For black and Hispanic families, no end yet to the bottoming out

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The Chicago Reader
By: Steve Bogira
May 2, 2013

"To be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardships," W.E.B. Dubois wrote in The Souls of Black Folk, published in 1903.

One hundred and ten years later, blacks and Hispanics are making half as much as whites, a recent Urban Institute report shows. But the racial gap in wealth--assets minus debts--is far greater. The average wealth of white families in 2010 ($632,000) was almost six times that of Hispanic families ($110,000) and more than six times that of black families ($98,000). The median wealth figures are similarly lopsided: $124,000 for white families, $16,000 for black families, $15,000 for Hispanic families.

The wealth gap between blacks and whites has seeds in our nation's centuries of slavery, and the discrimination that persisted long after the Civil War. In more recent years, the federal government hasn't sat idly by in the face of the wealth gap. The government has helped widen it.

The U.S. offers subsidies to help families build their assets, but you have to have assets to take advantage of most of them. More than $400 billion is spent on subsidies such as mortgage- and property-tax deductions, and credits for retirement savings and education.

The wealth gap between whites and minorities has grown in the last three decades, from about five to one in 1983 to about six to one in 2010, according to the Urban Institute report. The recession of 2007-2009 may be largely responsible: it cut the wealth of white families by 11 percent, but it reduced the wealth of black families by 31 percent and Hispanic families by 40 percent.

And, as usual, segregation was a key culprit in the recent losses of minorities. Blacks and Hispanics were special targets of predatory lending, and segregation was "an important contributing cause of the foreclosure crisis," according to a study published in 2010 in the American Sociological Review.

The Princeton sociologists who authored the study noted that the financial institutions in segregated neighborhoods tend to be predatory--pawn shops, payday lenders, and currency exchanges that charge high fees and exorbitant interest--so residents are used to being exploited. Segregation also concentrates poverty and joblessness. When the economy stagnated, residents of segregated neighborhoods were more likely than others to turn to home-equity loans, "creating a ready demand for unscrupulous brokers to exploit," the authors wrote.

Segregation "racialized and intensified the consequences of the American housing bubble," the study concluded. The fact that Hispanic and black home owners bore the brunt "was not simply a result of neutral market forces but was structured on the basis of race and ethnicity through the social fact of residential segregation." Not that this was anything new, the authors observed: "Discriminatory subprime lending is simply the latest in a long line of illegal practices that have been foisted on minorities in the United States."

In minority neighborhoods, the wealth-gap statistics have powerful consequences--not just boarded buildings, but demoralized families, greater illness and violence, and premature death. How large must the gap grow before we get serious about closing it? To ten to one? Twenty to one? Will we continue bragging in the meantime about our land of equal opportunity?

http://www.chicagoreader.com/Bleader/archives/2013/05/02/for-blacks-and-hispanics-no-end-yet-to-the-bottoming-out

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This page contains a single entry by CFED published on May 6, 2013 4:40 PM.

Is It Crazy to Think We Can Eradicate Poverty? was the previous entry in this blog.

Citizenship: A Pathway to Economic Recovery is the next entry in this blog.

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