The wealth gap

Wow– what a great discussion has taken place on my post yesterday on the fertility divide.   One commenter briefly mentioned the differences in wealth and it reminded me of a terrific, recent NPR series on the wealth gap in America.  Not what you earn, but simply accumulated family wealth, and this makes a big difference.  From part 1 of the series:

Here’s a startling figure: The typical white family has 20 times the wealth of the median black family. That’s the largest gap in 25 years. The recession widened the racial wealth gap, but experts say it’s also due to deeply ingrained differences in things such as inheritance, home ownership, taxes and even expectations.

Take the example of two California women, Dametra Williams and Stephanie Upp, who aren’t that different in many ways. Both were raised by single mothers who struggled financially. Both worked hard to get where they are today.

But how they describe basically the same thing about how they got to where they are today differs.

Wealth Gap Grows

Median wealth (1984-2007)

Median Wealth (1984-20007)

Williams is 40, black and a single mother of one. She just started her own business.
“It’s funny, the American dream is sort of steeped in this myth of work hard, be self-sufficient and push yourself forward, pull yourself up by your bootstraps, that kind of thing. But much of the wealth in this country was not built on that, in no way, fashion or form,” Williams says.

Upp, 43, is white, a mother of two and a part-time consultant.

“I think about the little things, like when I went to college. When I graduated, my mom had enough resources to give me her car so that I had a car to get to work so that I could earn money that I could then save to help put me into the next position,” Upp says. “I could then save more money and have opportunities. So it wasn’t like we had a lot, but there was enough. I didn’t do it all by myself.”

And that’s the difference. Study after study shows that white families are more likely than blacks and Hispanics to enjoy certain economic advantages — even when their incomes are similar. Often it’s the subtle things: help from Mom and Dad with a down payment on a home or college tuition, or a tax break on money passed from one generation to the next.

Yep.  It’s really easy to overlook this, but its also really important.    I’ve certainly seen the direct benefits in my life.  Sure, my parents had enough income to live in a neighborhood with great schools, to send me to Duke, and that passed on some excellent genes for motivation, delay of gratification, and cognitive ability (apparently, I’ve failed to pass those first two on to my progeny).  But, the very fact of accumulated wealth in my family has always meant there’s a safety net.  I’m far too cautious by nature to be the entrepreneurial type, but if I was so inclined, I could actually take huge risks– maybe one that would pay off big, precisely because I know I have my family safety net to fall back on.  If I or one of my family had a catastrophic health issue I wouldn’t end up bankrupt and homeless because, again, I know I could fall back on my family.  There’s nothing I have done to earn that.  But, like a typical white person, I am much more likely to benefit from this accumulated wealth than a typical minority.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

6 Responses to The wealth gap

  1. Russell says:

    Good point about a safety net, but, by and large, even if the schools whites go to are better, the gap probably has the most to do with the emphasis education has on their culture as it does on other ones. I read a year ago, for example, of a kid in an African American dominated school getting beat up because he carried books around and home to do homework. Head Start is not likely to be very successful for just that reason.

  2. We need more Bill Cosby types preaching that the blacks are captains of their own destiny, that they need to get an education and that they need to jump into black owned businesses as the way out of the cycle of poverty. They need to shrug off the ghetto dialects and dress codes and enter the mainstream of society where there are huge rewwards for those who do.

    John Wilder

  3. By the way, whites are having fewer kids and minority women are having more kids to increase their welfare take. Where are the black leaders but pandering to this mentality rather than leading and prodding blacks to become self sufficient. This is the land of opportunity.

    John Wilder

  4. Jason says:

    Thanks for posting this, Steve, it’s one of those things that is so easy to overlook and somehow seems to get lost in these discussions. When I first saw these numbers about 10 years ago I was certain it had to be a typo, it just seems so far out of balance. Definitely one of those hidden advantages of the accident of being born in a typical white family.

  5. Mike Barr says:

    We would learn a lot more about the antecedents of poverty, middle income, and wealth if studies stopped comparing whites with non-whites. In this instance, compare middle and upper income blacks with poor ones. This is what you’ll find:
    –> SES is positively correlated with parental SES (no surprise there, but it is circular);
    –> SES is positively correlated with beliefs, attitudes, and behaviors commonly associated with “middle class values”, the Protestant Work Ethic, whatever you want to call it. This would include things like impulse control, delay of gratification, and sense of self-efficacy (and probably some elements of the just world beliefs, conformity perhaps, etc).

    Go to Upper Marlboro MD which has one of the largest concentrations of affluent african-american populations in the country. Do some surveys and focus-groups to identify the characteristics that got them where they are. In terms of values, outlooks, behaviors, and so on, I bet they would probably look a lot like any other affluent group of people in the country. We would learn a lot about poverty and social mobility by contrasting these folks with the people who are mired in multigenerational poverty over in DC.

    And how is this mythical “typical white person”? Is it my dad who joined the USMC at age 18 to escape poverty and a dysfunctional family (his dad had been dead for 8 years) and spent 22 years in the Marines and 20 in the Post Office? Was he able to achieve middle class status because he was white, or because he worked his ass off, didn’t take vacations, and worked extra jobs?

  6. Well you again prove my point that we need more Cosby types preaching and leading blacks instead of the Sharptons who perpetually shout racism and victimhood. I built a very expensive deck for a black guy making way more than me becuase he embraced the
    mainstream society, got an education and a good job.

    John Wilder

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