the hidden cost of being african american how wealth perpetuates inequality thomas m. shapiro joe...
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The Hidden Cost of Being African AmericanHow Wealth Perpetuates Inequality
Thomas M. Shapiro
Joe Fleetham, Joe Yates and Star Simmons
May 20th 2010
Thomas M. Shapiro•Professor of Sociology and Public Policy at Brandeis University. •His current professional titles include the Pokross Professor of Law and Social Policy and the Director of the Institute on Assets and Social Policy.
Background and Education•Born in Los Angeles in 1947. •He received his B.A. Degree from the University of Wisconsin. •He received both his M.A. degree and PhD from Washington University in St. Louis, Missouri.
Picture from: http://www.amazon.com/Thomas-M.-Shapiro/e/B001IQXHMS
Outline• Inheritance and discrimination
– Wealth– Racial wealth gap– Inheritance
• Transformative assets– Difference between middle class whites and middle class
blacks– Homeownership
• Head-Start assets– Location– Education
“We are New Englanders. Never touch principal….To me income is to pay bills; assets are to keep.”
“Income supplies life support, assets provide opportunities.”
-Kathryn McDonald
Wealth• Wealth- total value of things a family owns – debt
– Home equity– Resources that families own
• Assets- a resource that has economic value which will provide future benefit– Stocks – Bonds– Savings
• Income- earnings– Work– Dividends– Pensions– Transfer Payments
• Asset Poverty Line
The Modern Age
• Baby Boom years (1946-1964)– Substantial transfer of wealth– Increased middle class net worth
• Growth in wealth and inequality– Net Worth– Net Financial Assets
Racial Wealth Gap• Inequality of income• Inequality of wealth• Difference of wealth based off of income.
Whites-Net Worth
Whites-Net Financial Assets
Blacks-Net Worth
Blacks-Net Financial Assets
Highest fifth median $133,607 $40,465 $43,806 $7,448Second highest fifth median $65,998 $13,362 $29,851 $2,699
Middle fifth median $50,350 $6,800 $14,902 $800
Second lowest fifth median $39,908 $3,599 $6,879 $249Lowest fifth median $17,066 $7,400 $2,400 $100
Source: PSID, 1999
“We were trading in the kids’ savings bonds. We were working two jobs each. We were working at night. We were having garage sales. And finally my mom said, ‘Well, this is stupid. We’ve got a lot of money here.’”
-Briggette Barry
Inheritance• What is inheritance?• Parental Wealth -“That Parent Thing”• Who inherits…
Mean Net Worth Median Net Worth$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000 $505,800
$198,700
$95,000 $47,000
White Black
Source: PSID, 1999
“Now it’s not necessarily fair and it’s not necessarily right, but I think certain neighborhoods are better, certain schools are better, and your children will have a better childhood and better education because of where they go. But it’s not right. I don’t think it’s necessarily right, but I think everyone should have the same opportunities as my children do, but they don’t…I feel guilty because I’m not doing anything to make their [kids in inner-city schools] life better or trying to help them. I’m hiding out here in my nice little neighborhood and my little private school and I’m like sticking my head in the sand and pretending like these problems don’t exist. So I do have a sense of guilt over it.”
-Lori Olsen
The Middle Class
• What is the middle class?– Middle 60%
• Earning about $17,000-$79,000 a year
• The difference between black and white middle class.– Conway and Barzak families
Median Net Worth Medain Net Financial Assets
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000 $58,000
$23,000
$13,550 $6,000
White Black
Source: PSID, 1999
“The Income Middle Class”; Race and Wealth
“The Occupational Middle Class”; Race and Wealth
Median Net Worth Median Net Financial Assets
$123,000
$60,000
$26,500
$11,200
White Black
Source: PSID, 1999
“The Educational Middle Class”; Race and Wealth
Median Net Worth Median Net Financial Assets
$111,000
$56,000
$33,500
$15,000
White Black
Source: PSID, 1999
Elizabeth: His mother gave us some of the money [for the down payment].
Vance: Well, it was originally structured as a loan with interest, and eventually the interest was waived.
Shapiro: Has any of the loan been paid back?
Vance: No, nope, it’s still sitting there…oh, fifteen thousand dollars, something like that.
-Vance and Elizabeth Cotter
Homeownership• A way to accumulate assets
– Home ownership vs. renting
• Mortgage– Down Payment
• 46% of white families receive help from family or savings compared to only 12% of black families.
– Discrimination from banks and real-estate agents
Percent Homeowners
Average Mortgage Rate
Mean Home Equity
Median Home Equity
White 74.2 8.12 $74,859 $58,000
Black 48.2 8.44 $46,254 $40,000
Difference 25.8 .32 $28,605 $18,000
“There’s a lot of blacks that moved in. That I was starting to worry about, because I was afraid it was going to go down. I’m not prejudiced, but it’s just that once a certain type comes in, that’s it! My concern when a lot of blacks started moving in was with the drugs, the pushing of drugs on your kids…I know a lot of whites moved out because of that problem.”
-Charlene Quinlin
Location, Location, Location• Property Values
– What happens when black people move in
• Residential Segregation• Why people move.
– Schooling– Status
• “Moving Up”– Safety
“The way I was raised, you don’t put much emphasis on material ownership. You don’t. It comes and it goes so fast. It could be gone in a heartbeat, but education is, it’s the only way the kids are going to make it. That’s it. Without that, they will end up with the exact same life that my mother and I had. We can’t have that! My husband is incarcerated.
-Karen
Education• Education and the American Dream
– Good education• Small class size• Parent involvement• Good teachers
– School choice• What makes a good school?
– Reputation– Who they brush elbows with
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