Question

1. Mark your confusion.
2. Show evidence of a close reading.
3. Write a 1+ page reflection.

The Black Wealth Gap
Source: TheWeek.com, October 2, 2020

Decades after the civil rights movement, African Americans still hold a fraction of the wealth of white
Americans. Why? Here's everything you need to know:
How big is the gap?
It's staggering. The net worth of a typical white family in 2016 — including home, retirement accounts,
and all assets — was nearly 10 times greater than that of a Black family, at $171,000 to $17,600. This
gulf even includes African Americans whose households are headed by college graduates, who actually
have less net worth than white households headed by high school dropouts. Wealth begets wealth through
generations, and African Americans have missed out on that transfer for centuries. Just 8 percent of Black
families receive an inheritance from parents or grandparents. For someone with no buffer of savings and
no family member who can help, any financial emergency — a sudden illness or job loss — is a
catastrophe.
How did the gap start?
After the Civil War, Reconstruction was supposed to begin making up for the hundreds of years of
slavery during which African Americans had wages, property, and even spouses and children stolen from
them. But the "40 acres and a mule" promised by Gen. William Sherman was yanked away by Abraham
Lincoln's successor, President Andrew Johnson, and the little land that had been parceled out was
returned to the white former slaveholders. Most Blacks in the South after the war were forced to toil as
sharecroppers, perpetually in debt to white landowners. Blacks who managed to succeed despite all this
fell victim to white terrorism, as in the 1898 Wilmington, North Carolina, massacre that wiped out a
Black-led government in the nation's only successful coup, or the 1921 Tulsa massacre in which jealous
whites attacked, burned, and even bombed from the air a thriving neighborhood known as Black Wall
Street. With segregation and Jim Crow laws depriving them of the vote and of economic opportunity,
many Blacks abandoned the South in the Great Migration, only to find more-subtle discrimination waiting
in the North.
What kind of discrimination?
The New Deal was meant to help the poor across America, but it had racism baked into it. Rather than
overturning racial covenants that kept Blacks out of desirable neighborhoods, the new Federal Housing

Administration promoted them. The government Home Owners' Loan Corporation marked majority-
Black districts in red on maps, so banks would not extend government-insured loans there — suppressing

both Black homeownership and business development. The corrosive effects of that "redlining" persist to
this day. After World War II, the G.I. Bill, which paid for college or vocational training for veterans and
offered subsidized mortgages, was administered by the states, which funneled the benefits away from
Blacks. And the 1956 Federal Highway Act that helped create the suburbs bulldozed and isolated black
neighborhoods, creating ghettos.
Didn't the Civil Rights Act help?
The 1964 Civil Rights Act prohibited discrimination and strengthened voting rights and the desegregation
of schools. But even as it "struck down legal barriers," says historian Leon Litwack, "it failed to dismantle
economic barriers." The wealth gap was already so large that even if Blacks were paid the same as whites
for the same job — and they were not — they were unable to catch up. Meanwhile, the era of mass
incarceration had begun. By the 1980s, Black men were 11 times as likely to be incarcerated as whites,
thanks partly to laws punishing use of crack cocaine an order of magnitude harsher than powder cocaine,
1. Mark your confusion.
2. Show evidence of a close reading.
3. Write a 1+ page reflection.

which was favored by wealthier whites. Our educational system also perpetuates Black poverty: Unlike in
most other advanced nations, schools are funded locally and are tied to the local tax base, which means
that people growing up in poor neighborhoods go to inadequate schools. Far from shrinking, the racial
wealth gap has in fact grown over the past few decades, particularly after the 2008 financial crisis, which
wiped out much of the progress blacks had made. While median white household incomes rose by a third
from 1983 to 2016, typical Black household incomes actually dropped by 50 percent.
But don't some Black people succeed?
Yes, but individual efforts to "bootstrap" one's way up the economic ladder face enormous obstacles. A
2019 Georgetown University study showed that wealth in youth is a better predictor of success than
intelligence. Racism in hiring persists, as numerous studies have shown that pit a résumé with a "Black--
sounding" name against a similar one with a white name. Marriage and stable families help create wealth,
and married Black women have more wealth than single Black women. But many Black men with low
incomes do not feel marriageable; moreover, a 2017 DuBois Cook Center study showed that wealth
differences persist between the races despite marriage status. Structural racism leaves African Americans

