The wealth chasm between Black and White Americans began with the unpaid labor of enslaved Blacks to grow and pick cotton making it the nation’s most valued export. However, it was the use of Black human beings as collateral for mortgages that injected the most capital into the economy. (1619 Project; New York Times, Matthew Desmond, August 2019) Not so fun fact: Thomas Jefferson mortgaged 150 of his enslaved workers to build Monticello. The relentless buying, selling, insuring and financing of the bodies of enslaved Blacks and the products of their labor made Wall Street a thriving banking, insurance and trading sector providing fuel for the global financial markets.
After the Civil War ended, the federal government never followed through on General William T. Sherman’s Special Field Order 15 to divide up roughly 400,000 acres of plantation land to newly freed black families in 40-acre segments. Under President Andrew Johnson, the lands reverted back to white plantation owners and members of the Confederacy. The legacy of slavery lived on not only in the impoverished condition of Black people but in the wealth and prosperity that accrued to Whites and their descendants
Although Blacks did not receive their 40 acres in exchange for their huge part in the building of the U.S. economy, Whites benefited from the Homestead Acts from 1862 to 1934, receiving parcels of 160 acres free of charge. More than 270 million acres, 10% of all the land in the U.S., former Indigenous People’s territory, established a basis of wealth and capital for overwhelmingly White recipients. Today, the number of adult descendants benefiting from this legacy is estimated to be around 46 million people, about a quarter of the US adult population. (PBS Documentary: Race:The Power of Illusion 2003)
Sadly, the polices and actions enacted after the Civil War codified and entrenched the wealth gap between Blacks and Whites. Black Codes kept Blacks as free labor under the domination of Whites. Jim Crow Laws instituted in 19th century and not overturned in many states until the 1960’s that reserved the best jobs, neighborhoods, schools and hospitals for White people. White terrorists wrought violence and death upon thriving Black businesses and communities.
Federal policies continued to strengthen the disparity between Blacks and Whites. The Social Security Act of 1935 provided a safety net for millions of workers, guaranteeing them an income after retirement. But the act specifically excluded two occupations: agricultural workers and domestic servants, who were predominately people of color. The 1935 Wagner Act granted unions the power of collective bargaining, helping millions of white workers gain entry into the middle class over the next 30 years. But the Wagner Act permitted unions to exclude non-whites.
Under the New Deal program, the Federal Housing Administration made it possible for millions of average White Americans to own a home for the first time. But Black or integrated neighborhoods were deemed a financial risk and made ineligible for home loans, a policy known today as redlining. Predatory lenders, lack of credit and covenant restrictions further prevented Blacks from living in neighborhoods close to good schools and other amenities enjoyed by the middle class. The GI Bill was intended to provide financial aid for homes and education to veterans coming home from WWII. However, it was administered by individual states that made biased decisions eventually excluding 1.2 million Black veterans.
The disasters of the pandemic and the economic crisis vividly reveal the existing economic and social inequity of Blacks that is the result of generations of preferential treatment for Whites. Black workers are disproportionately represented among the essential workers in the economy and have suffered record numbers of job losses due to the pandemic. More than one in six Black workers have lost their jobs since February. (U.S. Bureau of Labor Statistics). Black workers are less able to weather such a storm because they have lower incomes and less liquid wealth than White workers.
The 2020 Regional Equity Report produced by the Tampa Bay Partnership Foundation, in collaboration with the Community Foundation of Tampa Bay and United Way Suncoast shows the dismal state of Black wealth and income. “An analysis of 21 indicators related to economic vitality, talent, infrastructure, civic quality, poverty and employment shows that Tampa Bay’s Black residents are far more likely to be paid less, living in poverty and achieving less in school when compared to the region’s White residents. Without intervention, these disparities – and others – are likely to become more pronounced as a result of the COVID-19 crisis.”
For instance, median wages for Black workers in Tampa Bay are 21% less than White workers; with or without a college degree, Black workers continue to earn roughly 20% less than their White counterparts; and Black residents are much less likely to own their own home (40.8%), compared to White residents (73.3%).
It is true that working class and poor Whites are suffering, too. However, being Black and White in American is not the same experience regardless of social class. The net worth of Whites in the bottom 20% of nation’s income distribution is higher than the median net worth of ALL Black Americans. Further, Whites of all social classes and education levels have a much lower likelihood of exposure to unemployment and rarely become as asset poor as Blacks. (From Here to Equality; William A Darity and A. Kirsten Mullen; University of North Carolina Press, April 2020)
Some economists estimate that up to 80% of lifetime wealth accumulation depends on intergenerational transfers. The White advantage, embedded in the policies and actions that are described in this article, is passed down from parent to child and grandchild.
Wealth confers power, freedom, choice, security, health status and many other privileges on those who possess it. People who have accumulated money, property and financial assets have a cushion in hard times. They can survive job loss, illness, natural disaster without losing their homes. They have access to good healthcare, childcare and education. They can hire a good lawyer to defend their rights. They can buy healthy food, homes in safe neighborhoods and cars in good repair. Wealth, and all the privilege it confers, can be accumulated in a lifetime, but it is even more powerful when it compounds over generations in a family. Those with wealth provide their children with an automatic head start in life.
Black people have contributed a huge amount to the wealth of the nation and White Americans without being compensated for their contributions and without being allowed to benefit from the privileges wealth brings.It’s time to develop and enact antiracist policies and solutions to address this racial wealth gap that just continues to grow.
For more information and interesting facts, you may be interested in the report by the Samuel Dubois Cook Center on Social Equity at Duke University co-authored by William Darity, Ph.D. and others. What We Get Wrong About Closing the Racial Wealth Gap