What Makes Wealth White?

A Too Much review of
The Color of Wealth : The Story Behind the U.S. Racial Wealth Divide
By Meizhu Lui, Bárbara Robles, Betsy Leondar-Wright, Rose Brewer, and Rebecca Adamson, with United for a Fair Economy
The New Press, 2006

By Sam Pizzigati

January 15, 2007

Dr. Martin Luther King Jr. devoted his life to the struggle against white supremacy, a struggle, headlines remind us, still not fully won.

Our current white supremacists, like their counterparts in Dr. King's day, consider people of color fundamentally inferior. How do they “prove” this inferiority? They sometimes point to wealth — or rather, contemporary America’s racially unequal distribution of it.

In the United States today, people of color hold considerably less household wealth than whites. The typical black household, for instance, holds $120,300 less wealth than the typical white. But slavery, racist ideologues smirk, ended generations ago. Clearly, the racist mind reasons, people of color simply do not have the smarts to “make it” in America.

Speeches celebrating Dr. King's birthday, unfortunately, seldom confront — head on — this racist undercurrent to America’s political discourse. Fortunately, we have a new addition to this discourse that does: The Color of Wealth.

This important new book, a team effort by five veteran activists and academics, tells a story few Americans have ever heard, a story that relates how conscious political decisions — some made years ago, some just yesterday — have denied millions of people of color the opportunity to accumulate assets and live the American dream.

What sorts of decisions are we talking about here? Government decisions. The Color of Wealth shows how federal and state policy choices have, over time, worked to keep African Americans, Latinos, Asian Americans, and Native Americans largely asset-poor.

In the United States today, of course, we very rarely ascribe a person’s financial success, or failure, to government policy. We attribute a person's financial status to that person’s skills, or character, not to political decisions that live in musty old history books.

But The Color of Wealth makes the convincing case that this history — much of it quite recent — lives on in our daily lives, in everything from the size of our monthly bank balances to the houses we live in.

Take, for instance, the tremendous economic success millions of average American families realized after World War II. In the mid 20th century, millions of Americans enjoyed their first taste of financial security. They earned their first college degrees. They bought their first homes. They had, for the first time ever, real disposable income.

This mass middle class — the world’s first — didn’t emerge because tens of millions of Americans suddenly started working harder. These good times emerged, The Color of Wealth helps us understand, because political decisions helped give families a leg up.

One of these political decisions — the move to create Social Security — meant that seniors didn’t have to spend down their life savings to survive old age. They could, instead, use their hard-earned nest-eggs to help their grown children make a down payment on a home. Another political decision, the GI Bill, enabled millions of veterans to attend college. Still another, the Federal Housing Administration, subsidized mortgages.

Combined, programs like these had an enormous impact. But not all families could, or would, benefit from them.

Why not? The Color of Wealth spells, in historic detail both fascinating and sobering, how programs ostensibly intended to benefit all Americans actually only benefited some.

The original Social Security Act, for instance, denied coverage to men and women who worked as domestics and agricultural workers, occupations that employed 60 percent of black workers nationally and three-quarters of black workers in the South. The Southern pols who dominated Congress in the 1930s would have it no other way.

“Southern congressmen, committed to preserving the prevailing social order, wanted to keep their maids, sharecroppers, and field hands desperate, without any other options,” The Color of Wealth notes. “Fifteen dollars a month in Social Security old-age benefits would have been well above a sharecropper's income of $38 to $87 per person per year.”

The GI Bill, meanwhile, carried a similar color bias.

“Most black World War II vets,” observes The Color of Wealth, “found that the GI Bill's educational benefits didn't work, except at historically black colleges, which were swamped with far more applicants than they could accommodate.”

In all, over half of applicants to black colleges — 55 percent — “were turned away for lack of space.”

In housing, more of the same.

“The Federal Housing Administration stopped subsidizing mortgages for homes with restrictive covenants in 1950,” The Color of Wealth explains. “But banks, realtors, insurance companies, and white home owners continued to find ways to exclude African Americans from buying homes in white neighborhoods. Too many black families were limited to deteriorating urban ghettos.”

Together, these developments cemented into place a discriminatory dynamic that most social programs today still don’t adequately address.

The Color of Wealth asks us to reflect upon one such typical program, “a first-time home-buyer program that helps two couples, one white and one of color, with a lower down payment and lower interest rate.”

“The white family’s ‘starter home’ in a white neighborhood appreciates in value, enabling them to sell it and buy a bigger home in a neighborhood with better schools,” the book notes. “Their next house appreciates in value too, and they get a home equity loan against it to send their kinds to college.”

The end result? A home, for this white couple, has brought financial security for two generations.

Not so for the couple of color. This couple’s home, in a nonwhite neighborhood, appreciates “slowly or not at all.” That means no home sale profit and no big home equity loan to send a kid to college. Lower property values, at the same time, mean lower tax revenues for the local schools — and poorer school quality. A home, for this family, turns out to be just a place to live, not a lever to gain financial security.

The Color of Wealth goes on to flesh out, for all the major ethnic groups in the United States that “share a common history of racialization,” just how assets have come to reside, disproportionately, in white pockets.

But the book makes equally clear — and vivid — the disaster racially discriminatory government policies have been for all working Americans, white and people of color alike.

“Economic instability,” The Color of Wealth notes, “has grown among working people of all races,” with the United States, alone in the developed world, still lacking such elementary basics of decency as guaranteed health care for all.

“Understanding the roots of the racial wealth divide,” the authors of The Color of Wealth announce at the outset of their initiative, “will lead to more understanding of racial inequities in general and more understanding of how to reach equality.”

“The myths of racial superiority and inferiority can be debunked,” they conclude nearly 300 pages later, “and the government's hand in creating racial categories and distributing economic resources by race exposed.”

The Color of Wealth has indeed done this exposing. On Dr. King’s birthday, and on every day, that’s an achievement worth celebrating.

Sam Pizzigati edits Too Much, the weekly online newsletter on excess and inequality. For updates on inequality books — and everything else about inequality — check here for a free weekly subscription.