Racial Wealth Inequality
Caitlin Maltbie 009606309 Take Home Essay Question 2: Racial Wealth Gap Between Blacks and Whites After racial discrimination was made illegal in the 1960s, blatant and bigot racism has seemed to disappear, yet remaining racist attitudes have continued to put blacks at an overall disadvantage due to the progression of these attitudes into institutionalized settings and policies.
The result of historical and contemporary discrimination and segregation is a widening gap of racial wealth between blacks and whites. Now, America could be argued to be a dichotomized society of black and white, proving that the Kerner Commission was correct to predict that “our nation is moving toward two societies, one black, one white, separate and unequal (Bobo & Smith 1998: 178). ” Although whites didn’t necessarily intend on such a separate and unequal society, they don’t plan to change it either.
The reasons behind this perpetuating, widening gap that I will discuss follow a history of disadvantage versus advantage dating back to the time of slavery, as well as segregation and discrimination in practices such as hiring processes, loans, residential structuring, wages, and government aid which have resulted in increases of unemployment among inner-city blacks as well as concentrated poverty. Blacks are at a disadvantage to whites because they lack human capital tracing back to equal education and job opportunity that would regularly aid to accumulate wealth as it does for whites.
Starting back as far as the 16th century, slavery crippled chances for blacks to gain social and economic mobility. Now, we continue to see these crippling effects among generations of blacks. Not only do whites typically earn more annually, they have an easier time finding employment. The racialization of the state could be considered the starting point of the racial wealth gap between whites and gaps, and can be seen in policies and programs in the U. S.. Beginning during the times of slavery, if blacks were able to accumulate any amount of money they would spend it on the freedom of themselves and their family, whereas whites were ble to purchase assets with their money and eventually able to generate monetary inheritances for their upcoming generations. To add to the disadvantages, in the 19th century homestead laws didn’t allow African Americans to take advantage of federal land-grant programs. The core of the New Deal legislation, the Social Security Act of 1935 ultimately cut blacks out of receiving any benefits due to the fact that it exempted agricultural and domestic workers. The New Deal also exempted blacks because they fell beneath the threshold for coverage due to lower wages.
After World War II, the Fair Housing Act funneled loans away from cities into the suburbs, furthering the chances of blacks to own homes. Contemporary policies such as the AFDC practically forces wanting recipients to rid themselves of any assets to pass a test in order to receive benefits. The Internal Revenue Code and the Internal Revenue System gives tax breaks on assets such as homes, so due to the fact that blacks have less assets than whites, they again are at a disadvantage.
The result has been that blacks have continuously put more into the system and have received less in return. Homeownership in America is the primary means for generating wealth, and it also serves as a pathway to community and schooling, and parental assistance in buying a first home is key to setting opportunities for their adult children and their families (Shapiro 2003: 87). However, although monetary support among whites is most likely to go from parents to adult children, elderly blacks are more likely to need help themselves from their adult children (Shapiro 2003: 87).
This leaves new generations of blacks living up to a duty to provide for their elders rather than accumulating wealth for themselves and their children. Due to racialization of the state in homeownership practices, it has been very difficult for blacks to come upon owning a home. Because government policy follows racialized attitudes, the FHA was able to follow “restrictive covenants” in which they prohibited blacks to move into white neighborhoods, claiming to “protect” these white communities.
Also, the government began to help families buy homes by supporting loans, however these loans would only apply for nicer neighborhoods, where redlining, a process in which bank employees literally “redlined” bad parts of town, was absent. The result of this was that blacks couldn’t buy homes because the homes they could actually afford were in the redlined areas. The redlined areas often became their homes, where public housing was built after many blacks were condemned to live in their houses after the Urban Renewal Program intended to decrease inner-city slums by pushing them out.
Also, construction of new freeways and highways through cities during the 1950s forced blacks out of their homes (Wilson 1996: 194). Whites now were concentrated in the suburbs, and blacks were left trapped in public housing areas where these structures acted to form concentrations of urban ghettos, where unemployment rates were two-and-one half times as high as whites and annual wages 11 percent lower due to deindustrialization and the migration of jobs to the suburbs (Bobo & Smith 1998: 180).
On top of this, the Reagan and Bush administration decreased spending to subsidize cities, proving the shift in the federal government’s support for basic urban programs which had exaggerated the rates of unemployment and social organization in the inner-city neighborhoods (Wilson 1996: 194). Even after racial discrimination became illegal in the 1960s, suburbs diversified among race rather than class, as zoning laws and discriminatory land-use kept blacks out of suburbs because they didn’t allow the construction of apartment buildings or low-income housing (Wilson 1996: 193).
Economic detour can be traced back to the fact that blacks have never been in control of the means of production. For blacks wanting to start their own businesses, which would in turn make them able to generate more assets, it has been hard. Even while other people of color have been able to successfully own and run their own businesses, people fail to patronize black businesses. On top of not being able to own their own businesses, blacks have also had to face to the employers who still maintain negative racial attitudes towards blacks during hiring processes, especially involving inner-city residents (Oliver & Shapiro 1995: 198).
More than nine-tenths of white parents (91 percent) surveyed hold assets compared to fewer than two-thirds of black parents (94 percent (Shapiro 2003: 81). Among families with positive assets, the financial capacities of the parents of white families are four times greater than those of the parents of black families (Shapiro 2003: 83). Half of all whites come from families with the ability to deliver head-start assistance versus only a fifth of blacks (Shapiro 2003: 84).
Cultural capital is yet another form of inheritance that allows families with ample assets to pass along nonmonetary benefits to their children that give them a competitive edge in school, the job market, and other areas. Cultural capital is typically found where wealth is high (Shapiro 2003: 85). Over the lifetime, whites’ inheritances are on average seven times larger than blacks’ inheritances. Black boomers will inherit 13 cents for every dollar inherited by white boomers.
The legacy of grandparents of black baby boomers, who lived and toiled under harsh discrimination and glaringly different conditions, did not include financial resources. We see a glimpse of the racial reality of two generations ago continuing to impose and structure differences onto the present generation of young adults and a generation of children still coming up. Post World War II economic prosperity benefited whites substantially, whereas blacks still faced discrimination in the work place, therefore they were unable to really save any money.
Deindustrialization in the post-World War II period had a profound effect on people living these cities. Many who had worked in manufacturing plants lost their jobs as plants closed and moved their operations in the South, overseas, or elsewhere. These people were forced to find other types of employments, and some became poor (Iceland 2003: 109). Building of low-income projects in already poor inner-city neighborhoods in the post-World War II period, contributed to poverty concentration. Residential segregation interacting with economic change and social alienation, played a key role in the perpetuation of concentrated poverty.
National black unemployment is officially above 15 percent and rising while white unemployment is 7. 6 percent (Wright 2012: 142). Because the tactics for maintaining systemic white privilege changed in the 1960s, the rationalizations for explaining racial inequality changed, too. Whereas Jim Crow racism explained blacks’ social standing as the product of their imputed biological and moral inferiority, color-blind racism explains it as the product of market dynamics, naturally occurring phenomena, and presumed cultural deficiencies (Bonilla-Silva 170).
