Page 19
August 2013
The AC Phoenix
A House Divided
By Thomas J. Sugrue
[continued on page 6]
closure Act found that 32.1 percent of
wealthy Blacks, but only 10.5 percent
of wealthy Whites, got higher-priced
mortgages-those with an interest rate
3 or more points higher than the rate of
a Treasury security of the same length.
The bursting of the real estate bubble
has been a catastrophe for the broad
American middle class as a whole,
but it has been particularly devastat
ing to African-Americans. According
to the Center for Responsible Lend
ing in Durham, North Carolina, nearly
25 percent of African Americans who
bought or refinanced their homes
between 2004 and 2008 (and an
equivalent share among Latinos) have
already lost or will end up losing their
homes-compared to 11.9 percent of
White families in the same situation.
This disparate impact of the housing
crash has made the racial gap in wealth
even more extreme. As Reid Cramer,
director of the Asset Building Program
at the New America Foundation, puts it,
"Basically, we have gone from an aver
age minority family owning 10 cents
to the dollar compared to the average
White family to now owning less than
a nickel."
The median Black family today holds
only $4,955 in assets.
In recent years, concerns about racial
disparities have largely faded from
national politics. It is now a common
place that we have entered a post-racial
era. The concerns of the civil rights era
are obsolete. A Black family occupies
the White House. Conservative jurists
and even many liberals are arguing with
greater conviction than ever that affir
mative action programs and the Voting
Rights Act are no longer necessary In a
color-blind America. For his part, the
first African American president has
been remarkably silent on questions of
race. University of Pennsylvania politi
cal scientist Daniel Gillion examined
decades of presidential speeches and
found that Barack Obama has said less
about race than any Democratic presi
dent since 1961.
But for all of the talk about hope and
change, the racial wealth gap has not
only persisted, it has worsened. And it is
this gap that is the most powerful mea
sure of differential well-being by race.
Wealth has profound consequences
throughout the life cycle, from put
ting a down payment on a first home
to spending your last days in a skilled
nursing facility. Starting a business?
Paying for college tuition? Making ends
meet when you've lost your Job? Cover
ing extraordinary medical expenses?
Retiring? Assets matter.
On each of these counts, minorities face
an insecure present and a very precari
ous future. Consider just one measure:
the Brandeis Institute on Assets and
Social Policy estimates that only 8 per
cent of Black seniors and only 4 percent
of Latino seniors have sufficient eco
nomic resources to be economically
secure in retirement. "These seniors,"
write a team of Brandeis scholars, "do
not just have to watch their pennies;
they are truly struggling every day,
forgoing basic expenditures, such as
medical appointments and household
maintenance, just to make ends meet."
A few years ago, I met Roosevelt Smith.
He still owned my parents'old house
on Detroit's West Side, which was a
rental property by then, and he gave
me a tour. It was In good shape-pretty
much the same house that my parents
sold, but with newly refinIshed floors
and some new kitchen cabinets and
tiles and the garage out back. He's a
resourceful guy who bought a second,
larger house nearby-another asset, a
nest egg for the future. But together,
the two houses aren't worth much.
The median listing price for homes in
Detroit is now just $21,000, or about
the cost of a Chevy Malibu-and, like
the car, likely to depreciate in value
from the moment you buy it. Detroit's
population has fallen from 1.85 million
in 1950 to a little more than 700,000
today, and as population falls housing
demand falls with it.Today, nearly every
block has abandoned homes on it.The
Smiths probably have more in house
hold assets than the $4,955 median for
Black families, but not a lot.
In contrast, my parents'assets have pro
vided them with a cushion of security
and more than modest comfort, from
that family room they built In the'70s to
the cottage in northern Michigan they
built forty years ago and later reno
vated for their retirement. Along the
way, my parents used their savings to
help pay for three college tuitions.They
helped me buy my first house because
I didn't have enough savings for the
10 percent down payment. When their
health deteriorated, they drew from
their assets to rent an apartment in a
comfortable retirement community.
Barring a medical disaster, which my
mother could at least partially cover
using her remaining assets, my sisters
and I can expect a small sum from her
estate. Last year, my mother sent me a
check-she called it, rather morbidly, a
"down payment" on my inheritance-
that totaled more than twice the
household assets of the median Black
family.
I have never thought of myself as a
particularly wealthy person, and by
the standards of the top 1 percent
I'm not one. Despite the swings of the
economy and a divorce settlement that
drained my retirement account, I own a
house worth more than twice its origi
nal purchase price. I have squirreled
away some money in a mutual fund to
help pay for my children's educational
expenses: college Is just a few years off,
and it won't be cheap. I can also use
someof my assets as collateral for loans
to help pay their way. And, if my invest
ment decisions prove to be wise, I will
have a substantially larger retirement
nest egg than my parents had. If I have
extraordinary medical expenses, I have
funds to fall back on. I also drafted a will,
and hope that my heirs-my family and a
few charities-will be able to benefit from
my good fortune.
There are many White folks who are not
as fortunate as my parents were, and
even the modest legacy they were able
to build may be becoming increasingly
rare among younger generations of
Americans of all races. Still, like most
Whites, I am a beneficiary of the racial
wealth gap. And until that gap narrows,
we can't begin to talk about the dawn
ing of a post-racial America.
Thomas J. Sugrue is the David Boies Pro
fessor of History and Sociology at the Uni
versity of Pennsylvania. His most recent
book is "Not Even Past: Barack Obama and
the Burden of Race." This article, the third
of an 11-part series on race, is sponsored
by the W. K. Kellogg Foundation and was
originally published by the Washington
Monthly Magazine.
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