

Do you have a link to the actual study?

Here it is: http://iasp.brandeis.edu/pdfs/Racial-We ... -Brief.pdf

thanks, but i couldn't find in there how they actually went about their study and got their participants. I will find it. I think that is the most important part of all studies, the methods they use to gather the info. All too often the press we see the results and conclusions that were made but never how they actually gathered the info.

+1. For this sort of a study, a representative sample of both groups would be critical.