Closing the Racial Wealth Gap
EDITOR'S NOTE: This blog, which highlights some of the Opening Plenary session from the 2010 Assets Learning Conference, was provided by Joy Hunt of Neighborhood Partnerships. Check out the full text of her blog by clicking here.
Speaking yesterday at the opening plenary of Prosperity Now's biennial Assets Learning Conference, Thomas Shapiro and Melvin Oliver outlined four strategies for eliminating the United States' racial wealth gap. Shapiro and Oliver are authors of Black Wealth/White Wealth, a flagship work on wealth and inequality. Speaking to a crowd of over 1,000 advocates and service providers from all over the United States, Shapiro and Oliver linked historical practices such as redlining and discrimination by the federal housing administration, insurance companies and financial institutions and today's subprime lending crisis. Shapiro and Oliver pointed out that today—in 2010—the average African American household owns 10% of the wealth of the average white American household—a chilling statistic which hasn't changed since the 1980s.
Shapiro and Oliver called on the audience to acknowledge hard truths about the role established asset building programs, such as the home mortgage interest rate deduction, play in augmenting unfair gains perpetuated for generations. Thomas Shapiro cited the Panel Study on Income Dynamics, which has followed African American and white families for generations to monitor changes in wealth accumulation over time. Shapiro pointed out that the study gives us the opportunity to monitor wealth accumulation throughout the life-cycle and conclusively demonstrates that the vast majority of wealth accumulation goes to those who are well off to begin with.
Shapiro and Oliver proceeded to outline a policy framework for addressing the racial wealth gap:
Thomas Shapiro called for critically examining wealth building provision in the tax code, which costs approximately 400 billion dollars a year. These policies include the home mortgage interest deduction and savings for retirement pensions. More than 50% of these expenditures go to the top 5% of tax payers—those making more than $167,000 per year, while very little goes to middle or low income tax payers.
Thomas Shapiro called on Prosperity Now's audience to question our thinking on the estate tax and how the intergenerational transfer of wealth through inheritance fits into our country's democratic tradition. Dr. Shapiro posited that inheritance is the enemy of merit, and called on the audience to question whether we can continue to pass along huge advantages through inheritance while placing a high value on equal opportunity.
Melvin Oliver reminded us that home equity is the main source of wealth for Americans, and asked conference attendees to consider the ways in which residential segregation impacts wealth. He pointed out that high rates of home ownership correlate with stable communities, civic participation, education attainment, and reduced criminal activity, and noted that African Americans do not get the same equity gains from home ownership as whites because of racial segregation and the systematic undervaluing of black neighborhoods. This systematic undervaluation as a result of segregation is essentially an equity tax. Dr. Oliver also called on community development institutions to purchase and renovate foreclosed homes, and called on us all to consider asset building opportunities for renters.
Finally, Melvin Oliver called on us to think about how Children's Development Accounts can help to close the racial wealth gap. He recommended that public deposits made for each young person be greater for lower-income families in order to make real strides to reducing the racial wealth gap over time.
Melvin Oliver concluded this powerful presentation by calling on the audience to recognize that, in order to get beyond racism, we must first take account of race. Shapiro and Oliver's presentation was an important reminder about the urgency of asset policy reform coupled with culturally sensitive service delivery. Stay tuned for more highlights from Prosperity Now's biennial conference.