It’s Racism, Stupid. America’s Persistent Racial Wealth Divide

By Josh Hoxie | ( ) | – –

A new study shows the legacy of racism far outweighs individual financial decisions in driving the growing gap between black and white families.

No myth around around our staggering racial wealth divide may be more entrenched than the notion that black and brown people have less money because they’ve made poor personal decisions.

Tom Shapiro, a professor at the Institute on Assets and Social Policy, and his colleagues at Brandeis University teamed up with the New York-based think tank Demos to release a new report that directly takes on this devilishly persistent “deservedness” myth.

Neither greater education, workforce participation, nor family formation explain the persistent gap between black and white household wealth. Image: shutterstock.

When asked in public opinion polls whether white families are better off financially than black households, less than half of white respondents acknowledge they are. Among the folks who acknowledge the racial wealth divide exists, two thirds assert that discrimination rooted in individual people is a greater problem than discrimination that is built into our laws and institutions.

The divide in wealth between white and black families, the new report shows, cannot be explained by differences in financial or lifestyle choices. The significance of the choices individual people of color make pale against “a century of accumulated wealth.” In other words, the majority who responded to that poll are wrong.

“Structural racism,” the research team notes, “trumps personal responsibility.”

The new report from Brandeis and Demos — The Asset Value of Whiteness: Understanding the Racial Wealth Gap — takes each aspect of the deservedness myth head on, touching on everything from education and consumption to family formation and workforce participation.

Does lack of education explain the racial wealth divide? White households with workers who have less than a high school degree have more wealth than black households with workers who’ve attended at least some college.

Among workers with equal levels of education, the median white adult with at least some college holds 7.2 times more wealth than the comparable median black adult and 3.9 times more than the median Latino.

“Higher education is valuable,” the new study’s authors conclude, “but when it comes to wealth, white privilege is equally, if not more valuable.”

How about single-parent status? Does that explain the racial wealth gap? Black two-parent households do have more than three times the wealth of black one-parent households. But white two-parent households turn out to have ten times more wealth than the equivalent black families.

In fact, white one-parent households have more wealth than black two-parent households. Again, the racial wealth divide persists regardless of how smart an individual’s personal financial decisions may be.

Some apologists for inequality cite differences in spending habits as the reason why the racial wealth divide persists. Black people waste their money on frivolities, the argument goes, while whites save.

“Higher education is valuable, but when it comes to wealth, white privilege is equally, if not more valuable.”

In real life, white families spend 1.3 times more than comparable black families, on average across all income levels. Black consumers spend either less or the same as their white counterparts on clothing, jewelry, personal care, entertainment, eating out, and other non-essentials. Black families consistently outspend whites in only one category: utility bills.

Differences in personal spending habits, the researchers sum up, “cannot explain the racial wealth gap: white households spend more than black households with similar incomes, yet also have more wealth.”

The Asset Value of Whiteness offers a variety of policy solutions to our growing racial wealth divide, most notably calling for the implementation of a “racial wealth audit,” a tool that can measure how new potential public policy will raise or lower racial wealth gaps.

That audit, given the current legislative climate, seems far off. But the work of shifting the narrative that holds in place our persistent racial divide remains as pressing as ever.



Related video added by Juan Cole:

Inequality Media: “What is the racial wealth gap?”

2 Responses

  1. I interpret the meaning of the question about discrimination asked in para. four differently than the author of this article does. To me the question means what is more important in preventing African Americans in acheiving economic parity with whites, is it the laws that are holding African Americans back or the individual decisions of white people to hire or not hire African Americans and if so what kind of jobs. I suspect that it is the millions of decsions made by white people that over the decades which have been even more important in creating these conditions than the laws themselves.
    I have doubts though that the true level of wealth of families in America is accurately measured by these studies though. First off I bet that these studies do not show the value of someone’s social security payments or military pensions, because these payments are not transferable to one’s children I bet that the payments from these sources would simply be counted as income.
    If these payments were valued by determining how much wealth one would need to recieve a 100 dollar a month payment from social security I would guess that in absolute terms this racial wealth gap would grow even more. Yet in percentage terms I think the gap would narrow. Many people in the USA of all races recieve a military pension. Yet percentage wise African Americans are more likely to retire as NCOs rather than commissioned officers. Commissioned officers recieve a bigger pension but I doubt if they are generally ten times bigger. The same assessment would apply to social security payments.
    Another factor to consider is local costs of living. Of course one could say that generally living in lower costs areas should not be used as an arguement to say that African Americans can get by with less wealth in order to maintain their standard of living in they should for examply become unemployed because lower costs areas usually have a lower quality of life. I think local quality of life arguement cancels out local cost of living arguement to some extent but does it completely cancel it out?
    If I am correct is understanding the meaning of the question in paragraph four and I am correct in figuring that individual decisions are an important factor then one should conclude that although more socialism in economic policies in the USA would make things better for African Americans those policy changes alone will not be enough to for African Americans to achieve parity with whites. The problem is caused not only by racsism or only by class warfare it is both.
    The economic disparity between African Americans and whites in the US should actually be THE civil rights issue at this time in the USA. All the other civil rights problems are wrapped up in this one.

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