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NUL State of Black America: Growing income inequality

George Curry | 4/14/2014, 11:45 a.m.

• Black-White unemployment equality is 50 percent or 2:1 and

• When it comes to wealth, Blacks ($6,314) have only a 6 percent Equality Index when compared with Whites ($110,500).

Unlike African Americans, Hispanics saw their Equality Index with Whites increase slightly, from 74.6 percent in 2013 to 75.8 percent in 2014, which was 4.6 percent higher than African Americans.

In a chapter titled, “Policies of Exclusion Perpetuate the Racial Wealth Gap,” Thomas M. Shapiro wrote: “The dramatic and widening gap in household wealth along racial lines in the United States reflects policies and institutional practices that create different opportunities for whites and African Americans. Personal ambition and behavioral choices are but a small part of the equation.”

Shapiro wrote, “In gross terms, the difference in median wealth between America’s white and African American households has grown stunningly large. The wealth gap almost tripled from 1984 to 2009, increasing from $85,000 to $236,500. The median net worth of white households in the study grew to $265,000 over the 25-year period compared with just $28,500 for the Black households.”

He said five factors account for two-thirds of the proportional increase in the racial wealth gap: number of years of homeownership, average family income, employment stability, college education, and financial support and inheritance.

According to Shapiro, homeownership accounts for 27 percent of the growth in the racial wealth gap. He said reasons home equity rises dramatically faster for Whites include:

  • White families buy homes and start acquiring equity eight years earlier than Black families because they are more likely to receive family assistance or an inheritance for down payments;

  • A larger up-front payment by White homeowners lower interest rates;

  • Residential segregation places an artificial ceiling on home equity in non-White neighborhoods and

  • The homeownership rate for White families is 28 percent higher than rates for Blacks.

“Hard evidence shows in stark terms that it is not just the last recession and implosion of the housing market that contributed to the widening racial wealth disparities,” Shapiro wrote. “Past policies of exclusion, such as discriminatory mortgage lending, which continues today, ensure that certain groups reap a greater share of what America has to offer while others are left out.”

No one expects the wealth gap to narrow without some reduction in unemployment.

Valerie Rawlston Wilson, an economist in the National Urban League’s Washington bureau, noted in her introduction to the report: “More than one-third of unemployed workers have been out of work for six months or longer and one in four has been jobless for a year or longer. Though the unemployment rate declined by 1.2 percentage points from January to December 2013 – the largest decline over a single year since the recovery began – labor force participation also reached a 35-year low in December. This downward trend in labor force participation raises concerns about underutilization of America’s labor capacity, or underemployment.”

She explained, “If we factored in the number of people who want and are available for work (but are not actively looking for a job) along with the number of unemployed workers actively looking for a job, and those who are working part-time out of necessity (but would prefer full-time work), the actual rate of underemployment was 13.1 percent at the end of 2013, nearly double the official unemployment rate.”