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Opinion

Bootstrap myth exposed: White inheritance key driver in racial wealth gap

“Blacks/Latinos/non-whites don’t value education like whites do. They don’t work as hard as whites do. They spend more than whites do on junk,” says your standard white guy at the end of the bar dissecting the large racial wealth gap in the United States. “They just need to get off their butts and bootstrap it up like I did!”

However, the old tried-and-true American bootstrap lore took a big hit this month with a study that shows most families living with the material comfort and range of opportunities normally associated with middle-class status have obtained them the old-fashioned way: inheritance. The racial and wealth gap in the United States is as large as ever and “The Asset Value of Whiteness: Understanding the Racial Wealth Gap,” shows that inheritance plays a huge factor in that gap.

“For centuries, white households enjoyed wealth-building opportunities that were systematically denied to people of color. Today our policies continue to impede efforts by African-American and Latino households to obtain equal access to economic security,” Amy Traub, report co-author and associate director of policy and research at Demos said in a statement. “When research shows that racial privilege now outweighs a fundamental key to economic mobility, like higher education, we must demand our policymakers acknowledge this problem and create policies that address structural inequity.”

In short, the study found that white people inherit stuff and have inherited stuff for generations. And that gives them a supreme advantage. The report shows that typical markers of success in white households – and the chosen interventions in the lives of others – are not translating into lasting wealth and security in households of color.

From the report:

“Research probing the causes of the racial wealth gap has traced its origins to historic injustices, from slavery to segregation to redlining. The great expansion of wealth in the years after World War II was fueled by public policies such as the GI Bill, which mostly helped white veterans attend college and purchase homes with guaranteed mortgages, building the foundations of an American middle class that largely excluded people of color. The outcomes of past injustice are carried forward as wealth is handed down across generations and are reinforced by ostensibly “color-blind” practices and policies in effect today. Yet many popular explanations for racial economic inequality overlook these deep roots, asserting that wealth disparities must be solely the result of individual life choices and personal achievements. The misconception that personal responsibility accounts for the racial wealth gap is an obstacle to the policies that could effectively address racial disparities.”

Professor Thomas Shapiro, who directs the Institute on Assets and Social Policy and is the Pokross Professor of Law and Social Policy at The Heller School for Social Policy and Management at Brandeis University, has been studying this topic since the early 1990s. He was one of the co-authors of the study.

“We know, with a lot of empirical rigor, why the racial wealth gap exists in the United States,” Shapiro told Madison365. “We’ve got the dimensions down. We know that looking at different national databases that whites have about eight times as much financial wealth as African-American families and about eight times as much as the typical Hispanic family has, as well. And we know what the drivers of those things are.

“We know that it is the wealth that is produced through home ownership. We know it’s about the kind of work that people have that ties them into wealth escalators that is a robust pension benefit scheme,” he said. “In this piece, we were trying to say: Let’s take some of the so-called popular explanations and explore them.”

The report found, specifically, that:

◆ Attending college does not close the racial wealth gap.
◆ Raising children in a two-parent household does not close the racial wealth gap.
◆ Working full time does not close the racial wealth gap.
◆ Spending less does not close the racial wealth gap.


“The data says that African Americans and Hispanic families have the same amount of wealth as white families that are high school dropouts,” Shapiro said. “The racial wealth gap – that huge marker of racial inequality – cannot be closed by college going and college degree rates.”

Shapiro co-authored the report along with Laura Sullivan and Tatjana Meschede of Brandeis University and Traub of public policy nonprofit Devos. Issues of racial inequity are increasingly at the forefront of America’s public debate and probing the causes of the racial wealth gap has been becoming increasingly important.

“A lot of what drives the racial wealth gap is inheritance and the transmission of finances between generations,” Shapiro said. “Whites inherit five times more often than blacks and Hispanics. When money gets passed along to whites, it’s about 10 times as much.”

The term “racial wealth gap” is used to describe the difference in accumulated wealth that white households enjoy versus their counterparts of color. Researchers have long tried to attribute the contemporary differences — which are rooted in discriminatory legacies from slavery to housing segregation — to so-called life choices, including education and single parenthood. But this new study says that “individual choices are not sufficient to erase a century of accumulated wealth: structural racism trumps personal responsibility.”

“We hear that the racial wealth gap from people online and in comment sections who say ‘those people have children before they are married. If only, African Americans and Hispanics would have two-parent families, a lot of inequality will go away,’” he said. “How much wealth does a single-parent white family with children have compared to a two-parent family with children either African American or Hispanic? The answer is the white single-parent family has more wealth.”

