Widening the Racial Wealth Gap
by Betsy Leondar-Wright
www.dissidentvoice.org
May 31, 2006



 

It’s happening again.

The recent vote in Congress to criminalize undocumented immigrants was just the latest in a centuries-long series of government actions that have blocked people of color from gaining economic security. Employers are getting away with murder, underpaying and overworking people too vulnerable to complain. Our elected officials are not just letting them get away with it -- they’re actually aiding and abetting them.

Why does the typical family of color have 18 cents for every white dollar? Literally hundreds of government actions have affected the amount of money that families have today -- most of them not widely known.

Everyone knows that the U.S. government took land from Native Americans and gave it to white settlers. And it’s widely known that some states let white slave owners profit from slave labor.

But most people don’t know that land ownership was restricted to citizens and citizenship was limited to whites in many areas throughout the 1800s. The last racial barriers to naturalized citizenship were lifted in 1952. Almost no one realizes that one in four white Americans have an ancestor who was given Indian or Mexican land under the Homestead Act.

Most people don’t know that the New Deal excluded many people of color from Social Security because until the 1950s, those laws excluded domestic and agricultural workers, the occupations of most workers of color. The parents and grandparents of some African Americans and Latinos in the labor market today missed out on Social Security benefits. As a result, many in the younger generations are supporting their elders instead of saving for their own retirement.

And few realize that almost all veterans of color were unable to access the GI Bill’s educational and mortgage benefits, which boosted five million white veterans into the middle class after WWII. Not only did discrimination by realtors and colleges make the benefits difficult for vets of color to use, but VA and FHA lending rules actually blocked mortgages in mixed-race and urban neighborhoods.

The racial income gap has narrowed, thanks to affirmative action and the energetic striving of people of color. But the racial wealth gap still looms large, because assets tend to be passed down within families. In The Hidden Cost of Being African American, Thomas Shapiro compared the finances of pairs of white and black families with the same income. He found that while they all attributed their assets to their own hard work and savings, in fact the white families were far more likely to have gotten money from their families, whether in the form of inheritance, a down payment, or college tuition. Even low-income white people are more likely to have some modest family safety net, such as a home owning relative with a guest room, than many people of color.

Outright discrimination is illegal now, but racial bias in government policies continues. Since welfare reform went into effect in 1997, childcare and transportation assistance have been much more likely to go to white welfare leavers; unpaid “workfare” has been far more common for welfare leavers of color. The Bush tax cuts have been much more generous for people with substantial income from investments (disproportionately white) than to working people; and IRS audits have tended to befall low-wage workers taking the Earned Income Tax Credit (disproportionately people of color).

The up escalator that whites have climbed towards prosperity has been a down escalator for African Americans, Native Americans, Latinos and some Asian Americans.  However, many white Americans lose out from this two-tier economy as well, since racial divide-and-conquer techniques explain the lower wages and weaker safety net here than in most industrialized countries.

The lowest wage in the economy is the floor that all of us stand on. That’s why, in today’s immigration debate, not just human compassion but also enlightened self-interest should lead native-born working people to support legalization and labor rights for undocumented immigrants.

The positive lesson from this country’s grim history is that when the government decides to invest in building a middle class, it works. What worked for some white men for our country’s first 200 years could work for people of every race and nationality now.

Betsy Leondar-Wright, Communications Director at United for a Fair Economy, co-authored UFE’s new book, The Color of Wealth: The Story Behind the US Racial Wealth Divide (New Press, 2006).

HOME