“The median Black household has a net worth of only $24,100, a fraction of the $188,200 in net worth the median white household has, 2019 Federal Reserve data shows.
And these numbers don’t always show the nuance of financial instability for many Black families. A quarter of Black households have zero or negative net worth, compared with a tenth of white families, according to the Economic Policy Institute.
The reasons for the wealth gap are complicated and multi-layered, with racism, historical injustices, structural inequality, and educational disparities all playing a huge role. So do career choices, marriage status, and inheritance levels for Black people, which are starkly lower than for white people. The practice of redlining, for example, under which the government would not guarantee loans for Black Americans who were trying to purchase homes, as well as the effect of mass incarceration on Black representation in the workforce, are just a couple of examples of how African Americans are systematically prevented from building wealth.
Consequently, here’s the harsh reality about being Black in America: The deck is often so stacked against you that the weight of it all can feel overwhelming — no matter your income, your net worth, or how much you’ve achieved. For African Americans like me, systemic inequities and generations of poverty can make it seem like whatever you’ve done is never enough, especially when you know you’ll have to help support relatives or make contingency plans for any number of scenarios out of your control.
The reality is that for those of us able to generate wealth and reach a level of comfort, we are often also financially supporting family members or paying down debt. We simply don’t have that generational wealth that so many white families have to fall back on and start out their adult lives with. Even two people earning the same income can be looking at totally different financial situations based on their race and class: One could be putting money into savings or investing, while the other might be using that same income to pay a family member’s rent or help support an aging parent’s retirement.
I know that people like my mother don’t have any real safety net other than relatives. There’s no inheritance coming. As a result, for far too many Black people, low income and low wealth translate into a lifetime of scraping by.”
“Among Black Americans, it’s not uncommon for those who can to help family members financially: Some call it the “Black tax,” a term commonly used in South Africa that refers to the obligations of first-in-the-family college graduates, professionals, or others who “make it” to assist their family members.
I’m happy to help out my mother by covering her needs when she’s short on cash. But it can be an emotional experience for her to even ask”
“as former Congressional Budget Office Director June O’Neill and Dave M. O’Neill have shown, this supposed “pay gap” disappears when one factors in the background variables of age, education, math and verbal skills, and work history. In fact, when controlling for these variables, black men earn 99.9 percent of the wages of white men, and when the same calculation is applied to women, black women actually earn 7 percent more per hour than white women with the same education and math and verbal skills. In short order, the pay gap disappears.
By the same logic, although there is a significant poverty gap between white and black children in the United States, this disparity vanishes when one controls for the key background variables of family structure, educational attainment, and workforce participation. As Heritage Foundation scholar Robert Rector has demonstrated, when these background factors are held constant, “race alone does not directly increase or decrease the probability that a child will be poor.” Contrary to the logic of the critical race theorists, the key determinant of child poverty is not race, but a cluster of human and social variables that affect Americans of all racial demographics with remarkably equal force.
Unfortunately, critical race theory does not offer a policy platform for strengthening these key background variables; in fact, it is in many cases directly hostile to them.”
“April, who works at a pet shop in Minneapolis, makes $11.75 an hour. She loves her job, and it pays better than the federal minimum wage, but not by much. She and her partner get by. They still don’t make enough money to afford a car, but they can manage rent, their phones, and internet, and support their 12-year-old daughter.
Her partner lost his job as a body piercer when the pandemic hit. He went on unemployment insurance for a while, and he and April finally found health insurance through a public assistance program. It was more consistent income than they’d seen in quite some time. “We were able to get a little bit of extra money into our accounts for once. We weren’t going paycheck to paycheck for a while. That was wonderful,” April said. “I think a ton of people were finally out of the poverty level with that money.” Her partner has now found a different job that allows him to work from home.
Life is more or less fine, but April said it would be better if they made more. “We would be able to have a house like a normal family,” she added.
April and her family’s situation is quite normal: In 2019, about 39 million people made less than $15 an hour. When the pandemic hit, that number actually fell — not because people were making more but because low-wage workers became unemployed.”
“The world’s wealthy need cuts of over 90 percent of their carbon emissions, to get to their carbon fair share. The top-skew is so huge that the world’s richest 1 percent cause double the carbon burden of the poorest 50 percent combined (that’s 3.5 billion people).
Most “middle class” Americans are in the global top 1 or 10 percent.”
“So what the hell can anyone do? The main answer for the majority of folks reading this is to cut your personal consumption, and to press for political and systemic changes to get off the “hedonic treadmill,” at least until we’ve stabilized. The “hedonic treadmill” refers to the effect that increases in consumption often result in no permanent gain in happiness.
We’ve all felt negligible or fleeting satisfaction from consumption, but sadly the carbon impacts are far from fleeting — they will last centuries. It’s critical to avoid mindless overconsumption. Many carbon footprint calculators are available to help you figure out your own carbon impact.”
