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Racial Wealth Divide

Ratcheting Up the Racial Divide

Research & Commentary
February 13, 2011

by Inequality.org

The United States, by some benchmarks, has made phenomenal racial progress over the years. In polite white company, for instance, no politico today would ever dare mutter the “N” word.

Unfortunately, the same movers and shakers who wouldn’t think of using the “N-word” have no problem whatsoever with America’s trendiest political “A-word,” and this “A-word” — austerity — now endangers racial progress in the United States far more than any foul-mouthed bigot.

We learn why in the just-released eighth annual State of the Dream, the survey of America’s racial divide that the Boston-based United for a Fair Economy publishes every January, just before the Dr. Martin Luther King, Jr. holiday.

Cheerleaders for austerity — self-styled “budget hawks” from both major parties — don’t position what they’re doing, of course, as in any way racially tinged. They talk instead, in impeccably race-neutral tones, about “tightening our budget belts” and “living within our means.”

Beware these easy generalities, warns State of the Dream 2011. The austerity policies the budget hawks are now pushing — rollbacks in public employment, wages, benefits, and programs — have an unmistakably distinct racial impact.

To help us understand this impact, State of the Dream walks us past the glib austerity generalities, straight to facts on the ground. One example: Black Americans, the authors show, now rate as 30 percent “more likely than the general workforce to hold public sector jobs.” Public sector wage and benefit cuts, consequently, disproportionately undermine African-American households.

And those Social Security cutbacks the budget hawks are so loudly demanding? Just under 60 percent of Black senior citizens — and 65 percent of the Latino  elderly — depend on Social Security for over 80 percent of their family income. The comparable figure for white senior citizens: 46 percent.

The tax cuts the austerity crowd celebrates serve to widen the racial economic divide even more, mainly because these cuts privilege the unearned income — dividends and capital gains — that comes from the ownership of wealth. African Africans, in America today, hold precious little of this wealth, just 10 cents, on average, for every dollar in white pockets.

What explains this huge gap? State of the Dream carefully traces the conscious political decisions over the years that have widened this divide — the exclusion of workers in domestic service from minimum wage laws, for instance, and the unwritten rules that denied so many Black veterans access to GI Bill benefits.

“Wealth is transferred from generation to generation through gifts and inheritance,” State of the Dream goes on to explain. “As a result, the inequities and injustices of the past are inherited by each subsequent generation.”

So what do we do? If we truly want to honor the memory of Dr. King, we as a nation — for starters — would send the austerity crowd packing and confine our “belt tightening” to the overstuffed pockets of the nation’s rich.

America’s racial economic divide, as State of the Dream reminds us, has historically narrowed the most strikingly when taxes on America’s rich have run at their highest. More economic equality in society overall, the nation’s record makes clear, begets more racial equality.

Or, to rephrase that historical reality in the cadences of Dr. Martin Luther King: Wherever wealth concentrates, dreams die.

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