Racial Issues Also Cause the Inequality Of Wealth

By Junming Li

During slavery, most slaves weren’t allowed to accumulate any assets. Today, after more than a hundred of years, the problem has transformed into a kind of racism based on economic opportunities. In fact, the problem has grown much more serious than slavery. Institutional racism is one of the primacies that causes wealth inequality in the United States.

According to the graph from Institute on Assets and Social Policy, the inequality by race will be more apparent.

The gap has been increasing since 1984, the trend of the gap seems to be increasing over time. Racism is certainly an issue in America, when it comes to wealth and economic; the issue is even more realistic. Homeownership, unemployment and the recession are accounted as the main factors of causing institutional racism spreads to wealth inequality.

Homeownership indirectly represents one’s wealth, and effectively helps gain assets. Residential segregation and many Federal Housing Acts have caused the housing market be unfair for people of color, therefore limiting access to wealth for those people. Residential segregation still exists in many states and prevents people of color purchasing house in white neighborhoods. The director of Community Reinvestment Program written article, “The Wealth Gap: Why Dr. King’s Dream Is Unfinished”, by Preeti Vissa, analyzes “Jim Crow laws in the south kept most African Americans locked into an economic underclass. In the north, the process was more subtle but just as real, with bank redlining and federal government housing policies preventing people of color (and often not just African Americans) from buying homes in white neighborhoods relegating them to more rundown communities where property values didn’t rise like they did on the white side of town.” In other words, because of the history of institutional racism caused by the unfair federal housing acts, most people of color are still being kept out of neighborhoods that have high appreciation rate.

Realtors also play a major role on keeping the expensive or high appreciation rate neighborhoods white. As Suzanne Gamboa reports the study’s finding of housing discrimination from The Department of Housing and Urban Development in his article,

“_Black testers wanting to rent were told about 11.4 percent fewer units and shown 4.2 percent fewer. Black testers wanting to buy a home were told about 17 percent fewer homes and shown 17.7 percent fewer homes.

_ Hispanic testers were told about 12.5 percent fewer units to rent and shown 7.5 percent fewer. There were no statistically significant differences in the number of homes shows white testers compared to Hispanic testers. Authors said, that finding reflects a long-term decline against Hispanic testers wanting to buy homes.

_ Asian testers were told about 9.8 percent fewer and told about 6.6 percent fewer rental units. They were told about 15.5 percent and shown 18.8 percent fewer homes to buy.”

The datas explain homebuyers of color receive less information and attention from most realtors than white homebuyers. According to the discrimination that people of color are more likely be poorer than whites, realtors tend to keep the more expensive houses for people of color. It means that people of color have fewer options on selecting a desirable house and a better investment choice. That causes people of color couldn’t make as much money from housing investment as whites.

In addition, people of color also have disadvantages on employment. Such as low education background globalization and technology , are the main factors of unemployment for people of color.

According to “Unemployment rate by race and Hispanic or Latino ethnicity, 2011 annual average” by U.S. Census Bureau of Labor Statistics, the unemployment rate was 7.2% for non-Hispanic whites, 14.6% for Native American, 11.5% for Hispanics or Latinos, and 15.9% for blacks. Obviously, the data shows most employees of color are more likely to be unemployed than white employees.

In America, the local public education funds mostly rely on local property taxes. It implies that when local property taxes reduce, public education funds will reduce. As California Tax Data states, “Proposition 13 replaced the practice of annually reassessing property at market value with a system based on cost at acquisition. Prior to Proposition 13, if homes in a neighborhood sold for higher prices, neighboring properties might have been reassessed based on the newly increased area values. Under Prop. 13, the property is assessed for tax purposes only when it changes ownership. As long as the property is not sold, future increases in assessed value are limited to an annual inflation factor of no more than 2%.” which means that local property taxes rate in California decreased due to Proposition 13, because property taxes rate will only increase after a completion of new construction or a change of ownership; instead of increasing the rate annually.

However, the effects on public education aren’t as well as decreasing taxes rate. Proposition 13 disrupt the distribution of local education funds. Because residents who live in poor (people of color) neighborhoods pay less property tax in term of lower housing prize, than the residents who live in rich (white) neighborhoods. It represents schools in poor neighborhoods won’t receive as much education funds as the schools in rich neighborhoods. Therefore, the policy creates education inequality gap between rich neighborhoods and poor neighborhoods.

Consequently, students who live in poor neighborhoods or students of color will receive less education opportunity and resources than students from rich neighborhoods or white students. In term of poor education quality, students of color are more likely end up with working as blue-collar laborers and have less job opportunities that help them be wealthy.

Globalization and technology are the other primacies of racial unemployment in the country. When the United States has joined the global market economy in the 70s, the economy has significantly well changed; more products were created locally and exported. In contrast, today, many of the United States’ manufacturing became overseas manufacturing.

In Derek Thompson’s analysis of globalization, “Bash Brothers: How Globalization and Technology Teamed Up to Crush Middle-Class Workers”, the effects of new globalization across the country; “significant job losses, both in manufacturing and overall. For every $1,000 increase in imports per worker, the share of people with jobs declined by 0.7 percentage points — and more for non-college grads. As manufacturing jobs declined, demand for local services would decline, and thus job losses could extend into areas like retail and hotels.” As mentioned earlier, most low-skilled workers are people of color. In other words, people of color are the biggest victims of the increasing of unemployment that caused by globalization.

Another factor that low-skilled labors loss their jobs is the development of technology. Today, many low-skilled jobs can be done by robots and machines. Due to the low cost of utilizing technology, more and more local factors substitute labors to machines. Thus, more and more people of color are losing their ways to earn money because of globalization and technology.

During the economic crush (recession) from 2007 to 2011, the racial wealth inequality has widened even more.

According the survey from Pew Research Center, the net worth of households gap of blacks and whites is about $122868 in 2005 and $107472 in 2009. The net worth of whites is about eleven times larger than blacks in 2005, but number raised to twenty times larger in 2009. In addition, the declining of net worth for each individual groups is about three times less for Hispanic medians, twice less for black median and only one percent for white medians due to the recession.

As we have seen, institutional racism of homeownership and unemployment significantly lead to income inequality; yet, the recession expand the inequality to be much larger than it had never been.  As a matter of fact, if we don’t tackle wealth gap, the issues will become much more serious; between races and classes are much bigger than just wealth inequality.

5 Comments Add yours

  1. caseylapidus says:

    Institutionalized racism has been an issue ever since the beginning of time yet Americans claim that we’ve gotten so far in overcoming racism because of our half African American president, but the set up of the institution by old white men has yet to be reformed. I can’t even begin to picture how our institutions will begin to change the structure of this corrupt and unfair system strongly in favor of whites and that makes me sad.

    1. amandalevin says:

      History suggests the only way is through violent revolution. That also makes me sad.

  2. dejaungray says:

    When I read the article, it upset and annoyed me. To have racism be so institutionalized everywhere, like our schools and government, is truly horrific because it could mean that the power of racism has simply evolved over time. It plays a more calculated game. Futhermore, I found it interesting that the article had not spoken about the very few outliers related to this topic, because there may be a handful of families that had escaped some of these atrocities.

  3. dejaungray says:

    When I read the article, it upset and annoyed me. To have racism be so institutionalized everywhere, like our schools and government, is truly horrific because it could mean that the power of racism has simply evolved over time. It plays a more calculated game. Futhermore, I found it interesting that the article had not spoken about the very few outliers related to this topic, because there may be a handful of families that had escaped some of these atrocities…

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