Racial inequality in the United States
In the United States, racial inequality refers to the social inequality and advantages and disparities that affect different races. These can also be seen as a result of historic oppression, inequality of inheritance, or racism and prejudice, de jure and de facto segregation, specifically against racial minority groups.
A 2021 survey of 1,422 members of the American Economic Association found that 78 percent of professional economists generally agreed with the statement: "Differences in economic outcomes between whites and blacks in the US are in large part due to the persistence of discriminatory norms and institutions."
There are vast differences in wealth across racial groups in the United States. The wealth gap between Caucasian and African American families substantially increased from $85,000 in 1984 to $236,500 in 2009. According to survey data presented by the ACLU, the wealth gap as of 2018 stands at $33,000. While the average income for a white family of three is roughly $84,600, a Black family of the same size would only earn $51,600. Many causes relate to racial inequality such as: Years of home ownership, household income, unemployment, education, lack of upward social mobility, and inheritance/generational wealth. In 1863, two years prior to emancipation, Black people owned 0.5 percent of the national wealth, while in 2019 it is just over 1.5 percent. Though some Black journalists, such as Jesse Lee Peterson, disagree, pointing to systemic failings within the Black community as being the real causes for the wealth gap.
Under slavery, African Americans were treated as property. After the American Civil War, Black sharecroppers became trapped in debt. African Americans were rarely able to homestead. The Freedman's Savings Bank failed, losing many Black assets.
Exclusions from Social Security disproportionately affected African Americans. Savings were spent for retirement instead of handed down as inheritance. African Americans are less likely to receive an inheritance and more likely to aid poor family members.
The Federal Housing Administration and Veteran's Administration shut out African Americans by giving loans to suburbs instead of central cities. Housing segregation caused unequal living standards and [|poverty]. Public education greatly relies on local property taxes, with racial inequality between White affluent suburbs and poor minorities in inner-cities.
Criminal records lead to employment and income struggles. Inability to make bail and quality counsel are factors. Racial segregation and racial profiling lead to differences between races. After World War I, white families found themselves displaced in an economy which made housing a luxury good. After the Great Depression, this disparity was exacerbated even more. Because of this, New Deal programs were created and managed by the Public Works Administration in 1933 to aid in neighborhood composition. The way of doing this would be seen in segregated housing, even in already integrated communities. In 1937, the PWA was replaced with the U.S. Housing Authority. While they adopted many of the PWA's policies, they focused particularly not on the location of public housing but on the racialization components. At this time, public housing was only made available to white individuals. Therefore, African Americans and all BIPOC individuals were forced into racial silos. The housing that was available to all minority groups was scarce and, therefore, significantly more expensive. "Rent to buy" sellers would allow African Americans the opportunity to build wealth through homeownership, but the home's equity would not be attainable until the home was fully paid off. High-density areas of BIPOC folks became the standard since most housing was used for multi-family homes. Oftentimes, these homes would simply be built-in extensions of single-family homes because a lack of housing did not allow for African Americans to fit in anywhere else in the economic sector. One low interest rate programs and subsidized housing for the white suburbanization of America became standardized, BIPOC folks would be allowed to utilize public housing. However, this led to a new stigma in which public housing became "The projects." Those who lived in public housing were now seen as criminals, dirty, lazy, and the opposite of disciplined hard working individuals. Even today, this stigma stands in all branches of welfare an individual belonging to a minority community may utilize.
Definitions
In social science, racial inequality is typically defined as "imbalances in the distribution of power, economic resources, and opportunities." Racial inequalities have manifested in American society in ways ranging from racial disparities in wealth, poverty rates, bankruptcy, housing patterns, educational opportunities, unemployment rates, and incarceration rates. Current racial inequalities in the U.S. have their roots in over 300 years of cultural, economic, physical, legal, and political discrimination based on race. Leland T. Saito, Associate Professor of Sociology and American Studies & Ethnicity at the University of Southern California, writes, "Political rights have been circumscribed by race, class and gender since the founding of the United States, when the right to vote was restricted to White men of property. Throughout the history of the United States race has been used by Whites for legitimizing and creating difference and social, economic and political exclusion." Additionally, the United States Department of Treasury describes the definition of wealth as, "Wealth is defined as the total financial value of what an individual or household owns minus all debts "History
Before the 1808 abolition of the transatlantic slave trade, Africans would be captured and brought into the United States as enslaved people, depriving them of all property, and in some cases family. In order to prevent rebellion or escape, the slave codes in some states banned education of slaves, especially teaching a slave to read or write. Redistribution of land from white owners to the people formerly forced to work it was attempted under the forty acres and a mule policy of Union General William Tecumseh Sherman. This was reversed by President Andrew Johnson, a Southern Democrat who also opposed political rights for African Americans and protections against white violence in the South. Slavery continued in the border states until ratification of the Thirteenth Amendment to the United States Constitution in December 1865.The Freedmen's Bureau was created as part of the War Department by President Abraham Lincoln to provide shelter and supplies to freed slaves. It was supported by the Republican Congress over the veto of Andrew Johnson, but was soon de-funded and abandoned by a Democrat-controlled Congress in 1872.
While free African Americans owned around $50 million by 1860, farm tenancy and sharecropping replaced slavery after the American Civil War because newly freed African American farmers did not own land or supplies and had to depend on the White Americans who rented the land and supplies out to them. At the same time, southern Blacks were trapped in debt and denied banking services while White citizens were given low-interest loans to set up farms in the Midwest and Western United States. White homesteaders were able to go West and obtain unclaimed land through government grants, while the land grants and rights of African Americans were rarely enforced.
