According to the U.S. Census Bureau, the median wealth for African-American households across the country in 2013 was $9,000. That means when you add up the value of black families’ bank accounts, stocks, businesses, retirement accounts, and homes — and subtract their mortgages, auto loans, and credit card debt — most wouldn’t have enough money left to buy a new car. By comparison, the median wealth of non-Hispanic whites was $133,000. That’s about fourteen times more than what black Americans have.
When we look at such staggeringly unequal numbers, it can be difficult to grasp that they apply to real people, including our friends, and neighbors, and perhaps ourselves. It’s easy to write off the wealth gap as being about other people, in other places. But it isn’t. The gap here in Tyler is as clear as the line on the map that divides our black neighborhoods from white — and that’s not a coincidence. In America, wealth is intimately tied to where we live.
We often talk about the financial gap between whites and blacks in terms of income. However, that’s largely because we have a lot more information on how much people make than on how much they have. The latter, which we call wealth, is what truly separates rich from poor. Wealth makes it easier for families to start new businesses, pursue higher education, and weather unexpected emergencies like medical bills. When it’s invested, wealth can create more wealth, and it can raise up entire communities.
Unfortunately, wealth is difficult to measure, because it’s often tied up in stocks, businesses, gold bars, and other assets. Information about those assets is inherently private; outside of the IRS, there is vanishingly little data available. We do know from Census data that black Americans rarely own stocks or other assets. Nationally, more than half of whites have retirement accounts, but only a third of blacks do.
It’s important to note that wealth gaps don’t exist only between blacks and whites. There is a similar gap between whites and Hispanics. However, most Hispanics are first or second-generation immigrants, and for most families, it takes multiple generations to to accumulate substantial wealth. There aren’t a lot of useful long-term comparisons we can make locally at this time using data about Hispanics and wealth.
While most private assets are hard to measure, there are good data available about housing — and across the board, most Americans’ single largest asset is their home. According to U.S. census data from 2011 through 2015, about 71 percent of white Tylerites own their homes, as do about 50 percent of black Tylerites. (Among Hispanics, it’s 60 percent.) Those numbers aren’t static; homeownership rates have fallen amongst all groups over the last decade.
However, the real difference between homes owned by whites and blacks is in their value. The median self-reported value of a white-owned home in Tyler is $152,000, but the median value of a black-owned home is just $76,000. (Mortgage debt is not included here. Locally, blacks and whites own their homes outright at similar rates.)
That the wealth gap shows up so prominently in local housing data is, in a sense, by design. Historians and journalists have documented a variety of racist policies that have prevented African-Americans from buying and building equity in their homes for decades across the country:
- Redlining policies, established by the federal government and enforced by realtors, kept blacks out of white neighborhoods
- Federal housing subsidies, created to make homeownership more affordable, were often explicitly denied to non-whites
- Clauses known as racial covenants were added to home deeds to prevent white homeowners from selling to blacks
- Highly risky, often disastrous sub-prime home mortgages were specifically marketed to communities of color (so-called “reverse-redlining”)
Some of these policies were outlawed by the Fair Housing Act in 1968, but their long-term consequences continue to impact black families who were, over time, clustered into segregated neighborhoods with smaller homes that haven’t increased in value as homes in white neighborhoods. In future stories, we plan to take a closer look at the history of how housing segregation was enforced here in Tyler.
However large the black-white wealth gap, it exists, and it reverberates throughout the lives of all Americans. Wealth determines where you can live, what schools you can attend, or whether you can start a business or help your kids pay for college. It helps families bounce back from hard times. Economists at the Pew Research Center have found that the recession hit blacks much harder than it did whites, largely through lost homes.
There are no easy solutions for reducing the wealth gap. Some favor more progressive taxation, others say job development is the silver bullet. Others fight for reparations: having the government compensate African Americans for the fact that their ancestors were held as slaves and for racist policies that have persisted for decades after. And of course, other Americans say we should do nothing at all.
The image used at the top of this post was shared on Flickr under a Creative Commons 2.0 license.