No one for Black History Month should view kindly the economic degradation that African-Americans still face.
President Barack Obama didn’t touch the subject in his State of the Union address. But a new study shows equality is still a dream 50 years after Martin Luther King Jr.’s famous March on Washington speech.
It has been out of reach in housing and wealth creation in all of black history. That’s despite Obama’s election in 2008 and re-election in 2012 as the first black president. Nothing has occurred to emancipate minorities from a legacy of wealth-killing racism.
“The racial divide is older than the country itself,” said “State of the Dream 2013: A Long Way from Home — Housing, Asset Policy and the Racial Wealth Divide” by United for a Fair Economy. “It was born from subjugation, slavery and slaughter and was continued after slavery was outlawed by policies designed specifically to enforce the everyday practice of white supremacy as law.
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“Despite the advancement of civil rights in the last century, much of the underlying economic inequities were left in place. The economic divide has been handed down from generation to generation; and entrenched by the passage of time and the dimming of memory.”
Yet black and Latino families live with history’s economic chains. The report said the average net worth of white families is more than six times greater than that of black families and 5.7 times greater than that of Hispanic families.
Worse, the wealth of black and Hispanic families fell more than white family wealth from 2007 to 2010 during the Great Recession. “Black families lost 27.1 percent of their average net wealth and Latino families lost 41.3 percent” compared with a 6.7 percent wealth drop for white families.”
That’s partly because minorities have a greater percentage of their wealth in their homes. But it also reveals a disproportionate number of homeowners of color were targeted in the subprime loan scandal, which sent many into foreclosure as the housing bubble burst.
“Our national history of racially discriminatory policies and practices created the racial wealth divide; current policy that ignores its existence, perpetuates it and in some cases makes it worse,” the report said. “The economic divide between racial and ethnic groups in the United States is one of the nation’s great moral failures.”
White families, because of the GI bill, FHA loans and progressive tax policies after World War II, benefited from “massive public investments and worker-friendly legislation,” which built the middle class but excluded people of color. That legacy and a withdrawal of government support has left white families on average with $109,000 in retirement accounts compared with $17,000 for families of color.
With little wealth, families of color are more susceptible to downturns in the housing market, more indebted and have less financial flexibility — unable to send their children to college or start businesses. Security and opportunity are illusive.
“There is greater inequality of wealth than income,” the report notes. “Income is like a river; a flow of money from a job, business or other source.
“Wealth is like a reservoir. Without a reservoir of wealth, families are vulnerable when the river of income runs dry.”
To change this black history, the government should offer development accounts for children, or baby bonds — the largest amounts go to the neediest kids, the report suggests. Obama should adopt this. Also, instead of solely pushing home ownership, the U.S. should promote asset building and view housing as a human right, ensuring that all people have good housing. The report recommends cooperatives and worker ownership of businesses. Obama should push this, too.
Tax policies must change to create greater equality. Continuing “colorblind policies” will only maintain and worsen wealth disparity.