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Friday, December 3, 2021

Yes, there’s a wealth gap, here’s why

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You probably have not heard of Dr. Olivia Hooker, who is a spry 103 years of age. She is also the last known survivor of the infamous Tulsa Race Riot (or Massacre). During the course of two days in 1921, May 31 and June 1, a large mob of whites assaulted hundreds of African-Americans in Greenwood, Oklahoma, which is an enclave of Tulsa, Oklahoma. Greenwood — which has often been referred to as “Black Wall Street” — was considered to be the wealthiest Black community in the U.S. at that time.

A retired psychologist and college professor, Hooker now lives in New York. At the time of the massacre, she was just 6 years old. Her family’s well-furnished home was attacked during the first night of violence. (Hooker’s mother hid her and her siblings under a large table; she can still remember her mother telling them “not to say a word” as thugs took an ax to her sister’s piano, according to NPR program “Radio Diaries” in a special about Hooker.)

The mob murdered as many as 300 African-Americans. It also destroyed approximately 1,000 homes and businesses, leaving 10,000 people homeless. Despite this childhood trauma, Hooker would go on to earn her doctorate; become the first African-American woman to join the U.S. Coast Guard; and become a member of the Tulsa Race Riot Commission, which was formed in 1996. The Commission made a case for reparations, but neither the city of Tulsa nor the State of Oklahoma honored that recommendation.

The devastation in Tulsa nearly 100 years ago is perhaps the best-known example of domestic terrorism against African-Americans whose only “crime” was being economically successful. It is also a powerful explanation as to why so few blacks have been able to pass down wealth to future generations. Indeed, it speaks directly to the historical underpinnings of what has come to be known as “the racial wealth gap” between blacks and whites.

Some people argue that the greatest current impediment to African-American advancement is the enduring wealth gap. Further, some believe that this gap — given its size and the structural racism that sustains it — is virtually insurmountable. Without offering an opinion as to whether I agree with either of those assessments, there can be no question that disproportionality in generational wealth between Blacks and whites substantially hinders our future prosperity. Indeed, it gets worse. Recent studies show that African-Americans who are born into the middle and even upper class are more likely than their white counterparts to fall into a lower economic class once they become adults.

For the sake of clarity, a person’s or family’s wealth is calculated by adding up all assets (money, homes, stocks, retirement accounts, etc.) and subtracting all liabilities or debts (mortgages, school loans, credit cards, etc). Whatever is left is one’s wealth or “net worth.” If one has a net worth that is less than $0, one is considered to be “in debt”.

A 2017 report by The Economic Policy Institute concludes that “Failures in the provision of (financial) building blocks to the African-American population have led to an enormous racial wealth gap. The racial wealth gap is much larger than the wage or income gap by race. Average wealth for white families is seven times higher than average wealth for black families. Worse still, median white wealth is 12 times higher than median Black wealth. More than one in four Black households have zero or negative net worth, compared to less than one in 10 white families without wealth, which explains the large differences in the racial wealth gap at the mean and median.” 

This leads us back to the Tulsa Race Riots and other acts of domestic terrorism against Blacks, such as occurred in Rosewood, Florida, in 1923. Such terrorism, as well as structural racism (e.g., “redlining” by mortgage companies, unequal access to the G.I. Bill, outright theft of African-American land and wealth, etc.) have conspired to undermine Black wealth. According to a recent study by Prosperity Now and the Institute for Policy  Studies, the median wealth for African-Americans will be $0 by 2053 if current trends continue. (Similarly, net wealth for Latino-Americans is projected to be $0 roughly two decades later.)

This is in stark contrast to the fact that, during the next 20 to 30 years, members of “the Greatest Generation” and “the Baby Boomers” will pass on assets that range from $6 trillion to as much as $30 trillion. (That’s not “billion” that’s “trillion.”) In short, America is in the midst of the largest wealth transfer in the history of the world. However, people of color are projected to continue our downward slide toward negative net wealth. 

Despite the seemingly intractable challenges that we face, we can draw inspiration from Dr. Hooker, who was recently featured in a story on NPR. Dr. Hooker is living proof that there is no obstacle that we cannot overcome, no barrier that we cannot penetrate, no bar that is too high for us to surmount. If we truly wish to honor her – and the millions of ancestors who refused to cringe in the face of withering racism – we must equip ourselves in the same way that she has. The ability to change destiny is in our hands.

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