So then the study looked at work and the narrative that African American and Latinos are lazy. “If only they would buckle down, as people sometimes say, racial equality would be greatly reduced,” Shapiro said. “Here’s what the data tells us: Whites working part-time under the age of 55 or unemployed have more wealth at the medium than African-Americans and Hispanics working full time, that’s 40 or more hours a week.”


The report looked at the last complaint: “If only ‘they’ would be thriftier and not waste money on clothes and sneakers….” And drawing on data from the 2013 and 2014 Consumer Expenditure Surveys, they found that the average white household actually spends 1.3 times more than the average black household of the same income group.

But don’t misinterpret the report, Shapiro said. Education does pay off. It just won’t come close to closing a racial wealth gap that is a century or two in the making.

“Having said this, there’s an important qualifier. For everybody, the lifetime earnings of a college-educated person versus a high school dropout is tremendous,” Shapiro said. “From an individual and ability point of view, it’s longstanding good advice to get the kind of education that will allow you to get the skills that will pay off in higher lifetime earnings.”

Still, white adults who drop out before finishing high school, have children out of wedlock and work part-time jobs have greater wealth (defined as assets minus debt) than black and Latino adults who completed more schooling, raise their families in a two-parent home and work full time.


“If we were trying to deconstruct ‘lift yourself up by your bootstraps,’ it’s really bedrock to the American ideology. That’s part of what we were trying to interrogate with this study,” Shapiro said. “At the end of the day, people who get an education do better, people who work two jobs do better than somebody working one job or part-time, being thrifty leaves more resources in the bank today. That person or family is undoubtedly better off than they would have been had they not done these things.”

But….

“But, while they are individually better off, it does not come close to closing the racial wealth gap,” Shapiro said. “The racial wealth gap goes back centuries and is reinforced by policies. It’s maintained by attitudes. There’s a lot about racial inequality that is in the picture here.”

So, that bootstrap we talk about is not the same bootstrap for people color at all.

“God, no. It’s not. There’s a study done by close colleagues of ours called, ‘Umbrellas don’t make it rain’ and in a different way they hit some of the same themes that we do in this narrative brief, as well,” Shapiro said.

To be sure, when we talk of inheritance, we are not always talking about huge sums of money. Even modest gifts at opportune moments can be huge – going to college, buying a first home, enrolling a child in private school. The previous generations have used the fruits of their own life’s work to safeguard a middle-class existence for offspring who have not yet earned it on their own.

Shapiro has a book coming out next month called “Toxic Inequality” that he hopes will break new ground as it follows a set of nearly 200 families between 1998 and 2011, following the kids from kindergarten to high school graduation. “About half black, half white. Half middle class, half working class, half urban and half suburban …. And seeing what happens to them over these 12 years,” Shapiro said. “There’s a lot of those stories that I will pull out in the book ‘Toxic Inequality.'”

What would Shapiro recommend for the city of Madison, a city dealing with a large racial wealth gap of its own? (Note: Originally from southern California, Shapiro is an alumnus of UW-Madison. “I was a buddy of Mayor Soglin when he was still a graduate student,” he laughs.)

“I think on a local, regional, and state level, there are different levers that we have to work with. I think on a local level, housing markets are the real key. I think attempting to break down racial segregation as much as possible in a community really serves the sustainable long-term interests,” Shapiro said. “It’s residential segregation that really drives the way that housing equity is color-coded and it’s abundantly clear from any study that’s ever looked at data.”

The study closes with a push for policymakers to evaluate proposed policies for their potential to shrink the wealth gap between races in America. Shapiro said he is optimistic about the progress he has seen recently.

“Five years ago, there were five people in the world that when you said ‘racial wealth gap’ that they would know what you meant,” said Shapiro, admitting that he might be going over the top a little bit with his numbers. “That’s no longer the case. There’s been a lot of empirical work about what the racial wealth gap is. There are a lot of folks who are working on it, studies on it. I dare say that the phrase ‘racial wealth gap’ has been sort of branded, at least in some of the public’s mind. They know what it is already.

“There was a certain symbolic value when at the 50th anniversary of the March on Washington for Justice and Freedom, President Obama got up there and said, ‘We know a gap between African Americans and whites exist,’” Shapiro said. “You can’t say that unless there is enough consciousness and pressure and staff knowing about it. While I’m not going to say it came from one of our studies, it certainly came from a study of people working in the same circle I am. Several universities and advocates of grassroots organizations across the country have been involved in a movement called ‘The Initiative to Close the Racial Wealth Gap.’ So that was kind of cool that the president said that.”


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