The Bank's annual World Development Report distorts data to dismiss concerns about inequality and promote a deregulatory approach to new technologies.
A new book explores how America’s wealth gap destroys mobility, deepens the racial divide, and endangers our future.
This reflection on Toxic Inequality, the new book by Brandeis University scholar Thomas Shapiro, was originally published by Powell Books.
I didn’t fully know what I was getting into when, in 1998, I started interviewing families with young children about their finances and how money was shaping their hopes and plans. I wanted to learn how wealth influences vital family choices, and how assets affect families’ capacity for economic mobility. The entire project was animated by a desire to understand how race, wealth, and policy shape prospects and outcomes. But at the outset of this journey, I couldn’t have guessed that America itself and family fortunes would change so quickly and dramatically in the years that followed.
Getting ahead is hard work. Staying ahead is even harder. Families without adequate wealth are economically fragile and vulnerable to small mishaps that throw them off track. Our team interviewed nearly 200 families of different races and income levels over a period of 12 years. The upshot? Mobility is a long, tough road for most families, and years of hard work and planning can evaporate in a moment. Moreover, however, it is much harder for families of color to get ahead and stay ahead than white families.
The Johnsons are a case in point. I met Michelle and Kendrick (names have been changed) in 1998 on their way up. As a married, college-educated professional couple with a low six-figure family income, the Johnsons were very much members of a new African American middle class.
But their journey was still bumpy. “It’s really odd,” Kendrick reflected, “…people think you make all this money. When you have aging parents who you’re helping and you’ve got a daughter going through Tourette’s syndrome and another daughter in college, it just gets spread out so thin.” “Thin” could have sustained their middle-class status, but Kendrick losing his job in 2004 could not. Michelle and Kendrick reluctantly cashed out $18,000 in savings and retirement accounts to pay living expenses for the eight months he was out of work.
Kendrick did find a job — finally — but it was 3,000 miles away on the opposite coast. The long unemployment spell and relocation expenses hurt the couple’s finances and created marital stress. Two years later Michelle moved back to her family homestead in Florida with their two daughters. Kendrick sent money to pay expenses and cover their daughter Desi’s medical bills. Trained and working as a teacher, Michelle was unable to stay in the paid workforce because Desi was bullied at school and they decided homeschooling was the solution.
When I talked to them again in 2012, the Johnsons were recovering financially. Kendrick was working and had started a business, even managing to rebuild a retirement account to $32,000. But their middle-class status was over, as was their marriage.
I’ve been attuned to matters of race and wealth since my childhood growing up the second of five kids in Beverly Hills, California. From my earliest memories, I was interested in issues of fairness and equality related to race. I did not like what I saw of how African American citizens were treated in our affluent community. The few black students in my high school tended to be children of the staff who worked in wealthy homes locally. I remember being shocked and horrified by the callousness of the police during the Watts rebellion in 1965. I used to argue with my father about Cesar Chavez. I was arrested and spent a night in jail for something I had not done, an experience that helped me understand the experiences of people of color in the criminal justice system. It was formative.
Knowledge is power, and we now have the data to devote resources to policies that will have the greatest impact.
In college during the peak of the Vietnam War, I immersed myself in social justice issues, including Civil Rights and anti-war protests. I was drafted into the U.S. Army and refused induction. In college and grad school, my scholarly work on race and wealth began alongside my good friend Dr. Melvin Oliver, now president of Pitzer College. We were very interested in the field of social stratification and race. After we graduated and became professors, we worked together to find out more about family assets and liabilities across the racial divide. For the first time, we had data and a term for the racial wealth gap. Together, we wrote Black Wealth/White Wealth. [pullquote]Understanding the racial wealth gap changed discussions of poverty and inequality.[/pullquote]
Understanding the racial wealth gap changed discussions of poverty and inequality, making clear that these problems can’t be understood without making race central. The gap has gotten wider since those early days. As with the Johnsons’ story, much of the data is disheartening. But I find it invigorating to drill down into the policies and racialized structures that result in the racial wealth gap. We can now look at potential changes to policies regarding home ownership, higher education, employment benefits, and the tax code to see what effect they would have on putting us on the path to racial justice.
The picture is grim, but far from hopeless, even in our current political climate. Much can be done to protect vulnerable groups, including blacks and Hispanics, from letting their economic prospects slip down further compared to whites’. Knowledge is power, and we now have the data to devote resources to policies that will have the greatest impact.
Inequality goes far deeper than just income and wealth. It determines who can overcome obstacles: some have them cleared from their path, while others have trouble recovering from even minor mishaps. At its heart, inequality is about access, opportunity, and just rewards. For too long, toxic inequality has defined the landscape of our country, dictating where people live, how they fare, and what futures their children face. Its mechanisms can seem invisible, even inevitable. But they are man-made, forged by history and preserved by policy. Changing them is up to us.
Thomas Shapiro, the Pokross Professor of Law and Social Policy at The Heller School at Brandeis University, directs the Institute on Assets and Social Policy He is the author of several award-winning books in the field of racial-based inequity, including Black Wealth/White Wealth and The Hidden Cost of Being African American. He is active in the national Closing the Racial Wealth Gap Initiative managed by Global Policy Solutions (globalpolicysolutions.org) and the Insight Center for Economic Development (Insightcced.org), as well as other community and national movements.