Saturday, May 22, 2010

Black American Poverty

We read that the wealth gap between whites and African Americans has expanded dramatically. A new study by Brandeis University in Massachusetts Institute on Assets and Social Policy reveals that income equality does not always lead to wealth equality when it comes to race. The wealth gap between black and white families and individuals being tracked in the study more than quadrupled over the course of a generation, and that the middle-income white families in the study accumulated a higher net worth than high-income African-Americans.

The escalating gap, according to the study researchers, was largely caused the fact that white families have historically had more wealth to pass down. Although many black families have moved up to better-paying jobs, they begin with fewer assets, such as inheritance, on which to build wealth. They are also more likely to have gone into debt to pay for university loans.

"About one in every four white families inherit money, and their average inheritance is $10,000" said Thomas Shapiro, director of the IASP and author of "The Hidden Cost of Being African American: How Wealth Perpetuates Inequality." "That provides a huge head start. Less than 8 percent of African-American families inherit wealth, and when they do, the average inheritance is $900. Even when African Americans do everything right - get an education and work hard at well-paying jobs - they cannot achieve the wealth of their white peers in the workforce, and that translates into very different life chances”

White families typically have assets worth $100,000 (£69,000), up from $22,000 in the mid-1980s. African-American families' assets stand at just $5,000, up from around $2,000. A quarter of black families have no assets at all.Only one in 10 African-Americans owns any shares. A third do not have a pension plan, and among those who do the value is on average a fifth of plans held by whites.In 1984, high-income black Americans had more assets than middle-income whites. That is no longer true. "African-Americans' wealth essentially flatlined."

The report attributes part of the cause to the "powerful role of persistent discrimination in housing, credit and labour markets. African-Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes. African-Americans, before the 1960s, first by law and then by custom, were not really allowed to own businesses. They had very little access to credit. There was a very low artificial ceiling on the wealth that could be accumulated. Hence there was very little, if anything, that could be passed along to help their children get to college, to help their children buy their first homes, or as an inheritance when they die" said Shapiro. "In African-American families there is a much larger extended network of kin as well as other obligations. From other work we've done we know that there's more call on the resources of relatively well-off African-American families; that they lend money that's not given back; they help cousins go to school. They help brothers and sisters, aunts and uncles, with all kinds of legal and family problems".

Class is determined, not by the size of income or colour of skin but by their ownership or non-ownership of the means of production and distribution. Today, the richest 1% of the US population owns close to 40% of its wealth. The top 25% of US households own 87%.

The fact that these are examples of the lower strata of working class existence should not obscure the fact that poverty, in some measure, is a problem for the entire class. The worst poverty is usually suffered by those who for some reason - unemployment, old age, sickness are unable to get a job and a decent wage. Or as this report explains , an unwelcomed legacy of discrimination and racism from the past. History will affect peoples chances in life. Chronic poverty can be passed on from generation to generation

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