After the Civil War the Freedman's Bank helped to foster wealth accumulation for African Americans. However, it failed in 1874, partially because of suspicious high-risk loans to White banks and the Panic of 1873. This lowered the support African Americans had to open businesses and acquire wealth. In addition, after the bank failed, taking the assets of many African Americans with it, many African Americans did not trust banks. There was also the threat of lynching to any African American who achieved success.
In addition, when Social Security was first created during the Great Depression, it exempted agricultural and domestic workers, which disproportionately affected African Americans and Hispanics. Consequently, the savings of retired or disabled African Americans were spent during old age instead of being handed down and households had to support poor elderly family members. The Homeowner's Loan Corporation, which helped homeowners during the Great Depression gave African American neighborhoods the lowest rating, ensuring that they defaulted at greater rates than White Americans. The Federal Housing Authority and Veteran's Administration shut out African Americans by giving loans to suburbs instead of central cities after they were first founded.
The growing Blaxit movement is now seeing large numbers of African Americans moving to Africa to benefit from the new growth opportunities.
Racial wealth gap
A study by the Brandeis University Institute on Assets and Social Policy which followed the same sets of families for 25 years found that there are vast differences in wealth across racial groups in the United States. The wealth gap between Caucasian and African-American families studied nearly tripled, from $85,000 in 1984 to $236,500 in 2009. The study concluded that factors contributing to the inequality included years of home ownership, household income, education, and familial financial support and/or inheritance. In an analysis of the American Opportunity Accounts Act, a bill to introduce Baby Bonds, Morningstar reported that by 2019 white families had more than seven times the wealth of the average Black family, according to the Survey of Consumer Finances.Wealth can be defined as "the total value of things families own minus their debts." In contrast, income can be defined as, "earnings from work, interest and dividends, pensions, and transfer payments." Wealth is an important factor in determining the quality of both individual and family life chances because it can be used as a tool to secure a desired quality of life or class status and enables individuals who possess it to pass their class status to their children. Family inheritance, which is passed down from generation to generation, helps with wealth accumulation. Wealth can also serve as a safety net against fluctuations in income and poverty.
There is a large gap between the wealth of minority households and white households within the United States. The Pew Research Center's analysis of 2009 government data says the median wealth of white households is 20 times that of Black households and 18 times that of Hispanic households. In 2009 the typical Black household had $5,677 in wealth, the typical Hispanic had $6,325, and the typical white household had $113,149. Furthermore, 35% of African American and 31% of Hispanic households had zero or negative net worth in 2009 compared to 15% of white households. While in 2005 median Asian household wealth was greater than white households at $168,103, by 2009 that changed when their net worth fell 54% to $78,066, partially due to the arrival of new Asian immigrants since 2004; not including newly arrived immigrants, Asian net wealth only dropped 31%. According to the Federal Reserve Survey of Consumer Finances, of the 14 million Black households, only 5% have more than $350,000 in net worth while nearly 30% of white families have more than this amount. Less than 1% of Black families have over a million in net assets. while nearly 10% of white households, totaling over 8 million families have more than 1.3 million in net worth. According to the Federal Reserve of Cleveland the wealth gap between white and Black Americans has remained roughly the same since 1962, when the average white family had seven times the wealth of the average Black family.
Lusardi states that African Americans and Hispanics are more likely to face means-tested programs that discourage asset possession due to higher poverty rates. One-fourth of African Americans and Hispanics approach retirement with less than $1,000 net worth. Lower financial literacy is correlated with poor savings and adjustment behavior. Education is a strong predictor for wealth. One-fourth of African Americans and Hispanics who have less than a high school education have no wealth, but even with increased education, large differences in wealth remain.
Conley believes that the cause of Black-White wealth inequality may be related to economic circumstances and poverty because the economic disadvantages of African Americans can be effective in harming efforts to accumulate wealth. However, there is a five times greater chance of downward mobility from the top quartile to the bottom quartile for African Americans than there is for white Americans; correspondingly, African Americans rise to the top quartile from the bottom quartile at half the rate of white Americans. Bowles and Gintis conclude from this information that successful African Americans do not transfer the factors for their success as effectively as white Americans do.
Other factors to consider in the recent widening of the minority wealth gap are the subprime mortgage crisis and 2008 financial crisis. The Pew Research Center found that plummeting [|house values] were the main cause of the wealth change from 2005 to 2009. Hispanics were hit the hardest by the housing market meltdown, possibly because a disproportionate share of Hispanics live in California, Florida, Nevada, and Arizona, which are among the states with the steepest declines in housing values. From 2005 to 2009 Hispanic homeowners' home equity declined by Half, from $99,983 to $49,145, with the homeownership rate decreasing by 4% to 47%. A 2015 Measure of America commissioned by the ACLU on the long-term consequences of discriminatory lending practices found that the 2008 financial crisis will likely widen the Black-white wealth gap for the next generation.
The racial wealth gap essentially is composed of a private wealth management industry maintaining Whiteness to act as a barrier to prevent those of color from equal financial development. This disparity has been debated, but never disputed due to its "very real" implications it has on African Americans. Data has shown that "among racial and ethnic groups, African Americans had the highest poverty rate at 27.4%".