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FORTY ACRES AND A MULE ISN'T ENOUGH |
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by DALTON CONLEY
(No verified email address) |
05 Oct 2001
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The real inequity between African-Americans and other Americans is not in earned income, but in assets and the stakes they will buy in the future - a home, an education. And those assets are a legacy of wealth from a past the ex-slaves were denied. |
The one statistic that reflects the continuing racial inequality in post-civil rights America is net worth - wealth, equity, assets. If you want to know your net worth, all you need do is add up everything you own and subtract your outstanding debts. When you do this for white and minority households across the United States, great differences emerge: overall, the typical white family has a net worth 10 times that of its non-white counterpart. This "equity inequity" has grown in the decades since the trumpeted civil rights triumphs of the 1960s (1).
The wealth gap cannot be explained by income differences alone. When we compare African-American and white families at the same income levels, assets gaps remain wide. For instance, at the lower end of the economic spectrum (incomes less than $15,000 a year), the median African-American family has a net worth of zero, while the equivalent white family holds $10,000 worth of equity. Among the heralded new African-American middle class, the situation is not much better: the typical black family earning $40,000 a year has a nest egg of less than that amount; its white counterpart has assets of $80,000, more than double the amount (2).
This wealth gap accounts for many of the persistent differences between African-Americans and whites. African-Americans are less likely to graduate from college, earn less, and are more likely to rely on welfare. Yet when we compare African-Americans and whites from similar backgrounds in terms of income and wealth, we find that African-American children are more likely to graduate from high school than whites, and just as likely to complete college.
Stacey Jones, an African-American woman with a graduate degree and a solidly middle class job, explains: "I find it hard to locate a decent school in Atlanta for my children, without resorting to parochial education because I am, in effect, priced out of home-buying in good school districts. And it is difficult for me to pay more for housing, since I'm spending a good deal of my income on [private] education for my children" (3). This is the dilemma of the African-American middle class, a growing group that is often touted as a badge of racial progress. Lack of assets means living from paycheque to paycheque, being trapped in a job or a neighbourhood that is less beneficial in the long run, or not being able to send your kids to the top college. In the US, where quality schooling is often a private affair, wealth creates upward mobility. Income only provides for day-to-day, week-to-week expenses.
For poor African-Americans, the situation is even more precarious. The $10,000 in equity that impoverished white families enjoy would certainly come in handy when a family member is out of work, or when a medical crisis strikes (since there is no universally provided government health insurance in America). With no asset cushion to speak of and a weak US welfare state, African-Americans feel the brunt of any downturn. They are more dependent on welfare. But welfare reform legislation passed in 1996 abolished federal aid to the poor and, at the local level, limited benefits to five years in a lifetime.
Aside from purely financial benefits, assets have other, less tangible effects. In 1980 the philanthropist Eugene Lang returned to the Bronx neighbourhood where he had grown up to give a speech to sixth graders. Lang was awestruck by the urban blight that had infected his old stomping ground. He tore up his speech on the importance of education and hard work. Instead, he promised each of those six graders that if they completed high school, he would personally pay their college tuition. He did not change their weekly income or their neighbourhood conditions; what he did was provide them with an asset in the form of a promissory note (as well as some after-school tutoring). The result was that in a neighbourhood where a majority of students dropped out of high school and almost nobody attended college, 54 of those 61 students finished high school and more than half went on to pursue higher education (4).
Whites earn more and own more
It takes money to make money. Whites not only own more, they earn more than African-Americans - a lot more. Economists estimate that 50% to 80% of lifetime wealth accumulation results from gifts from past generations of relatives: a down payment on a first home, a free college education, a bequest from a parent.
Yet there have long been institutional restraints to property accumulation by African-Americans. After the emancipation of slaves at the end of the 19th century, blacks were promised "40 acres and a mule" by a government agency set up to integrate former slaves into the world of wage labour. But the lion's share of the total number of confiscated plantations went to white northerners, who hired the former slaves to cultivate them, inaugurating the system of sharecropping that would keep blacks asset poor for many decades. Though legally and politically different from slavery, its end result was the same. There were great obstacles for African-Americans who tried to escape sharecropping. In many Southern states, those who tried to set up their own businesses were stopped by "black codes" that required African-Americans (but not whites) to pay exorbitant licensing fees.
During the 20th century barriers to black property accumulation remained. The US government's Home Owners' Loan Corporation (HOLC) helped many white homeowners avoid default during the Depression. The same cannot be said for African-American homeowners. In fact, it was the HOLC that instituted the technique of "redlining", in which the highest risk neighbourhoods, often black, would be assigned a red - no-loan - rating. Private banks adopted the practice, too (5). Meanwhile the US public pension system excluded most African-American workers since it exempted the agricultural and service sectors. The result was that a greater proportion of black assets had to be spent on supporting elderly family members, and less could be passed on to the next generations.