“In the middle of a pandemic that has killed roughly 1 in every 1,020 Black Americans — a disproportionate death toll likely to worsen as coronavirus cases spike in much of the country — it’s not just lives that are being imperiled. Racial wealth gaps are worsening, and progress towards economic equity is being undone.”
““When the pandemic translates into a disproportionate burden on low-wealth households, that is correlated with race,” says Jones. “The median wealth of white households is between 9 and 10 times as much as the median black household. And during this pandemic, the people with the lowest level of the wealth don’t have the emergency savings to hold themselves over.”
At the same time, Black and Latino workers are more likely to have “frontline” jobs that put them at heightened risk of Covid infection. For many, it’s a bind: You have less of a financial cushion to fall back on and need the work. But the job itself puts you at heightened risk of Covid infection, your health insurance is generally tied to your job, and if you lose it and catch Covid, you face potential financial ruin. Even when the pandemic ends, Jones expects that Black and Latino households will be “worse off, relative to white households, than when it began.””
“For years, workers have had a continually eroding level of leverage in the workplace. The ways companies have redefined labor as “external contractors” basically causes more and more people to not be covered by workplace protections. During this pandemic, those people couldn’t get unemployment insurance at all. It’s indicative of a larger problem: The labor market is being reoriented in a way where workers have less and less power. One reason that’s important is that if you don’t have a lot of say, you’re going to be stuck between a rock and a hard place: forced to either not work, or to go to work under far less-than-ideal circumstances in terms of protections from Covid infection and other health problems. Do they have the right protective equipment? Do they have sick leave? Probably not.
Related to health care, we have health insurance driven by where you’re employed. During a time like this — a pandemic with acute and chronic health implications and high rates of unemployment — going in and out of access to health care is particularly devastating. In the long run, we need some form of universal health care access to offset this problem of people losing their access to health care if they lose their jobs.”
” We found that people are sensitive to changes in their paychecks from month to month, and that’s particularly true for Black and Latinx households and households with a low level of liquid assets. What I mean by liquid assets are savings and other assets that are either cash or which can be quickly converted into cash — so your bank account, your savings account, and some investments you can quickly cash out. The households with the lowest level of liquid assets had the most vulnerability. When there were changes in their income, they had to make bigger adjustments, or adjustments that were going to be more painful. Relative to white households, Black and Latino households were more sensitive to those fluctuations, and that seems to be a result of the fact those households generally have less in terms of liquid assets, which is related to broader racial wealth gaps driven by a number of factors”
“Already, the current downturn is turning out to be less traumatic for wealthy and well-established people than it is marginalized groups and the poor.
The stock market is soaring, even though millions of people are out of a job. The Federal Reserve has really stepped up in terms of monetary policy to inject liquidity into the economy and keep markets afloat, while Congress hasn’t really kept up its end of the bargain. It passed the Coronavirus Aid, Relief, and Economic Securities Act, or the CARES Act, in March, but much of the support from it has dried up, and it’s not clear what, if anything, Capitol Hill plans to do next on the economy.
“The rich experience these recessions much differently than the rest of us,” Bharat Ramamurti, managing director of the Roosevelt Institute’s corporate power program, told me. “The pain is much more time-limited, it’s not as deep, and as a result, they recover much more quickly, and then they’re in a position to take advantage of the fact that other actors in the economy are still struggling and can use that to further consolidate their control and their power.””
“After returning from recess in September, Senate Republicans put forth a “skinny” stimulus to counter a much more ambitious package proposed by Democrats in the House in May. But even the GOP’s bill failed in the Senate — as Vox’s Li Zhou explained, in part because it was more of a messaging bill than a sincere effort at helping the American public. The economy isn’t as bad as some of the doomsday predictions, so some lawmakers seem to have decided more assistance isn’t necessary.”
“The most compelling evidence Hacker and Pierson cite for this argument comes from a study conducted by political scientists Margit Tavits and Joshua Potter, which looked at party platforms from 450 parties in 41 countries between 1945 and 2010. Tavits and Potter find that as inequality rises, conservative parties ratchet up their emphasis on religious and racial grievances — particularly in countries with deep racial and religious fractures. The pivot only works, Tavits and Potter say, when there is high “social demand” for ethnonationalist conflict.”
“If you survey the modern Republican Party, the figures most intent on turning it into a vehicle for ethnonationalist resentment are the least committed to the plutocratic agenda. Steve Bannon, Tucker Carlson, Sen. Josh Hawley, and 2016 candidate Donald Trump are all examples of the trend: They are, or were, explicit in their desire to sever the ties that yoke angry nationalism and a desire for a whiter America to Paul Ryan’s budget.
