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A TALE OF TWO FAMILIES
How Does Family Wealth Make a Difference?
Meet Byron Green and Max Holland. They're about the same age,
work for the same company, and make the same income. They even
live in the same neighborhood. But if you compare their net assets,
Max has twice as much wealth as Byron. Why is there such a big
difference?
Byron is Black and Max is white. What roles have race and wealth
played in their life stories?
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Byron's Family
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Max's Family
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#1 - Starting Out: The Parents Buy a Home
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In 1951, The Greens bought a two-story duplex in one of
the areas of Chester, PA, that would rent or sell to African
Americans. The Greens scraped together $1,000 for the down
payment and mortgaged the $5,500 remaining balance.
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The Hollands married in 1948. A financial gift from their
parents and a low-interest government VA loan allowed the
Hollands to stretch their resources and move to a new suburban
development on Long Island. In 1952, they bought a home in
all-white Merrick for $21,500. |
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#2 - Making a Living: The Parents Find
Work
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| Job opportunities for Black people were still very limited.
Mr. Green worked as a lab attendant at a nearby refinery.
He'd say, "Black men were the last hired and the first fired."
Mrs. Green provided domestic help for white families in the
middle-class suburbs. |
Mr. Holland financed his college education through the
GI Bill. After graduating, he got a job as a "management trainee"
for a big New York textile firm, where he worked for the next
15 years. The sales, technical, and management staff were
entirely white. |
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#3 - For Better or for Worse: The Neighborhood
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When manufacturing crashed, many people left Chester, and
the area became increasingly segregated. Those who stayed
faced higher taxes to maintain public services and schools.
While their income remained the same, the Greens saw their
expenses climb and their neighborhood begin to deteriorate.
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Property values were good and getting better. Max and his
brothers enjoyed good schools, parks, libraries, etc. In 1965,
Mr. Holland started his own business by tapping into his home
equity and borrowing money from an uncle. His business did
well and he sent all three of his children to private colleges.
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#4 - Leaving the Nest: Growing Up, Moving
Out
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| Byron received an academic scholarship to an Ivy League
school. Because of his family's uncertain financial situation,
he has always exercised a conservative approach to his personal
finances. |
Max's personal "wealth-building" began at the age of 13
with Bar Mitzvah checks from friends and relatives. By the
time he was 18, Max could use his savings and money from his
parents to travel, explore his interests, and go to college
worry free. |
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#5- Cashing in: Selling the Family Home
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In 2000, the Greens sold their home for $29,500 - a negligible
increase in value considering the remodeling and improvements
they put into it over 40 years. This amount has not gone far
to provide for Byron's family in old age. At the time of the
sale, Chester's population was 76% Black.
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In 1991, the Hollands sold their home for $299,000 - 14
times what they paid for it - and were able to retire comfortably
to the Berkshire Mountains. They also helped all their children
with down payments on their own homes. At the time of the
sale, Merrick was still 95% white. |
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#6 - Inheriting the Future: Byron and
Max Today
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In 1994, Byron financed the purchase of a condominium and
continues to make monthly mortgage payments today. He also
needs to look after his parents' finances and must be ready
to pitch in whenever unforeseen expenses arise.
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Max bought his own house in 1985. His parents are financially
secure and his home is all paid for and appreciating in value.
Max is free to focus on the future - to provide a safety net
or launching pad for his own children. |
CONCLUSION
This tale was based on a true story. Byron and Max are real people
(their names have been changed). They are the directors of California
Newsreel, the company that produced this television series.
As you can see, in one generation, discrimination makes a big
difference in the relative wealth of these two people. In 1995,
the average white family had eight times the wealth of the average
nonwhite family. Even at the same income level, whites have, on
average, twice the wealth of Black families.
Wealth isn't just about luxury. It's also the starting point for
the next generation. Until the wealth gap is addressed, whites
will continue to have an advantage over nonwhites, generation
after generation.
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