The Hidden Cost of Being African American

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/Thomas-M.-Shapiro/e/B001IQXHMS

Low Inheritance Wealth Stratification No head-start 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. 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… Source: PSID, 1999

“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 Barzakfamilies

“The Income Middle Class”; Race and Wealth Source: PSID, 1999

“The Occupational Middle Class”; Race and Wealth Source: PSID, 1999

“The Educational Middle Class”; Race and Wealth Source: PSID, 1999

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

“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 Low Inheritance Wealth Stratification No head-start assets

How do you break the cycle? • Children’s Savings Accounts • Down Payment Accounts • Matching Social Assistance to Asset Policy

The Hidden Cost of Being African American