It's time to get down to the            of the matter.

(fair factors)

Many Americans remain captive to our misaligned social systems; ones that establish detrimental patterns that are extremely difficult to unilaterally break.  The challenges for vulnerable families are linked in complex ways.  Their plight reminds us of that Whack-A-Mole game, where the little moles randomly pop up only to be whacked down by a big fat mallet.  Every time compromised families get their heads somewhat above ground to establish a semblance of control over their life and destiny, they get whacked down again by cycles and created for them eight decades ago.  It is just wrong.  And excruciatingly unfair.  And exceedingly unjust.  Enough is enough.

There is no better example of The Butterfly Effect in action!

Let's walk through how the relentless devastating cycle works.

Meet Michael, a Black man who lives in Austin, Texas.  Michael’s earliest memory is hysterically crying while crawling over his mother who was unconscious and bleeding profusely from her head.  Although he never knew how she was hurt that particular time, he later assumed she had been beaten by one of her live-in boyfriends or her pimp.  

He knew his mom was a prostitute, and men would come and go all day and night.  A couple of them had been nice to him, but those didn’t seem to last very long.  The others would beat him, mock him, have sex with his mother in front of him, burn him with cigarettes and, in the case of the man who was possibly his birth father, force him to try marijuana at the age of seven.

Michael had two older brothers, but one was in prison from the time he was born and the other was killed in a drive-by shooting when Michael was three.  Once in a while, his mom would ask him to deliver little packages around their decrepit apartment complex, instructing him to bring back the money he was given in return.  His best buddy lived next door and they would leave really early on summer mornings and roam around the neighborhood until well after dark.  

After wheezing most of his life, the school nurse determined Michael had acute asthma, but he never got the proper medication to ease it.  When he was sixteen, his mom was diagnosed with a life-threatening heart condition, so he dropped out of high school to work full time to support her.

Michael’s chaotic early life and — even though his juvenile criminal records are sealed — his time in juvenile detention have made his life difficult to say the least, but things are turning around!

Michael recently got his GED, received a small pay raise at work, and married the love of his life, the very beautiful Angela.  Michael and Angela just had their first child, a perfect baby boy named James, and they are ready to buy their first home.  Everything is looking up for Michael!


Let’s take this journey with Michael and Angela.  The first stop is house hunting:

Michael and Angela contacted a realtor and are ready to see some houses,
but they soon learn that racial discrimination is still painfully evident in the housing market.  

Several realtors won’t even see them at all (read more here).  This is just one reason why home ownership tilts significantly in favor of the White population.  Research conducted by two professors from Princeton University discovered that “median homeownership rates are similar in most urban areas and, with a few exceptions, hover around 70 percent...But in majority-Black neighborhoods, homeownership rates are frequently well below 50 percent. In Albany, New York and Atlantic City, New Jersey, the gap between White and Black neighborhoods reaches a staggering 40 and 50 percentage points, respectively.”  The Wall Street Journal reports that “the Black homeownership rate has fallen 8.6 percentage points since its peak in 2004.”  This is a major problem because housing is the most reliable way Michael and Angela can begin accumulating wealth.

This is a major problem because housing is the most reliable way Michael and Angela can begin accumulating wealth.

They are not alone.  Due in large part to blatant discrimination, the wealth gap among races is astonishing.  The wealth gap among upper-income families and middle- and lower-income families is sharper than the income gap and is growing more rapidly.  The latest Survey of Consumer Finances released by the Federal Reserve revealed that wealth of typical White households is eight times the wealth of typical Black households and five times that of typical Hispanic households. The median wealth (the number squarely in the middle of all of the numbers) of White households is $188,200, compared to $24,100 for Black households and $36,100 for Hispanic households.  The mean wealth (the average) of White households is $983,400, compared to $142,500 for Black households and $165,500 for Hispanic households.

The Economic Policy Institute reports that “more than one in four Black households have zero or negative net worth, compared to less than one in ten White families without wealth, which explains the large differences in the racial wealth gap at the mean and median.”  The report continues:

"Educational attainment, the right occupation, and full-time employment are necessary, but not sufficient conditions for building wealth (and even equalizing these between races would be nothing short of miraculous). The typical Black family with a head of household working full time has less wealth than the typical White family whose head of household is unemployed.  This outcome holds for Black families regardless of the time and money spent on educational upgrading.  Median wealth for Black families whose head has a college degree, for example, has only one-eighth the wealth of the median White family whose head has a college degree.  Even the typical Black family with a graduate or professional degree had more than $200,000 less wealth than a comparable White family."

The numbers get even worse if you take it city by city, state by state.  In the Boston Metropolitan area, for example, a joint study by Duke University, The New School, and the Federal Reserve Bank of Boston found that:

"Non-White households have only a fraction of the net worth attributed to White households.  While White households have a median wealth of $247,500, Dominicans and U.S. Blacks have a median wealth of close to zero.  The typical White household in Boston is more likely than non-White households to own every type of liquid asset.  For example, close to half of Puerto Ricans and a quarter of U.S. Blacks are unbanked (that is, they do not have bank accounts) compared with only 7 percent of Whites.  For every dollar, the typical White household has in liquid assets (excluding cash), U.S. Blacks have 2 cents, Caribbean Blacks 14 cents, and Puerto Ricans and Dominicans less than 1 cent."


