Politics

Mind the Gap

A new paper debunks the persistent myths about the racial wealth gap.

A black family with a home-sold sign.
Photo illustration by Slate. Photos by Thinkstock.

The massive gap between black and white wealth is structural. All serious research on the subject finds the gap is an enduring feature of the American economy produced and reproduced by politics, policy, and law. But to the extent it even registers in mainstream thinking, the popular belief is that black Americans are themselves responsible for this broad inequality. The specific diagnosis varies. One view faults family structure—out-of-wedlock births and single parenthood set black communities up for failure. Another blames attitudes toward education. Yet another looks at consumerism, blaming black Americans for frivolous expenditures at the expense of saving and entrepreneurship. Each presents a different face for the same claim: that black culture is broken, and fixing the culture will resolve the economic disparities.

A new paper from William Darity of Duke University, Darrick Hamilton of the New School, and a team of researchers seeks to debunk these narratives and establish that the racial wealth gap was not produced by supposed black pathology and cannot be closed by individual effort. Darity and Hamilton focus on 10 myths about the racial wealth gap.

The first myth is that “greater educational attainment or more work effort” will close the racial wealth gap. Higher education is associated with higher incomes, and higher incomes help build wealth, so the more black people go to college, the more likely it is they’ll find upward mobility. Except, that’s not true. Even with postsecondary educations, black Americans lag far behind their white counterparts. “It takes a post-graduate education for a black family to have comparable levels of wealth to a white household with some college education or an associate degree,” note Darity and Hamilton. Even white families with less than high school educations hold more wealth than black families with college degrees. All of this is also true of employment status. White households with an unemployed head hold five times as much wealth as black ones with adults working full time. As for the idea that black families undervalue education—it’s nonsense. “[T]he best evidence indicates that black families, controlling for household type and socioeconomic status, tend to be more supportive than white families of their children’s education through direct financial support,” Darity and Hamilton write.

The second myth concerns homeownership: If more black families owned homes, they would begin to close the gap. But again, the evidence says otherwise. Whether they own homes or not, black households hold substantially less wealth than their white counterparts. Blacks who do own their homes encounter a large racial disparity in home values. Homes do not appreciate for black homeowners as they do for white ones, a product of discrimination in housing and lending as well as existing patterns of segregation.

The next two myths address the idea that black Americans could overcome the racial wealth gap by saving more and exclusively patronizing black-owned banks and businesses. To start, write Darity and Hamilton, it is wrong to think that blacks “lack self-control and are plagued, uniquely, by a culture of frivolous consumerism.” If anything, it’s the reverse: “once income is controlled … black families actually have a slightly higher savings rate than their white counterparts.” And while it may have psychic and community benefits to work with black banks and other black-owned establishments, there’s simply not enough capital in circulation among black Americans for black banking to make a meaningful dent on the disparity. “The largest five black owned banks recently were estimated to have assets totaling $2.3 billion, while J.P. Morgan alone had an estimated $2 trillion in assets,” write Darity and Hamilton.

Channeling the work of law professor Mehrsa Baradaran on black banking, Darity and Hamilton make a vital point about the power of capitalism to address the racial wealth gap. “[I]n the absence of a wide, deep, and independent foundation in wealth among black Americans, the prospect of a world of giant black-owned corporations is no more than a fantasy … capitalism, whether black or white, cannot fix problems created by racialized public policies,” they write.

They are similarly skeptical about claims that financial literacy and entrepreneurship will solve the racial wealth gap. The same problems that plague blacks regarding homeownership—limited wealth, limited access to capital, lending discrimination, and segregation that limits markets and opportunity—also apply to business ownership. Black entrepreneurship as a path to broad wealth creation is simply not possible in an environment marked by heavily racialized patterns of inequality. “Greater black wealth, and hence financial capital, is the vital prerequisite for greater black entrepreneurship, rather than vice versa overemphasis,” they write.

Darity and Hamilton take time to address three particularly silly myths. The first is that black Americans could close the racial wealth gap by emulating other successful minority groups. This is dispensed with little effort: “so-called ‘successful’ immigrant groups actually retrieve a comparable class position as the one they held in their country of origin. Their pre-migration capital, whether embodied in their education and training or their financial resources, is critical in determining their outcomes in the United States.” More relevant for blacks, racialized Latinos, and Native Americans are histories of oppression and expropriation by white-controlled governments and individuals acting with their protection.

Next is the idea that blacks could get ahead with greater “personal responsibility.” Setting aside the fact that poor behavior does not preclude affluent young white people from reaching the heights of American society, it is simply ludicrous to think that individual effort outweighs larger structural conditions. As Darity and Hamilton note, “well-documented wage and unemployment gaps demonstrate that even when black people ‘do the right thing,’ it does not close the racial wealth gap.” On this same note, they dismiss the idea that black exceptions, like celebrities, say anything meaningful about the status of black America writ large.

Darity and Hamilton devote their final debunking to the question of family structure. Their broad point is that the usual culturally driven explanations ignore the role of racism in shaping marriage prospects for black women, from mass incarceration—which has produced “paucity of marriageable males in the black community”—to how wealth inequality and insecurity themselves damage families. What’s more, there’s little evidence that simply getting married would increase black wealth. Black women of every age group have less wealth than their white counterparts, whether married or single. The median single-parent white family has more than twice the wealth of the median black or Latino family with two parents.

Education is a powerful thing. Two-parent families do produce significant benefits for children’s well-being. Entrepreneurship and community investment can be powerful tools. But they won’t fix the racial wealth gap. No, that disparity was built through decades of discrimination and neglect. Its presence in the 21st century is both a monument to the success of white supremacy in our nation’s history and a testament to our failure, thus far, to build a truly inclusive society.

To end racial inequality, to remove it root and branch, will take fundamental changes to the foundations of American life. And dispensing with the myths about its origins is an important step toward that goal.

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