a personal note from Emily
The racial wealth gap in America may just be the most astonishing statistic in this entire book. The latest Survey of Consumer Finances released by the Federal Reserve revealed that there is a total difference of $240,120 in wealth between the median white household and the median black household. Really think about what that means: For every $100 in wealth held by white households, black households have $15.
The median wealth (the number squarely in the middle of all the numbers) of white households is $285,010, compared to $44,890 for black households and $61,620 for Hispanic households. The mean net worth (the average) of white households is $136,717, compared to $21,145 for black households and $22,749 for Hispanic households.
Wealth is defined as the total value of everything a family owns – things like homes, cars, cash, retirement/savings accounts, and stock and bonds – and is the best measure of a family’s overall financial health because it determines their financial security. After all, even if someone has a fabulous, high-paying job today, they could lose that job tomorrow. Wealth, on the other hand, provides a financial buffer not only if someone loses their job, but also in the case of an economic downturn like the 2007-2009 Financial Crisis or the economic disruption of something like the pandemic.
Wealth also provides the opportunity for the creation of even more wealth, like the ability to start a new business venture, and it also allows families to finance their children’s education, prepare a nest egg for their retirement years, and often allows parents to leave their kids an inheritance – which passes wealth on to the next generation, where the cycle can continue. This is how wealth builds over time. Obviously, a well-paying job is helpful in building wealth because it allows people to save and/or invest, and healthy financial markets don’t hurt either. But more than anything else, homeownership is the most common way people build wealth.
And herein lies the problem.
A report from the National Association of Realtors showed that “over the last decade, the median-priced home has become worth about $190,000 more. As a result, the net worth of a typical homeowner is about 40 times the net worth of a renter.” However, “across racial/ethnic groups, the black homeownership rate continues to be well behind the rate of any other group. At the end of 2022, the homeownership rate for black Americans was 44.9 percent compared to 74.5 percent for white Americans…. the black homeownership rate hasn’t kept pace with increases in the other racial/ ethnic groups, making the gap even larger between white and black homeownership rates.”
Although housing is just one of many issues we need to address to close the racial wealth gap, it’s an excellent example of how the staggering inequality that exists in this country didn’t just miraculously happen out of the blue. Take, for example, the carnage that happened in the Greenwood district of Tulsa, Oklahoma – often called the “Black Wall Street” – on May 31, 1921. That fateful day, a white mob not only attacked black people and their homes, but also their businesses.
A report by the Oklahoma Commission to Study the Tulsa Race Riot of 1921 describes it this way: “As the whites moved north, they set fire to practically every building in the African American community, including a dozen churches, five hotels, 31 restaurants, four drug stores, eight doctor’s offices, more than two dozen grocery stores, and the black public library. By the time the violence ended, the city had been placed under martial law, thousands of Tulsans were being held under armed guard, and the state’s second-largest African American community had been burned to the ground.”
These types of atrocities started well before Tulsa. On September 22-24, 1906, during the Atlanta Race Riot of 1906, white mobs murdered numerous black men and women and destroyed many of their businesses. In the years leading to the riot, the black population had become increasingly educated and successful, building strong networks and communities along with thriving, competitive businesses. This shift in dynamics threatened many in the white elite class in Atlanta, and they responded by expanding Jim Crow segregation laws, which only served to heighten tensions even more.
The death and destruction in Atlanta in 1906 led W.E.B. Du Bois – a sociologist, historian and civil rights activist – to write his haunting A Litany of Atlanta:
A city lay in travail, God our Lord, and from her loins sprang twin Murder and Black Hate. Red was the midnight; clang, crack and cry of death and fury filled the air and trembled underneath the stars when church spires pointed silently to Thee. And all this was to sate the greed of greedy men who hide behind the veil of vengeance! Bewildered we are, and passion-tost, mad with the madness of a mobbed and mocked and murdered people.
In the East St. Louis Race War of 1917, a white mob brutally murdered black men and women when white workers at the Aluminum Ore Company went on strike and black workers were hired to replace them. Dhati Kennedy, the founder of the Committee for Historical Truth, told Smithsonian Magazine the story of his father, who lived through the massacre:
We spent a lifetime as children hearing these stories. It was clear to me my father was suffering from some form of what they call PTSD. He witnessed horrible things: people’s houses being set ablaze, people being shot when they tried to flee, some trying to swim to the other side of the Mississippi while being shot at by white mobs with rifles, others being dragged out of street cars and beaten and hanged from streetlamps.
Thousands of blacks were streaming across that bridge when what they called the ‘race war’ got into full swing. When that happened, the police shut down the bridge, and no one could escape. Some, in desperation, tried to swim and drowned.
Carlos F. Hurd, a reporter, wrote a first-hand account of the mayhem in the St. Louis Post-Dispatch: “The East St. Louis affair, as I saw it, was a man hunt, conducted on a sporting basis, though with anything but the fair play which is the principle of sport. There was a horribly cool deliberateness and a spirit of fun about it. ‘Get a n*****’ was the slogan, and it was varied by the recurrent cry, ‘Get another!’”
Another journalist, Hugh L. Wood, wrote in the St. Louis Republic:
A Negro weighing 300 pounds came out of the burning line of dwellings just north and east of the Southern fright home. ‘Get him!’ they cried. So, a man in the crowd clubbed his revolver and struck the Negro in the face with it. Another dashed an iron bolt between the Negro’s eyes. Still another stood near and battered him with a rock. Then the giant Negro tumbled to the ground. A girl stepped up and struck the bleeding man with her foot. The blood spurted onto her stockings and men laughed and grunted.
Unsurprisingly, in most all these instances, the victims were unable to recover and rebuild. The consequences of these unthinkable tragedies extend far beyond death, destruction, and property damage. These events literally smashed and burned the prosperity that black men and women had – against all odds and with zero advantages – worked so hard to build.
… and they also ignited the ultimate Butterfly Effect.
Almost 120 years ago, an entire community of people who, as abolitionist and my personal hero Frederick Douglass described, had been turned loose from slavery 40 years earlier into “destitution” the likes the world had never seen – – “The old roof was pulled down over their heads, before they could make for themselves a shelter. They were free; free to hunger, free to the winds and rains of heaven; free to the pitiless wrath of the enraged master’s hand. They were without roofs to cover them, or bread to eat, or land to cultivate…we gave them freedom and famine at the same time.” – – were robbed of the chance to generate wealth through opportunities like building businesses and homeownership.
…which led to their next generation being born out of the financial mainstream, making them “credit invisible,” which prevented them from also building credit and, as an extension, wealth ….which forced many of them into the predatory side of our dual credit market, saddling them with extremely expensive, unsafe money (i.e., predatory subprime loans, payday loans, illegal land contracts, etc.) ….which caused them to get stuck in a debt catch-22 that created chronic indebtedness ….which likely led to other long-term consequences like wage garnishment and restricted access to insurance, employment, housing and utilities.
But it doesn’t stop there. To add insult to injury, pile on all the other bricks that life has handed these Americans along the way – inadequate education, low or no employment, episodic poverty and all the other Fair Factors – and that impermeable wall quickly becomes insurmountable.
When you look at it this way, it’s undeniable that the staggering inequity that exists in this country in practically every category didn’t just miraculously happen. From the jump, bad decisions by politicians – made both intentionally and unintentionally – ignited, fueled and perpetuated pervasive, deep-rooted division and inequality.
Debating whether this is true is a waste of time because numbers don’t lie. All one has to do is read the astonishingly unequal statistics scattered throughout this website – in everything from wealth to incomes to education to criminal justice – to know that these inequities not only exist, but they are not healing on their own.