"Whites and non-Whites also exhibit key differences in less-liquid assets that are primarily associated with homeownership, basic transportation, and retirement or health savings.  While most White households (56 percent) own retirement accounts, only one-fifth of U.S and Caribbean Blacks have them.  Only 8 percent of Dominicans and 16 percent of Puerto Ricans have such accounts.  Most Whites in Boston — 79 percent — own a home, whereas only one-third of U.S. Blacks, less than one-fifth of Dominicans and Puerto Ricans, and only half of Caribbean Blacks are homeowners.  Although members of communities of color are less likely to own homes, among homeowners they are more likely to have mortgage debt. Non-White households are more likely than Whites to have student loans and medical debt.  Thus, non-Whites are likely to experience far more short-term financial disruptions due to their lack of liquid buffer assets.  They are also more likely to experience much poorer longer-term housing and retirement outcomes as a consequence of their lack of homeownership, housing equity, and retirement savings. The result is that the net worth of Whites as compared with non-Whites is staggeringly divergent."  Read the entire report here.

Michael and Angela have found the perfect home BUT...
o bank will give them traditional financing since they are credit invisible.

The Consumer Financial Protection Bureau (CFPB) released a Data Point that found "one in ten adults in the U.S., or about 26 million people, are 'credit invisible.'  This means that 26 million consumers do not have a credit history with one of the nationwide credit reporting companies.  An additional 19 million consumers have 'unscorable' credit files, which means that their file is thin and has an insufficient credit history (9.9 million) or they have stale files and lack any recent credit history (9.6 million).  In sum, there are 45 million consumers who may be denied access to credit because they do not have credit records that can be scored.  Together, the unscorable and credit invisible consumers make up almost 20 percent of the entire U.S. adult population.  Consumers who are credit invisible or unscorable generally do not have access to quality credit and may face a range of issues, from trying to obtain credit to leasing an apartment."  Read reports here and here.

A study from the National Fair Housing Alliance — a consortium of more than 200 private, non-profit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States — found that:  "Our current credit-scoring systems have a disparate impact on people and communities of color. These systems are rooted in our long history of housing discrimination and the dual credit market that resulted from it.  Moreover, many credit-scoring mechanisms include factors that do not just assess the risk characteristics of the borrower; they also reflect the riskiness of the environment in which a consumer is utilizing credit, as well as the riskiness of the types of products a consumer uses."

The report concludes, "By 2042, the majority of people in this country will be people of color.  Credit-scoring mechanisms are negatively affecting the largest growing segments of our country and economy.  America cannot be successful if increasing numbers of our residents are isolated from the financial mainstream and are subjected to abusive and harmful lending practices.  Credit scores have an increasing impact on our daily activities and determine everything from whether we can get a job, to whether we will be able to successfully own a home.  The current credit-scoring systems work against the goal of moving qualified consumers into the financial mainstream because they are too much a reflection of our broken dual credit market.  This paradigm must change."  Read the entire report here.

Meanwhile, the rent is due, but Michael doesn't get paid until next Friday.  He heads to the nearest payday loan store.

A payday loan is a type of borrowing where a lender will extend high interest for a short-term loan.  Twelve million Americans use payday loans every year and the average interest rate is 400 percent.  This is a vicious cycle all on its own.  Every time Michael gets paid, he is already behind because he has an enormous interest payment to make from his last paycheck — which means he has to take out another of these high interest loans to just barely keep up with the interest. 

And the hits just keep on coming...

Michael has a car accident that totals his car.
His job is an hour away from his home and there is no public transportation that can get him there.

Michael loses his job.

According to the Pew Research Center, a nonpartisan think tank:

“Fewer than half of all American adults (47 percent) say they have emergency or rainy day funds that would cover their expenses for three months in case of sickness, job loss, economic downturn, or other emergencies; 53 percent say they don’t have this type of savings on hand.

The share who have rainy day funds differs drastically across demographic groups.  While 53 percent of White adults say they have rainy day funds, much smaller shares of Black adults (27 percent) say the same.  Upper-income adults are roughly three times as likely as lower-income adults to say they have emergency funds that would cover their expenses for three months — 75 percent vs. 23 percent.

Of the 53 percent of adults who say they don’t have rainy day funds set aside, most say they wouldn’t have easy access to money that could help them meet their financial obligations if they lost their main source of income.  Only 28 percent say they would be able to cover their expenses for three months by borrowing money, using savings, selling assets, or borrowing from friends or family.  About seven-in-ten (71 percent) say they would not be able to do this.”

Right before he lost his job, Michael got a speeding ticket on his way to work.

After losing his job he was unable to pay the fine.  A warrant is issued and Michael is arrested.

Already, the cards are stacked against Michael.  In 2018, the imprisonment rate of Black men was 5.8 times that of White males. 

A report by the Hamilton Project, an economic policy initiative at the Brookings Institution, reveals that "there is nearly a 70 percent chance that an African American man without a high school diploma will be imprisoned by his mid-thirties.  By their fourteenth birthday, African American children whose fathers do not have a high school diploma are more likely than not to see their fathers incarcerated."  Read the entire report here.

Those same two Princeton University professors from earlier discovered that "in certain cities, incarceration rates among males who grew up in majority-Black neighborhoods are two to more than 10 times higher than among males who grew up in majority-White neighborhoods.  The criminal justice system has become a central institution in the lives of men raised in majority-Black neighborhoods." 

According to the United States Sentencing Commission, "Black male offenders continue to receive longer sentences than similarly situated White male offenders. Black male offenders received sentences on average 19.1 percent longer than similarly situated White male offenders during the Post-Report period (fiscal years 2012-2016), as they had for the prior four periods studied (read the entire report here)." 


Take it state by state and it's far worse.  "Jurors in Washington state are three times more likely to recommend a death sentence for a Black defendant than for a White defendant in a similar case and, in Louisiana, the odds of a death sentence are 97 percent higher for those whose victim was White than for those whose victim was Black."  Read  the entire report here

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