Closing the Racial Wealth Gap
Melvin Oliver
Dean of Social Sciences
UCSB
Tom Shapiro
Director, IASP
The Heller School, Brandeis University
2010 Asset Learning Conference
September 22, 2010
Washington, DC
What the Racial Wealth Gap Means
 Problem did not start yesterday
 Acknowledge Past Discrimination
 Works to Augment Value of Unfair Gains Secured
Through Direct Discrimination in Previous Eras
 Fail to Connect impediments to Unfair Enrichment
of others
Baseline Racial Wealth Gap
A Dime-On-A-Dollar

Racial Wealth Gap
1984-2007

 Context: Great Recession
 Racial Wealth Gap Increases Fourfold
 Wealth Goes to the Very Top
Racial Wealth Gap 1984-2007
Figure 1: Median Wealth Holdings 1984-2007
(Not including home equity)2
$120,000
$100,000
$80,000
$95,000
$60,000
$40,000
$20,000
$20,000
$0
1984
1989
1994
White Families
1999
2003
African American Families
2007
Figure 2: 1984-2007 Median Wealth Holdings by Income in 1984
(Not including home equity)
$250,000
High-Income Whites
2007 Dollars
$200,000
$150,000
$100,000
Middle-Income Whites
$50,000
High-Income African Americans
Middle-Income African Americans
$0
1984
1989
1994
1999
2003
2007
$95,000 Question with many Drivers
Policy Blueprint
 1. Wealth Building Provisions, Tax Code
 2. Estate Tax
 3. Housing, Segregation, and Wealth
 4. Children’s Savings Policy
US Wealth –Building Budget
 $400 Billion Annually
 Current Distribution:
 African Americans
$13.4 Billion
 Equitable Distribution:
 African Americans
 What’s Left on the Table:
$48.4 Billion
$35 Billion
Estate Tax
 Inheritance is the Enemy of Meritocracy, perhaps
Democracy
Housing, Segregation, and Wealth
 Home equity will continue to be the main source of
wealth for all Americans
 Home Ownership continues to have non-monetary
effects, particularly community effects
 Racial Segregation made targeting “predatory and
sub-prime” loans more efficient and rational
 Homes in Segregated Communities continue to
have different rates of equity accumulation
Housing, Segregation, and Wealth
 Dismantling Racial Segregation is an asset building
policy
 Affordable Loans are an important dimension of
closing the racial wealth gap
 We know how to do Lending that works
 Self-Help Affordable Mortgage Program
Housing, Segregation, and Wealth
 Make Foreclosed Homes available for Community
Development
 Renter’s Credit to democratize and deracialize the
US Wealth-Building Budget
Children’s Savings and Our Future
 Children’s Savings Accounts, Baby Bonds, could
potentially move toward closing the racial wealth
gap
 A CSA with eligibility based on net worth at some
level below the national median would reach a
large proportion of black households
 Universal Program risks the possibility of
sedimenting initial advantages into the future
Children’s Savings and Our Future
 Darity and Hamilton have sketched the outlines of
such a program
 Envision accounts at age 18 of up to $60K
 Costs of $60B per annum (10% of the Defense
Budget)
THANK YOU!
 Tom Shapiro and Melvin Oliver
 tshapiro@brandeis.edu
 moliver@ltsc.ucsb.edu