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New study takes aim at debunking old myths about America’s racial wealth gap

Racism woven into the structure of the economy is the key malefactor, and fresh research backs this up.

A new study outlines just how mistaken many Americans are about the roots of the nation’s racial wealth gap.
A new study outlines just how mistaken many Americans are about the roots of the nation’s racial wealth gap.

Nearly everyone agrees that black Americans are less financially well-to-do than white Americans. But why does this fact remain so stubbornly true?

While there’s little-to-no consensus, popular beliefs – buttressed by decades-old political arguments and social policies – tend to point to black Americans as the source of their own woes. For example, an April poll conducted by The Economist/YouGov showed that significant numbers of white Americans – 40 percent – believe black Americans would be as economically successful as white Americans, if they only tried harder.

As Slate’s Jamelle Bouie observed recently, “the specific diagnosis varies,” though it typically defaults to a selection of arguments, such as the failure of black family structure, poor educational achievement, rampant consumerism, and poor savings. “Each presents a different face for the same claim; that black culture is broken, and fixing the culture will resolve the economic disparities,” Bouie wrote in an essay that rejected such arguments.

Indeed, Bouie is one of a growing number of journalists, social scientists, policy makers, and political leaders who are challenging age-old shibboleths that blame black Americans for their inability to gain economic parity with white Americans. Their claims are bolstered by a growing body of research which demonstrates that systemic racism – not a lack of effort, education or family structure – is chiefly to blame for perpetuating the yawning and consistent racial wealth gap in the United States.

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In the most recent examplea study released last month by scholars at Duke University’s Samuel Dubois Cook Center on Social Equity and the Insight Center for Community Economic Development outlines just how mistaken many Americans are about the roots of the nation’s racial wealth gap.

We contend that the cause of the gap must be found in the structural characteristics of the American economy, heavily infused at every point with both an inheritance of racism and the ongoing authority of white supremacy

In their paper, “What We Get Wrong About Closing the Racial Wealth Gap,” an impressive list of scholars – including Alan A. Aja at the City University of New York; Caterina Chiopris, William Darity Jr., and Mark V. Paul at Duke University; Darrick Hamilton at The New School for Social Research in New York City; Los Angeles attorney and documentary film producer Antonio Moore; and Anne E. Price, president of the Insight Center – expose and debunk ten widespread and damaging myths that points the fingers at black Americans:

  • Myth 1 — Greater education attainment or more work effort on the part of blacks will close the racial wealth gap
  • Myth 2 — The racial homeownership gap is the “driver” of the racial wealth gap
  • Myth 3 — Buying and banking black will close the racial wealth gap
  • Myth 4 — Black people saving more will close the racial wealth gap
  • Myth 5 — Greater financial literacy will close the racial wealth gap
  • Myth 6 — Entrepreneurship will close the racial wealth gap
  • Myth 7 — Emulating successful minorities will close the racial wealth gap
  • Myth 8 — Improved “soft skills” and “personal responsibility” will close the racial wealth gap
  • Myth 9 — The growing numbers of black celebrities prove the racial wealth gap is closing
  • Myth 10 — Black family disorganization is a cause of the racial wealth gap

The Duke/Insight scholars note that the failure to close the racial wealth gap stems from a collective adherence to these myths, which obscures the real reasons black Americans fail to advance and preventing practical solutions to narrowing the gap.

“These myths support a point of view that identifies dysfunctional black behaviors as the basic cause of persistent racial inequality, including the black-white wealth disparity, in the United States,” the researchers write. “We contend that the cause of the gap must be found in the structural characteristics of the American economy, heavily infused at every point with both an inheritance of racism and the ongoing authority of white supremacy.”

To make this point clearer, let’s do a deeper-dive examination into two of myths.

First, Myth 3: Buying and banking black will close the racial wealth gap – a popular idea with support among entrepreneurs and capitalists who believe black communities would prosper, if black people moved their money out of white-controlled financial institutions and better supported black-owned banks and businesses.

In recent years, this noble, yet mistaken, idea has been given a lift by the #bankblack movement, a social media effort to demonstrate the anger and economic power in African-American communities against police shootings and brutality toward unarmed black people.

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But as the Duke/Insight report makes clear, “black businesses and banks cannot thrive on a separate and unequal playing field” because the nation’s economic system greatly favors the larger, better-capitalized white banks and businesses. “For instance, in 2016, the top 100 black-owned firms identified by Black Enterprise collectively grossed $24 billion and employed 73,940 workers,” the report stated. “In contrast Walmart, the top firm by revenue in the U.S., grossed more than twenty times as much in revenue and employed 2.2 million more workers than the entire top 100 black-owned firms combined in the same year.”

