New Wealth Gap Research

A new report by a group of economists led by William Darity, Jr. and Darrick Hamilton identifies misguided approaches to understanding and rectifying the gap in wealth between white and black Americans (note: I came across this in the Twitter feed of Chicago sociologist/poet/polymath Eve Ewing. I posted about her New Republic report on the Chicago Housing Authority’s perverse refusal to build housing a while back. Follow @eveewing).

The picture is grim, with black households averaging less than ten percent of white household wealth (depending on which data is used, due to sampling variations). And, while a typical white household at the poverty line has about $18,000 in net worth, the typical black family with similar income has net worth of approximately zero. Whites are disproportionately represented among the wealthy and constitute nearly all of the top percentile. Within racial groups, a black family at the 99th percentile has just one eighth the wealth of a white family at the 99th percentile ($1.5 vs $12 million).

The authors offer a pointed rebuke to conservative and neoliberal policy prescriptions, which they content fail to grapple with the importance of intergenerational wealth transfers and instead blame dysfunction in the here-and-now among black Americans for their lagging wealth:

In this report, we address ten commonly held myths about the racial wealth gap in the United States. We contend that a number of ideas frequently touted as “solutions” will not make headway in reducing black-white wealth disparities. These conventional ideas include greater educational attainment, harder work, better financial decisions, and other changes in habits and practices on the part of blacks. While these steps are not necessarily undesirable, they are wholly inadequate to bridge the racial chasm in wealth.

These myths support a point of view that identifies dysfunctional black behaviors as the basic cause of persistent racial inequality, including the black-white wealth disparity, in the United States. We systematically demonstrate here that a narrative that places the onus of the racial wealth gap on black defectiveness is false in all of its permutations.

I’ve written a bit here about the ways that discussions of poverty in segregated urban communities tend to focus on internal organization instead of surrounding and pervasive structures, on behavior, values, and education instead of property, employment, and investment.

The authors do intervene in an emerging debate among sociologists and historians, about the significance of home ownership for wealth building. While recent scholarship by Matthew Desmond and others has argued for closing the wealth gap by promoting minority home ownership, the authors of this study demonstrate that property owned by black Americans does not build the kind of wealth that property held (and passed to heirs) by white Americans does. Historian Carl Nightingale’s study of segregation uses the phrase “racist theory of property value” to explain how American markets embed race in exchange value, and policy scholar Richard Rothstein’s recent Color of Law summarizes a raft of recent work examining government support for a racially divided housing market and its consequences for home equity wealth inequity. Plus, as Darity and Hamilton show, racial gaps in home equity wealth reflect gaps in all classes of assets. While the exclusion of minorities from home ownership is a problem, it’s not the whole of the problem by a long shot.

“Buying Black,” education, entrepreneurship, thrift, and financial literacy initiatives get their turn, too. Perhaps most satisfying, the authors call out the recent pop-anthropology and model-minority mythmaking of Tiger Mom Amy Chua and Jed Rubenfeld, who claimed to identify a set of group cultural traits that separate relatively successful minority groups from struggling ones, while ignoring differences in the material circumstances and political incorporation of different ethnic groups.

This report is a comprehensive debunking. It’s not long, and it’s clearly written in plain English. It’s well worth an hour’s time to read.

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