The Hidden Cost of Being
African American
How Wealth Perpetuates Inequality
Thomas M. Shapiro
Joe Fleetham, Joe Yates and Star Simmons
May 20th 2010
Thomas M. Shapiro
•Professor of Sociology and Public
Policy at Brandeis University.
•His current professional titles
include the Pokross Professor of
Law and Social Policy and the
Director of the Institute on Assets
and Social Policy.
Background and Education
•Born in Los Angeles in 1947.
•He received his B.A. Degree from
the University of Wisconsin.
•He received both his M.A. degree
and PhD from Washington
University in St. Louis, Missouri.
Picture from: http://www.amazon.com/ThomasM.-Shapiro/e/B001IQXHMS
Low
Inheritance
Wealth
Stratification
No headstart assets
Outline
• Inheritance and discrimination
– Wealth
– Racial wealth gap
– Inheritance
• Transformative assets
– Difference between middle class whites and middle class
blacks
– Homeownership
• Head-Start assets
– Location
– Education
“Income supplies life support, assets provide
opportunities.”
-Kathryn McDonald
“We are New Englanders. Never touch
principal….To me income is to pay bills; assets
are to keep.”
Wealth
• Wealth- total value of things a family owns – debt
– Home equity
– Resources that families own
• Assets- a resource that has economic value which will
provide future benefit
– Stocks
– Bonds
– Savings
• Income- earnings
–
–
–
–
Work
Dividends
Pensions
Transfer Payments
• Asset Poverty Line
The Modern Age
• Baby Boom years (1946-1964)
– Substantial transfer of wealth
– Increased middle class net worth
• Growth in wealth and inequality
– Net Worth
– Net Financial Assets
Racial Wealth Gap
• Inequality of income
• Inequality of wealth
• Difference of wealth based off of income.
WhitesNet Worth
WhitesNet Financial
Assets
BlacksNet Worth
BlacksNet Financial
Assets
Highest fifth
median
$133,607
$40,465
$43,806
$7,448
Second highest
fifth median
$65,998
$13,362
$29,851
$2,699
Middle fifth
median
$50,350
$6,800
$14,902
$800
Second lowest
fifth median
$39,908
$3,599
$6,879
$249
Lowest fifth
median
$17,066
$7,400
$2,400
$100
Source: PSID, 1999
How much do you think
it costs to be black???
“We were trading in the kids’ savings bonds. We
were working two jobs each. We were working at
night. We were having garage sales. And finally my
mom said, ‘Well, this is stupid. We’ve got a lot of
money here.’”
-Briggette Barry
Inheritance
• What is inheritance?
• Parental Wealth -“That Parent Thing”
• Who inherits…
$600,000
$500,000
White
$505,800
Black
$400,000
$300,000
$198,700
$200,000
$100,000
$95,000
$47,000
$0
Mean Net Worth
Source: PSID, 1999
Median Net Worth
“Now it’s not necessarily fair and it’s not necessarily
right, but I think certain neighborhoods are better,
certain schools are better, and your children will
have a better childhood and better education because
of where they go. But it’s not right. I don’t think it’s
necessarily right, but I think everyone should have
the same opportunities as my children do, but they
don’t…I feel guilty because I’m not doing anything to
make their [kids in inner-city schools] life better or
trying to help them. I’m hiding out here in my nice
little neighborhood and my little private school and
I’m like sticking my head in the sand and pretending
like these problems don’t exist. So I do have a sense
of guilt over it.”
-Lori Olsen
The Middle Class
• What is the middle class?
– Middle 60%
• Earning about $17,000-$79,000 a year
• The difference between black and white middle class.
– Conway and Barzak families
“The Income Middle Class”; Race and Wealth
$70,000
$60,000
$58,000
$50,000
$40,000
$30,000
$20,000
$23,000
$13,550
$6,000
$10,000
$0
Median Net Worth
White
Medain Net Financial
Assets
Black
Source: PSID, 1999
“The Occupational Middle Class”; Race and Wealth
White
Black
$123,000
$60,000
$26,500
$11,200
Median Net Worth
Median Net Financial Assets
Source: PSID, 1999
“The Educational Middle Class”; Race and Wealth
White
Black
$111,000
$56,000
$33,500
$15,000
Median Net Worth
Source: PSID, 1999
Median Net Financial Assets
Elizabeth: His mother gave us some of the money
[for the down payment].
Vance: Well, it was originally structured as a loan
with interest, and eventually the interest was waived.
Shapiro: Has any of the loan been paid back?
Vance: No, nope, it’s still sitting there…oh, fifteen
thousand dollars, something like that.
-Vance and Elizabeth Cotter
Homeownership
• A way to accumulate assets
– Home ownership vs. renting
• Mortgage
– Down Payment
• 46% of white families receive help from family or savings
compared to only 12% of black families.
– Discrimination from banks and real-estate agents
Percent
Homeowners
Average
Mortgage
Rate
Mean Home Median
Equity
Home
Equity
White
74.2
8.12
$74,859
$58,000
Black
48.2
8.44
$46,254
$40,000
.32
$28,605
$18,000
Difference 25.8
“There’s a lot of blacks that moved in. That I was
starting to worry about, because I was afraid it was
going to go down. I’m not prejudiced, but it’s just
that once a certain type comes in, that’s it! My
concern when a lot of blacks started moving in was
with the drugs, the pushing of drugs on your kids…I
know a lot of whites moved out because of that
problem.”
-Charlene Quinlin
Location, Location, Location
• Property Values
– What happens when black people move in
• Residential Segregation
• Why people move.
– Schooling
– Status
• “Moving Up”
– Safety
“The way I was raised, you don’t put much emphasis
on material ownership. You don’t. It comes and it
goes so fast. It could be gone in a heartbeat, but
education is, it’s the only way the kids are going to
make it. That’s it. Without that, they will end up with
the exact same life that my mother and I had. We
can’t have that! My husband is incarcerated.
-Karen
Education
• Education and the American Dream
– Good education
• Small class size
• Parent involvement
• Good teachers
– School choice
• What makes a good school?
– Reputation
– Who they brush elbows with
Take Home Lesson
Wealth
Stratification
Low
Inheritance
No headstart assets
How do you break the cycle?
• Children’s Savings Accounts
• Down Payment Accounts
• Matching Social Assistance to Asset Policy