Against the Current, Sept./Oct. 2000
Race and Class: Racism and the Wealth Gap
by MaIik Miah
POLITICIANS AND GOVERNMENT officials point to the historic low unemployment
level in the Black community as signs of a strong economy and a future
where whites and African Americans will finally have an opportunity for an
equal share of the American dream.
While it is true that long-term unemployment for the African-American
population is in the single digits for the first time, the wealth gap
between white and Black families continues to widen. According to
government statistics Black households wealth average one-twelfth that of
white households.
Wealth is not defined by your annual income. It is a reflection of assets
accumulated (such as real estate and stocks) over time.
According to a study by economist Edward Wolff, in 1995 the median white
households net worth, minus net equity in owner-occupied housing, was
$61,000, compared with $7,400 in Black households. (Report by Mari Queen in
the May issue of Emerge magazine)
What are the origins of the wealth gap? Why have so few Blacks have
accumulated real estate and stocks? Two words: HISTORICAL RACISM.
What do I mean by historical racism? It is racism woven into society on
every levelthe bedrock of a society rooted in slavery and segregation, and
thus institutionalized. Because our ancestors were slaves, and often lost
whatever assets they acquired because of poverty, discriminatory laws or
simple cheating, most Blacks couldnt accumulate very much wealth.
So our great grandparents, grandparents, and parents could not pass on the
family property and wealth to us. Inherited wealth amounted to our physical
being (labor power) that we could sell to the boss for the best wage
possible. Even that was not possible until the slave system was abolished
with crushing of the slave owners in the Civil War.
Unfortunately, African Americans didnt get our "forty acres and a mule"
either. (The modest reparations German Jews are getting we never got!) Jim
Crow segregation made us second-class citizens. Own real estate and stock?
Who are you kidding? Survival was our number one concernas it is for most
Blacks today.
It took a massive civil rights movement in the 1950s and 60s to get the
right to vote in the South. Congress made it law with the 1965 Voting
Rights Act. The door was now open for some modest political representation.
Home ownership was still hard to gain because of redlining by the real
estate industry. It took a 1968 congressional act to get the first national
"fair housing" laws adopted. Up until the late 1960s U.S. policies
preserved segregation and helped keep African Americans from home ownership
by refusing to make Federal Housing Administration (FHA) mortgage financing
available. Between 1946 and 1959, less than two percent of all federal
mortgage insurance assistance was made available to Blacks.
Only after new legislation was written in the 1960s and 70s were Blacks
able to take legal action against discrimination in employment, housing and
higher education. In my industry (airlines), few qualified Black pilots and
mechanics were hired until the 60s. By the 1970s a civil rights suit filed
by Black employees forced United Airlinesthe countrys largest carrierand
the unions to open up hiring and to promote more Blacks and women. (The
unions were required to modify discriminatory work rules.)
Institutional and historical racism is behind the wealth gap. Thats why
the gap actually widens in economic good times. Because Blacks as a group
start fifty yards behind whites, its impossible to catch up without strong
affirmative action.
How did working-class whites sprint so far ahead? It really wasnt through
individual enterprise or family savings but rather government policy, as
Stephanie Coontz pointed out in her book, The Way We Never Were.
After World War II the GI Bill, available to forty percent of the male
population between the ages of 20-24, permitted a whole generation of
working-class whites to expand their education.
Similarly, the FHA policy of requiring down payments of only five to ten
percent on the purchase price of a house put the federal government in the
business of insuring and regulating private loans for single-home
construction. Veterans eligible for Veterans Administration loans only
needed a dollar down.
Of course African Americans served as soldiers during World War II, but
discrimination meant in practice that most were denied access to these
programs. Federal loan policies also benefited the suburbs at the expense
of the urban areas, trapping poorer families in the inner cities.
Federal loan policies functioned to systematize the pervasive but informal
racism that had previously dominated local housing markets. These policies
also starved public transportation and other vital public services, from
schools to libraries and parks.
So while it is true that more Blacks have better-paying jobs today, own our
