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The
Growth of the Suburbs - and the Racial Wealth Gap
Developed by David M. Seiter
ACTIVITY 5: Deepening Understandings of Race
and Family
Wealth Accumulation: Six Jigsaw Readings
READING A
What does the wealth gap have to do with race?
Dalton Conley: The one statistic that best captures the
state of racial inequality in America today is wealth, or net
worth. If you want to know your net worth, just add up everything
you own, subtract all your debts and that's your net worth.
Today, the average Black family has only one-eighth the net worth
or assets of the average white family. That difference has seemingly
grown since the 1960s, since the Civil Rights triumphs, and is
not explained by other factors like education, earnings rates
or savings rates. It is really the legacy of racial inequality
from generations past. No other measure captures the legacy -
the cumulative disadvantage of race for minorities or cumulative
advantage of race for whites - than net worth or wealth.
The wealth gaps between Blacks and whites aren't explained by
income. In fact, if you compare people at the bottom of the income
distribution - say, a family that makes around $15,000 a year,
you'll find that the average Black family that earns $15,000 a
year in income has $0 net worth, or is in debt actually. Compare
that with the average white family that earns $15,000 a year,
and they have a good $10,000 to $15,000 in equity. That means
being poor, being at the bottom of the income distribution, really
means two different things depending on whether you are Black
or white.
That white family has a little bit of a cushion. If unemployment
strikes, as it does so often to people at the bottom of the economic
distribution, they've got some means to ride out the storm. They
might have a car that will increase the radius of their job search.
They might have this money that they can spend in case of a medical
emergency, even if they don't have health insurance. But compare
that to the situation for a poor Black family with $0 or negative
net worth. There is no cushion. There is nothing in between the
paycheck and homelessness, so to speak.
The same kind of disparity emerges at the upper end of the income
distribution. If you compare, say, a white family that earns $50,000
with an African American family that earns $50,000, you'll find
that the white family has about double the net worth - about $80,000
to $100,000 of net worth compared to about $40,000 to $50,000
of net worth for the African American family at that income level.
So when you are talking about the difference between financing
their kid's college education, starting a new business, moving
if they need to move for a better job opportunity - having $100,000
versus $50,000 in net worth might make the difference between
upward mobility and stagnation.
How do other groups compare in terms of wealth?
Dalton Conley: Blacks and whites really anchor the ends
of the distribution in terms of wealth in America. Latinos fall
somewhere in the middle. They fall, on average, closer to the
African American average in terms of wealth. But there is enormous
disparity within the Latino community. It's hard to talk about
Latinos as a unified group because there are enormous differences
within that community. And not coincidentally, how Hispanics fare
depends on their skin color and it also depends on the particular
history of that group.
Cuban Americans, for example, have wealth levels that are much
more similar to whites. They don't exactly equal the white levels,
but they come close. On the other hand, Puerto Ricans or Dominicans
are almost equivalent to the Black average. Other groups, like
Mexicans and South Americans, fall closer to that group, but again
are in the middle somewhere.
Questions for READING A:
- What is the racial wealth gap? How does the net worth of Black
and white families compare at different income levels?
- How does the typical family net worth of other groups compare
to whites?
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