Conversely, the Republican figures most committed to plutocracy — like Ryan or the Koch brothers or the Chamber of Commerce — tend to back immigration reform and recoil from ethnonationalist rhetoric, and in 2016, they opposed Trump in favor of Jeb Bush and Chris Christie and Marco Rubio. They just lost on all those fronts.
Hacker and Pierson emphasize the fact that once in office, Trump abandoned populist pretense and gave the Chamber of Commerce everything it had ever wanted and more. But, as with so much else with Trump, it can be hard to distinguish decision-making from disinterest. Trump outsourced the staffing of his White House to the Koch-soaked Mike Pence and his agenda to congressional Republicans. The question, then, is whether the dissonance of his administration represents an inevitability of Republican Party politics or simply a lag between Trump demonstrating the base’s prioritization of ethnonationalist resentment and a politician who will both win and govern on those terms.”
“At key moments, Fox News tried to support immigration reform and deflate Trump, and it lost those fights and remade itself in Trump’s image. There are lines even conservative media can’t cross.”
“As Hacker and Pierson show, this is a point of true convergence between the identitarians and the plutocrats: Both have lost confidence that they can win elections democratically, so they have sought to rewrite the rules in their favor. What hold on power they retain comes from the way American politics amplifies the power of whiter, more rural, more conservative areas — and that’s given the conservative coalition a closing window in which to rig the system such that they can retain control.
America does not exist in a steady state of tension between majoritarian and minoritarian institutions. Those institutions can be changed, and they are being changed. A party in power can rewrite the rules in its own favor, and the Republican Party, at every level, is trying to do just that — using power won through white identity politics and geographic advantage, but deploying strategies patiently funded by plutocrats. As Hacker and Pierson write:
“Recent GOP moves in North Carolina show what’s possible in a closely balanced state. Republicans first took the statehouse in 2010. They quickly enlisted the leading Republican architect of extreme partisan gerrymanders, Thomas Hofeller. A mostly anonymous figure until his death in 2018, Hofeller liked to describe gerrymandering as “the only legalized form of vote-stealing left in the United States.” He once told an audience of state legislators, “Redistricting is like an election in reverse. It’s a great event. Usually the voters get to pick the politicians. In redistricting, the politicians get to pick the voters.” In 2018, North Carolina Republicans won their “election in reverse,” keeping hold of the statehouse even while losing the statewide popular vote. In North Carolina’s races for the US House, Republicans won half the statewide votes and 77 percent of the seats. A global elections watchdog ranked North Carolina’s “electoral integrity” alongside that of Cuba, Indonesia, and Sierra Leone.””
“History shows that democratic systems thrive amid responsible conservative parties — parties that make their peace with democracy and build agendas that can successfully compete for votes — and they collapse when conservative parties back themselves into defending constituencies and agendas so narrow that their only path to victory is to rig the system in their favor.
This is the cliff on which American democracy now teeters. The threat isn’t that Donald Trump will carve his face onto Mount Rushmore and engrave his name across the White House. It’s that the awkward coalition that nominated and sustains him will entrench itself, not their bumbling standard-bearer, by turning America into a government by the ethnonationalist minority, for the plutocratic minority.”
“On a global scale, inequality is declining. While it has increased within the United States, it has not grown nearly as much as people often claim. The American poor and middle class have been gaining ground, and the much-touted disappearance of the middle class has happened mainly because the ranks of the people above the middle class have swollen. And while substantially raising tax rates on higher-income people is often touted as a fix for inequality, it would probably hurt lower-income people as well as the wealthy. The same goes for a tax on wealth.
Most important: Not all income inequality is bad. Inequality emerges in more than one way, some of it justifiable, some of it not. Most of what is framed as a problem of inequality is better conceived as either a problem of poverty or a problem of unjustly acquired wealth.”
“The Congressional Budget Office (CBO) produced a report in November 2018 on the growth of household income in each of five quintiles. Between 1979 and 2015, average real income for people in the top fifth of the population rose by 101 percent, while it rose for people in the bottom quintile by “only” 32 percent. For the middle three quintiles, average real income increased by 32 percent as well.
Or at least those are the numbers if you ignore the effects of taxes and direct government transfers. But you really shouldn’t leave those out: If you’re debating whether to increase taxes on the rich and transfers to the poor, it seems important to take into account the taxation and safety net already in place. Once the CBO researchers subtracted taxes and added welfare, Social Security, and so on, the picture changed dramatically for the lowest quintile: Income rose by 79 percent. (For the middle three quintiles, it increased by 46 percent. For the highest quintile, it went up by 103 percent—slightly more than before, probably thanks to Ronald Reagan’s and George W. Bush’s tax cuts.)”
“That’s still an increase in income inequality, of course. But it’s not an inequality increase in which the poor and near-poor are worse off. They’re much better off. Everyone is.”