After the second world war a home-lending programme made homeownership possible for millions of Americans (by underwriting low-interest, long-term loans for first-time home buyers). But these loans were channelled to the suburbs, away from the city centres where African-Americans predominantly resided. Since the 1960s there have been occasional efforts to promote minority asset accumulation but they have not amounted to much. Despite the previously soaring stock market, home ownership is still the primary way that families accrue equity in the US. But it is more difficult for African-Americans to become homeowners, and even when they do, homes in African-American neighbourhoods do not increase in value at the same rate as those in predominantly white areas. Property has the particular attribute of quantifying the social value of ideas or objects. The value of a diamond, a misprinted stamp or a Van Gogh stems only from the price that people are willing to pay for it in the marketplace. In the same way, when an area's housing values decline as the proportion of black residents rises, the price changes provide a record of the social value of "blackness" on the part of society.
White flight
The devaluation of African-American neighbourhoods is partly a result of white fears of a decline in property values and the "white flight" that ensues. As long as whites are a significant majority and can decide where they will live, they will have an economic incentive to flee integrated neighbourhoods, perpetuating the vicious cycle. Aside from personal choice, it is therefore in the economic interest of white homeowners to sell up when they anticipate that their neighbourhood has reached a racial turning point, for fear that others will make the same calculation and sell off first, causing them to lose money on their home (6).
Both African-Americans and whites are trapped into reproducing current residential patterns. One solution is to provide "integration insurance." This form of insurance would protect property owners from any rundown in prices that resulted from a rash in selling as a neighbourhood tips from white to black. With this policy in place, the economic incentive to pull out when a neighbourhood starts to integrate would disappear; ideally the insurance policy would never need to be cashed in. But there are some objections from within the African-American community at the idea of "needing to be insured against".
The vicious cycle of residence and race doesn't just pertain to the wealth gap: it has implications for the larger sense of class identity, group membership and social exclusion. While occupational categories were once the primary economic, social and political groupings to which Americans belonged, today that is no longer the case. In the past, collective bargaining arrangements linked most workers' economic fortunes to one another: a pipe fitter's wage was the same as all the other pipe fitters in his union, and they sought higher pay as a unified group. Today - with union membership at a low of around 10% - Americans are increasingly in competition with their co-workers in an economy that relies on temporary and non-unionised labour.
At the same time home ownership rates have risen, and neighbourhood associations may have replaced unions as the primary realm where our own economic interest is directly tied to that of our fellow humans (7). While it matters little what wages my next-door neighbours earn, it matters a great deal how they want to decorate the outside of their house. The value of my neighbours' home directly affects the value of my own property. If my neighbours choose to decorate their homes garishly - as defined by the estate agents - or, worse, to let it deteriorate, their actions will not only lower their own property values but also mine, by making the neighbourhood a less desirable place to live.
One result of these property value linkages is robust, local political action to prevent, for example, undesirable institutions such as rehabilitation clinics, sewage treatment plants and so on from moving into local areas. This is the NIMBY (not in my back yard) syndrome. The other result is the perpetuation of racial segregation, giving it a rational basis, since a high proportion of whites pushes up housing values in a neighbourhood. Including for the few African-Americans who live in it.
Instead of promoting financial measures to foster savings among the poor, helping African-Americans to become homeowners, the Bush administration appears to be moving in the opposite direction with the repeal of the federal estate tax, which affects only the richest 1.4% of the population. On the Forbes magazine annual list of the 400 richest people in the US, there are only two African-Americans.
Dalton Conley is a professor of sociology at New York University, author of Honky, University of California Press, 2000.
(1) In July 1964 segregation was officially banned throughout the country; in August 1965 restrictions to African-Americans' voting rights were lifted. These rights have frequently been violated in the name of the sovereignty of different states.
(2) See Dalton Conley, Being Black, Living in the Red: Race, Wealth and Social Policy in America, University of California Press, Berkeley, 1999.
(3) In the US spending on education is mainly paid for by individual states and counties, not the federal government. The richer the county, the better the schools.
(4) See Robert Frank and Phillip Cooke, The Winner-Take-All Society, Viking, New York, 1995.
(5) Redlining was finally outlawed by the 1977 Community Reinvestment Act.
(6) Between 1940 and 1960 the white population of Chicago's West Side fell from 102,000 to 11,000, while its African-American population rose from 380 to 114,000; from 268 whites to each black, there are now 10 African-Americans for each white.
(7) Read Eric Klinenberg, "Bowling alone, policing together ", Le Monde diplomatique English language edition, February 2001.
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