No Recovery from Race

| January-February 2010

If we’re going to reimagine the ways in which we interact with our ecologies and economies, let’s begin by fully grasping one of this nation’s greatest failures: the persistently racialized gap between rich and poor. The American Prospect (Sept. 2009) reports that according to 2002 data, white households have a median net worth of $87,000, a number that plummets to $8,000 for the median Latino household and just $6,000 for the median black household. “Regardless of age, household structure, education, occupation, or income, black households typically have less than a quarter of the wealth of otherwise comparable white households,” Darrick Hamilton and William Darity Jr. write.

The recession hasn’t helped—in fact, given the color of the subprime mortgage crisis, it is likely to exacerbate these gaping disparities. “Although whites are more likely than blacks to own their home,” the public policy scholars explain, “the share of black wealth in the form of housing is nearly twice as large as the white share.” There’s abundant evidence that banks targeted minorities for subprime mortgages, so we can expect the foreclosure crisis to hit black household wealth particularly hard.

The root of the racial wealth gap is a cycle that dates back to the broken post–Civil War promise of 40 acres and a mule: Black families have fewer resources than white families to pass on to their children. Transfers from one generation to the next are “the primary source of wealth for most Americans with positive net worth,” The American Prospect reports; they offer a leg up when the next generation is paying for college or putting a down payment on a home.

The authors lay out a number of policy suggestions, including a “ ‘baby bond’ plan” based on a program in the United Kingdom. Families would be eligible depending on wealth, not income; eligible newborns, those whose families’ household wealth is below the national median, would receive a trust as high as $50,000 or $60,000 that would be accessible at age 18.

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