COMMENTARY | Wages Incomes and Wealth How Good Jobs Policies Can Reduce the Black-White Wealth Divide By Algernon Austin | March 21, 2013 This commentary originally appeared on the Huffington Post. Wealth — what we own minus what we owe — matters a great deal for families’ economic success. Children from wealthier families can more easily attend college, purchase a home, and start a business. Wealthier families can better bear the costs brought on by a spell of unemployment or an illness. The large and growing black-white wealth gap means that not only is this generation of blacks worse off, but the next generation too will face greater challenges. A new report from the Institute of Assets and Social Policy (IASP) tracks the growing black-white wealth divide and the reasons for its increase. In 1984, the researchers find, the median black household had a net worth of about $85,000 less than the net worth of the median white household. By 2009, the black wealth disparity had grown to $237,000. The most important factor behind this growing gap is homeownership. Blacks own homes at a much lower rate than whites, but even among homeowners, whites have an advantage. The IASP authors note that whites come from wealthier backgrounds which allow them to purchase a home and start building equity on average eight years earlier than black homeowners. Because whites are more likely to receive financial assistance from a family member and a larger amount of financial assistance, they can obtain mortgages with lower interest rates and build more equity faster. Residential segregation also means that homes in predominantly black neighborhoods are worth less than similar homes in predominantly white neighborhoods. The IASP authors make clear that the history of “redlining, discriminatory mortgage-lending practices, lack of access to credit, and lower incomes,” have created conditions that put whites at a wealth advantage which they are able to pass on to their descendants. Although homeownership is the largest single factor, the two factors related to jobs when combined are just as important. Homeownership explained 27 percent of the wealth gap, while household income explained 20 percent, and unemployment explained 8 percent. Since for most people, nearly all of their income comes from work, work-related issues — income from work and unemployment — rival homeownership in explaining the black-white wealth gap. A national good jobs agenda is essential for reducing the black-white unemployment gap and the black-white income gap. If we reduce these two gaps, we will also reduce the black-white wealth gap. To reduce the unemployment gap, we need to implement public-sector job creation targeted to communities that experience high unemployment during good times and bad. These communities are disproportionately black communities. (More details about job-creation policies and the rationale for them can be found in the report, “A Jobs-Centered Approach to African American Community Development.”) This policy will help to move black America toward full employment. A complete good jobs agenda for blacks requires not only full employment for blacks, but higher wages, good benefits, and a strong national union movement. (For a full discussion of a good jobs agenda see, “Getting Good Jobs to People of Color.”) The first step in lifting wages is to have a more reasonable federal minimum wage. The current minimum wage is two dollars less than it was in 1968 after adjusting for inflation. This represents a 22 percent decline in its value, yet workers are more productive and the economy much richer today than in 1968. The rest of the article is at: epi.org/publication/good-jobs-policies-reduce-black-white-wealth/
Posted on: Thu, 12 Sep 2013 12:57:33 +0000
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