R a c i a l W e a l t h G a p

1. RacialWealthGap Lap 5; Day 2 Asha Hopton

2. Prayer God and Father of all, in your love you made all the nations of the world to be a family, and your Son taught us to love one another. Yet our world is riven apartwith prejudice, arrogance, and pride. Help the different races to love and understand one another better. Increase among us sympathy, tolerance, and goodwill, that we may learn to appreciate the gifts that other races bring to us, and to see in all people our brothers and sisters for whom Christ died. Save us from jealousy, hatred, and fear, and help us to live together as members of one family at home in the world, sons and daughters of one Father who live in the liberty of the children of God; through Jesus Christ our Lord. Amen.

3. Racial Wealth Gap Defined The racial wealth gap is basically an idea suggested by many economists that concludes that white families build wealth faster than black families do. In other words, people of color tend to be less wealthy than White Americans (African-Americans, Latinos, etc.)

4. Background • Traces back to the middle of the Reagan Administration (1984); and since then tripling between then and 2009 (25 years) • It is believed that this wealth gap is caused by laziness, choosing not to save, and being irresponsible – however, that’s not the case • Since the recent economic recession, it has hit minorities the worst compared to whites

5. -We tend to think of racism as being on an individual basis only. But the racial wealth gap can be a result of institutional racism. -Institutional racism: Any action, intentional or unintentional, that is based on race or skin color and that subordinates an individual or group based on skin color or race is racism. -Examples: -specifically excluding Blacks or people of color from services -adopting policies that result in the exclusion of Blacks or people of color

6. Individual racism: -consists of overt acts by individuals that cause death, injury, destruction of property, or denial of services or opportunity. Institutional racism: -more subtle but no less destructive; involves polices, practices, and procedures of institutions that have a disproportionately negative effect on racial minorities’ access to and quality of goods, services, and opportunities. -Examples: -specifically excluding Blacks or people of color from services -adopting policies that result in the exclusion of Blacks or people of color

7. Causes of the Wealth Gap: -Years of homeownership -Household income -Unemployment -College education -Inheritance/other financial support

8. Homeownership: -White families able to receive family financial assistance, make larger up-front payments for home purchases, they benefited from lowered interest rates and lending costs. -Black families’ homes are less valuable because the appreciated value of a home is lower in a non-predominately white neighborhood -Blacks face a higher risk of foreclosure because they were more likely to get high-risk loans -Homeownership for Whites only represents 39% of their family wealth; homeownership for blacks represents 53% of family wealth

9. Education: -Public schools in a black neighborhood are relatively poorer than those based in a white neighborhood -The same college degree will produce more wealth for whites than for blacks -Blacks are more likely to graduate college with a huge amount of debt --For Black college graduates, 80 percent begin their careers with student debt. For White college grads, the corresponding debt is 64 percent.

10. Unemployment • Blacks are still facing depression-like unemployment levels • The black unemployment rate averaged 16.1% in April, May, and June 2011, compared to an average of 7.9% for whites in the same period • This is attributed by differences in education attainment

12. Household Income -Every dollar increase in average income over the 25 year period added $5.19 wealth for white households, while the same income gain only added 69 cents for the wealth for African-American households

13. More Disparities In Wealth -Homeownership: “White households are 28 percent more likely to own their home than black households” (Brandeis University study) -Income: In 2011, the average annual income of a white person was $29,401; the average income of a black person was only $18,357 (Census Bureau) -Unemployment: In January, unemployment rate for whites was 7%; the rate for blacks was 13.8% (Labor Dept.) -Education: Between 2006-2010, 29% of white people over the age of 25 had bachelor’s or graduate degrees; only 18% of blacks in the same age group had the same achievements (Census Bureau) -Inheritance: “Whites were five times more likely to receive an inheritance than blacks between 1984 and 2009” (Brandeis study)

14. http://www.youtube.com/watch?v=KpJLvueSPmY

15. How can we stop the racial wealth gap? -Smart Policies: -enforcing lending standards and fair housing policies -assist low-income families and families of color with graduating college without a massive amount of debt -use minimum wage and equal pay provisions to reduce income gaps -strengthen employer-based retirement plans so people can be better off financially when they decide to retire -programs like the Racial Wealth Divide have been established to provide resources that emphasize the importance of wealth and wealth-building strategies attain greater economic equality.