It's time to get down to the of the matter, cont'd
(social justice & wealth gap)
The racial wealth gap in America may just be the most astonishing statistic yet. 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 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, a non-partisan think tank, 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. 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."
They also report that:“On top of lower wages and incomes and higher poverty rates, Black families have significantly less access to liquid assets than White families. It’s been long established that Black families face a large and persistent wealth gap. To weather a financial loss, families often must dip into their liquid assets to pay for their living expenses. If they lose their job or experience a serious health shock, their only hope of making ends meet and continuing to pay their rent or mortgage and put food on the table is to rely on their savings."
"The attainment of higher education does not bridge this divide. This gap remains large when we compare White and Black families whose heads of household have the same level of education. In fact, the absolute gap in liquid assets between Black and White families is far larger among those with a college degree or more versus those with less than a college degree. White families headed by a college-degree holder have nearly five times the access to money in transaction accounts as similarly degreed Black families. The gap persists whether the Black family owns a home or not. The gaps in liquid assets differ by what sector the family head works in, but no matter how the data are cut, White families have far more access to liquid wealth.”
An eye-opening report released in 2017 called The Road to Zero Wealth revealed that:
By 2024, median Black and Latino households are projected to own 60-80 percent less wealth than they did in 1983. By then, the continued rise in racial wealth inequality between median Black, Latino and White households is projected to lead White households to own 99 and 75 times more wealth than their Black and Latino counterparts, respectively. *Remember, this was released well before the financial devastation of the Covid-19 crisis.
If the racial wealth divide is left unaddressed and is not exacerbated further over the next eight years, median Black household wealth is on a path to hit zero by 2053 — about 10 years after it is projected that racial minorities will comprise the majority of the nation’s population. In sharp contrast, median White household wealth would climb to $137,000 by 2053 and $147,000 by 2073. Read the entire report here.
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.
From a report called Forced to Walk a Dangerous Line: “Though the proportion of Black and White Households with debt are similar, proportionally more Black Household experience difficulties with debt and bill payments. Troublesome debt is a symptom of the racial wealth divide and perpetuates discrepancies in wealth development. Having troublesome debt has long-term consequences such as wage garnishment, ongoing indebtedness and restricted access to low-cost, high-quality credit, insurance, jobs, housing and utilities. More than one in four (27 percent) Black households report they sometimes miss or are late on their debt payments, compared to approximately one in seven (15 percent) White households.” Read the report here.
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.”
A joint study from Brookings, a nonprofit public policy organization, and Gallup, a global analytics and advice firm, found that "in the average U.S. metropolitan area, homes in neighborhoods where the share of the population is 50 percent Black are valued at roughly half the price as homes in neighborhoods with no Black residents." Read the entire report here.
There is a strong and powerful statistical relationship between the share of the population that is Black and the market value of owner-occupied homes. Location in a Black neighborhood predicts a large financial penalty for 117 out of the 119 metropolitan areas with majority Black neighborhoods, though the valuation gap varies widely between them.
Differences in home and neighborhood quality do not fully explain the devaluation of homes in Black neighborhoods. Homes of similar quality in neighborhoods with similar amenities are worth 23 percent less in majority Black neighborhoods, compared to those with very few or no Black residents. Majority Black neighborhoods do exhibit features associated with lower property values, including higher crime rates, longer commute times, and less access to high-scoring schools and well-rated restaurants. Yet, these factors only explain roughly half of the undervaluation of homes in black neighborhoods. Across all majority Black neighborhoods, owner-occupied homes are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses.
Metropolitan areas with greater devaluation of Black neighborhoods are more segregated and produce less upward mobility for the Black children who grow up in those communities. Using combined tax and census data from the Equality of Opportunity Project, this analysis finds a positive and statistically significant correlation between the devaluation of homes in Black neighborhoods and upward mobility of Black children in metropolitan areas with majority Black neighborhoods. Segregation is negatively correlated with Black home valuations.
A report by Reveal from The Center for Investigative Reporting, which analyzed 31 million Home Mortgage Disclosure Act records, revealed that “modern-day redlining persisted in 61 metro areas even when controlling for applicants’ income, loan amount and neighborhood.” Their reporting “showed Black applicants were turned away at significantly higher rates than Whites in 48 cities, Latinos in 25, Asians in nine and Native Americans in three. In Washington, D.C., Reveal found all four groups were significantly more likely to be denied a home loan than Whites.” They found that “lending patterns in Philadelphia today resemble redlining maps drawn across the country by government officials in the 1930s, when lending discrimination was legal.”