Inequality.org

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Institute for Policy Studies

Our Real Racial Wealth Gap Story

Over 50 years after Martin Luther King Jr.’s March on Washington, the median white family has 70 times more wealth than typical black families.

By Antonio Moore

As we celebrate Dr. Martin Luther King Jr.’s life and legacy this year, we need to understand that the current state of African American wealth in no way reflects what Dr. King envisioned when he spoke to America’s great promise before his death. The economic reality for black America has, in fact, become much worse than commonly thought.IQ

A recent study by the Pew Research Center used data from the Federal Reserve Survey of Consumer Finance to show that the median white American household has 13 times the wealth of the median black household. But the data used to support this study’s bleak findings may have used accounting that actually understates the gap in wealth between white and black families.

New York University Professor Edward Wolff, one of the foremost economists studying wealth inequality, looks at the same Federal Reserve dataset that the Pew researchers used in a recent report he published in the National Bureau of Economic Research (paywall). Wolff points out that the Fed includes consumer durables in its net-worth estimates.

Wolff excludes these consumer durables from his net-worth figures because these assets — everything from automobiles and televisions to furniture and household appliances — cannot be readily converted to cash and their resale value typically far understates their consumption value.

According to Wolff’s calculations, the median black family is actually only worth $1,700 when you deduct these durables. In contrast, the median white family holds $116,800 of wealth using the same accounting methods. Black household wealth, Wolff adds, actually fell during the Great Recession from $6,700 to $1,700.

Some historical context: In South Africa, during the atrocities of apartheid, the median black family held about 7 percent of typical white South African family net worth. Today, using Wolff’s analysis, the median African American family holds a mere 1.5 percent of median white American family wealth.

As we celebrate Dr. Martin Luther King Jr. we must do so with an understanding that his life’s work was not completed with the accomplishment of the Civil Rights Act. Rather it was the opening for us all to move the discussion forward on how to reach racial equality.

  • DHFabian

    It depends on how one wants to frame the discussion. Black people are disproportionately poor, while the majority of poor and low-income are white. We choose to ignore white poverty because it makes white middle classers too uncomfortable. The majority of poor are also women. Most of the “poorest of the poor” — our homeless/destitute — are white. Rural poverty and poverty among those over the age of 50, has been growing for years.

    No question, it’s easier to regard poverty as a racial issue rather than the result of policies chosen/supported by Americans since the 1980s. We can then set the issue aside, and “trust” that government will address the discrimination. We’re a simple people, and we want simple solutions. But real life isn’t simple. The US shut down/shipped out a huge number of jobs since the 1980s, ended welfare in the 1990s, creating today’s poverty crisis. Not everyone can work (health, etc.) and there aren’t jobs for all. The last I heard, we have 7 jobs for every 10 people struggling to find one — and this doesn’t count those who have already been pushed into destitution (can’t get a job without a home address, phone, bus fare.) We have no mercy on them.

    Much work has gone into pitting the poor against each other by race, ensuring that there can be no push-back this time, no broad Poor People’s Campaign to secure fundamental human rights for our “surplus population” (those who aren’t of current use to employers). Divide and conquer. Marginalizing white poverty is reassuring to the middle class, but ensures that conditions will continue to deteriorate for the country.

  • JohnAvers

    Your point makes no sense @DHFabian has no understanding of what this is saying. Lets be more clear Descendants of Slavery worth 70 times less than whites. Lets be clear The middle white family is worth 117K. This article isn’t about poverty. You can write that piece separately, the author is clearly discussing race and how wealth is defined through a lens of race because this country and its citizens had Slavery, Jim Crow and Mass Incarceration. Lets make it even clearer for you nearly all the money in America is in White bank accounts. So the fact that there are also white poor holds little relevance.

    • DHFabian

      The fact that most money is in the bank accounts of rich white people, in a nation that is predominantly white, has no relevance to the poor. What I see is ongoing denial of overall conditions, writing white poverty off as irrelevant. Focusing on race has served powerfully to distract the public from the cause of our economic deterioration overall, while more deeply pitting the poor against each other by race.

  • Leland Mellott

    When a large portion of this world’s population has agreed that money is being earned in time instead of by labor, a planetary power shift will have taken place.

  • Leland Mellott

    In an arriving future, the business of this world’s people will be that of saving lives.

  • Juwar74

    I wish some black folks stop comparing blacks to whites as if they are the only racial groups. First off, whites far outnumber blacks in America, so it is not fair to compare blacks to whites. What you should do is compare blacks to Asians and Indians, who are fewer in numbers, yet have more wealth than blacks. The explanation of that should be looked into more. And even if all of what you say is 100% true in this article does not mean that the 14 million black households can’t increase their wealth by doing some basic things with what they have like practicing black economics, saving a percentage of their income every month, buying generic, etc. Yes, not every black person will become a millionaire and the wealth gap will surely continue, but at least we should try to make many black people “multi-thousandnaires”, which means they are not in poverty. It seems that the implication here is that if more black people aren’t “millionaires” rather than “financial stable and secure” then there should be some kind of massive intervention. Ridiculous. The road to wealth starts with changing your mindset, regardless of the roadblocks. Unfortunately, too many black Americans are still infected with the “slave mentality” or the “Jim Crow mentality”. It’s understandable considering our history, but there has to come a point where you just say, “Fuck it. I’m going to do something different, no matter what happens going forward.”

  • Fucker

    BLACKS SOULD BE SLAVES
    BOW BEFORE ME NIGGER

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