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


How are race and the accumulation of wealth related?

Melvin Oliver: The difference between wealth and income is really highlighted when you look at differences among Blacks and whites. While Blacks make sixty-two cents of every dollar of income that whites make, they only have ten cents for every dollar of wealth that whites have. The gap for wealth is much greater than the gap for income. So if wealth is important for securing life chances, then Blacks have a very difficult time doing that compared to whites.

Why is there this large difference in the wealth resources between Blacks and whites? Well, I think there are a couple of very important reasons. One, there's a historical legacy. Income is based on what you can sell your labor market skills in the labor market for. So if you have a college education, you go out and try to sell those resources and you get a certain amount of income. But wealth is not just about contemporary issues. It's also about the legacy of the past. If three generations ago your family had wealth, that wealth has passed to the next generation. And it's a strong likelihood that it's passed further on to the next generation. But African Americans have a history where there has been little wealth in the past; therefore making it more likely that there's little wealth in the future. And when you look at that history, you see a history of oppression, a history of slavery, a history of de facto discrimination, and a history where it's been difficult for Blacks to take the little income they've had to create wealth.

I think a prime example has been what happened when Blacks were freed from slavery, the period in which there was great hope. One of the things that many of us hear about is the broken promise of forty acres and a mule. And that was an important promise, because those forty acres, that was wealth. That was what could have secured a foundation for a generation of people that had had little wealth. But as we know, those forty acres promised at the end of the Civil War did not materialize.

However, during the same period, a large land reform did occur in America, and that was homesteading. A whole generation of Americans moved from east to west and secured land as far away as California that served as a basis for wealth that has been passed down from generation to generation. For a large part of that time, African Americans were excluded from that benefit.

So you see two very important things that occurred. And these were public policy decisions in which, on one hand, people were given access to property, given title and subsequently wealth. And on the other hand, people were not given access to property, did not generate wealth, and did not generate opportunity for the next generation. If you add that up over time, what you get is a situation in which public policy provides opportunities for some and opportunities for another. This is how America became racialized - it is the meaning of race in America.

How does wealth accumulate generation to generation?

Dalton Conley: As individuals, we like to think that our property is a result of our talent, hard work or even luck - that it's our individual fruits of labor. But economists have shown that about 50-80% of our lifetime wealth accumulation is really attributable, in one way or another, to past generations.

Inheritance actually plays a small role in that. What's more common is something like your parents financing your college education, supporting you while you're in school or taking care of you, letting you live with them, while you're looking for a job. It's also little gifts along the way, co-signing the loan for a mortgage, that sort of thing.

All those kind of things lead to lifetime wealth accumulation. And it's this enormous debt we have to our ancestors' wealth that largely explains the perpetuation - in addition to discrimination and government policies - of racial equality in wealth over generations.

How did creating suburbs drain resources out of the central cities?

john a. powell: In the 1950s something like 80 percent of the building that was happening across the country was happening in the suburbs, so all of our national resources were going out of the central city to support white folks moving out into the suburbs. Now, some of those white folks moving out of the central city were happy to live among Black people, but the federal government and certainly Levitt [the developer of Levittown] refused that. They said, no this will be a white space. In fact, Levitt evicted some white people who wanted to attract and open up housing to people of color.

So this fundamental framework was established - not just of having white suburbs and concentrating minorities in the central city, but also depopulating and depleting resources for the central city and creating this division between the suburbs and the city. And, I would say, redefining whiteness in a particular way. A good neighborhood became a white neighborhood.

Why can't people overcome this wealth gap? If you work hard and take care of your finances, shouldn't an individual be able to overcome this handicap?

Melvin Oliver: What's really disturbing about the wealth gap is that even when you control for differences between people, the discrepancy is still quite large. In other words, if you just compare people with similar backgrounds - college graduates, stable families with both parents working, etc. - they are still divided sharply when it comes to wealth. It really makes you question the notion that if you work hard, you do all the things right, that you will gain equivalency, especially racially, with your white counterparts.

I think this notion that there's a meritocracy - that all you have to do is hit the right chord, then the music will play sweet - is not a reality for African Americans. Assets really divide America more than income. And when you look at assets you don't get this notion of a meritocracy. People are still quite unequal, even when they have similar achievements in life.

Even when you compare the Black poor and the white poor, there are significant differences. The Black poor tend to have longer periods of poverty - poverty spells - than the white poor. The white poor tends to be episodically poor. That is, they go through spells, a half a year or so where they might be in poverty. They're out of work. They've used up all their resources. That kind of poverty. The Black poor tend to have longer poverty spells, and sometimes, as we've seen, intergenerational poverty. Poverty that goes from one household to another household, from a single-parent household headed by a woman with children to another single-parent household headed by a woman with children. These are big differences.

One of the reasons for these differences is that the white poor tend to live in communities that do not have concentrated poverty. White people tend to live with a range of economic classes. The Black poor tend to live in concentrated poverty communities - communities in which 30-40% or more of the people are also poor. So the resources and opportunities they have around them tend to be much different than the resources that the white poor has. The white poor often times can take advantage of opportunities. They're in relatively resource-rich communities.

Questions for READING E:

1. Why are all-white communities and all-minority communities not equal in terms of the resources that are available? What is concentrated poverty?

2. How does past discrimination help set today's starting line for the future? Why are past inequities difficult for individuals to overcome?



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