Such huge disparities between black- and white-owned businesses led the researchers to conclude “the failure to bank black or buy black does not explain why we have a racial wealth gap of this magnitude, nor will banking black or buying black do much to reduce the gap.”

And, second, Myth 10: Black family disorganization is a cause of the racial wealth gap – an article of faith so entrenched in popular culture and public policy that only those daring to brave the inevitable ridicule dare challenge its veracity.

To understand the genesis of black family pathology, it’s necessary to recall the 1965 U.S. Labor Department report, “The Negro Family: The Case for National Action,” better known as the “Moynihan report” for its author, then-Assistant Secretary of Labor and later a Democratic Senator from New York, Daniel Patrick Moynihan.

According to Daniel Geary’s 50th anniversary reflection on the Moynihan report in The Atlantic:

[T]he report’s ambiguities and contradictions as well as Moynihan’s decision to discuss racial inequality primarily in terms of family structure produced confusion over its aims. Many liberals understood the report to advocate new policies to alleviate race-based economic inequalities. But conservatives found in the report a convenient rationalization for inequality; they argued that only racial self-help could produce the necessary changes in family structure. Some even used the report to reinforce racist stereotypes about loose family morality among African Americans. Meanwhile, left-wing critics attacked Moynihan for distracting attention from ongoing systemic racism by focusing on African Americans’ family characteristics.

Moynihan’s report continues to reverberate to this day; its enduring legacy has been to cast poverty in stark and indelibly racist and gendered terms. But even if something is widely assumed and repeated for half a century, that doesn’t make it true.

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The Duke/Insight reports harshly condemns the argument that black family dysfunction lies at the core of the wealth gap:

 Explanations that focus on behavior and so-called cultural factors also miss the point that retained wealth is a driving force for education, employment, and income outcomes. Rather than being shaped by family structure, wealth actually shapes family structure as well.

Other researchers have found related findings, building an even more iron-clad argument for re-examining the story the nation tells itself about the racial wealth gap.

In a separate study, researchers at Stanford and Harvard Universities, along with the U.S. Census Bureau, recently reported that in nearly every neighborhood across the nation, black boys earn less in adulthood than white boys even when both groups come from comparable socioeconomic backgrounds.

The researchers — Raj Chetty at Stanford, Nathaniel Hendren at Harvard, along with Maggie R. Jones and Sonya R. Porter at the Census Bureau — analyzed racial disparities in income over generations by examining Census data of 20 million U.S. children and their parents. In particular, they tracked how wealth outcomes compared for Hispanic, white, Asian, black, and Native Americans.

In their March 2018 paper titled “Race and Economic Opportunity in the United States: An Intergenerational Perspective” the researchers noted “the black-white gaps persists even among boys who grow up in the same neighborhood.” The study went on to report: “Controlling for parental income, black boys have lower incomes in adulthood than white boys in 99 percent of Census tracts.”

Like the Duke/Insight study, these findings fly in the face of conventional understanding about race and wealth, discrediting the popular belief among many policy makers that class standing – not racial discrimination – sets the baseline for future financial well-being in the United States.

For example, the researchers found that a wide racial wealth gap exists even among wealthy families — so much so that black children whose parents are among the top 1 percent of U.S. earners, with incomes at an average of $1.1 million, grow up to have incomes that is 12.4 percent lower than white children who grew up in similarly wealthy households.

The unmistakable – and obvious – difference is the color of their skin. “One of the most popular liberal post-racial ideas is the idea that the fundamental problem is class and not race, and clearly this study explodes that idea,” Ibram Kendi, a professor and director of the Antiracist Research and Policy Center at American University, said in an interview about the study with The New York Times. “But for whatever reason, we’re unwilling to stare racism in the face.”

Narrowing the racial wealth gap will be neither easy nor quick. The problem has endured because of the structural advantages the status quo provides to the nation’s most elite citizens. Eliminating the foundational supports to the enduring racial wealth gap would, in the words of the Duke/Insight report, “require a major redistributive effort or another major policy intervention to build black American wealth.”

Given the current state of U.S. politics, that’s a nonstarter. Still, the work of progressive social scientists making credible, fact-filled arguments about how the nation created and continues to perpetuate these disparities in wealth among our multicultural population serves an invaluable role. Changing attitudes about class, race, and wealth will only come with a broad and accurate understanding how and why disparities came to exist and continue to hold back the nation.

At some point in the future, policy makers will come to grips with the far-sighted scholarship currently being produced and reject the damnable myths that blame black Americans for their own social woes. When that day comeshopefully sooner rather than later, the nation will be able to enact fundamental and fair changes to our nation’s economy and way of life.