trapped in a wealth gap that is actually widening, not narrowing. "It is as though we have run up a credit-
card bill and, having pledged to charge no more, remain befuddled that the balance does not disappear,"

Black writer and intellectual Ta-Nehisi Coates said in The Atlantic. "The effects of that balance, interest
accruing daily, are all around us."
How COVID-19 worsened the gap
When the coronavirus hit this year, Black Americans were still reeling from the 2008 financial crisis. That
downturn had wiped out 53 percent of all Black wealth, largely because subprime lenders had targeted
Black communities with loans on bad terms. Then came the COVID-19 shutdown. While 22 percent of all
U.S. businesses shuttered between February and April this year, 41 percent of Black-owned businesses
closed. Many African-American business owners couldn't access the Payroll Protection Program, because
loans tended to go to large firms that had existing relationships with major banks. One study found that
white owners who went in person to a bank to ask for a PPP loan fared much better than Black owners
who did so, even when the Black owners had better financial profiles. And many Black-owned businesses
are sole proprietorships, which weren't covered. As a result, fewer than half of all African-American
adults now have a job. "The pandemic is falling on those least able to bear its burdens," said Federal
Reserve Chair Jerome Powell. "It is a great increaser of inequality."

Possible Response Questions:
• What are your thoughts about the black wealth gap? Explain.

Answer 1

The Black Wealth Gap refers to the staggering inequality in wealth that exists between white people and African American people today, even decades after the Civil Rights Movement took place. The gap itself shows an appalling disparity - the noteworthy of a white household as of 2016 (including all assets, retirement funds and real estate), headed by a high school dropout, was about ten times greater than the average black household headed by a college graduate, white families valued at around $171,000 and black families around $17,600. A major reason for this gap is that wealth is generally inherited and multiplied over each generation, and black families have missed out on centuries of such inheritance. Today, only about 8% of all black individuals hold inherited wealth - any financial emergency in the form of sudden illness, accidents, etc have disastrous consequences since most black individuals have no familial support or financial buffers to bail them out of a challenging situation.

After the Civil War ended, the Lincoln administration made bold claims of Reconstruction, where centuries of stolen land, assets, wages, spouses and children were to be restored to the black community ("40 acres and a mule" promised by Gen. William Sherman). These promises bore little fruit, however, since the subsequent administration (Pres. Andrew Johnson) scrapped this policy, and most of the assets were returned to former white slave owners.

The majority of the black community had to undergo grueling labor as sharecroppers to earn their keep in the South, and those in the North who managed to garner a scrap of success to their name quickly fell prey to white supremacists propagating terrorism as in the 1898 Wilmington, North Carolina, massacre or the 1921 Tulsa massacre. Apart from this white supremacists waged economic warfare against the black community, depriving them of the vote and discriminating heavily - The New Deal, formed to eradicate poverty, should have overturned outdated covenants of keeping African Americans out of better quality neighborhoods, but the Federal Housing Administration upheld and even promoted these misplaced ideals. Home Owners' Loan Corporation segregated them into defined communities, and ensured that govt. aid in the form of loans seldom reached those neighborhoods. This "redlining" had catastrophic consequences on black home ownership and the development of economic activity. Other discriminatory measures included the G.I. Bill and the 1956 Federal Highway Act.  

The 1964 Civil Rights Act, meant to safeguard black community interests, certainly struck down legal impediments but failed to address economic barriers. Even if black individuals were paid equal wages to white individuals (which they aren't, even to this day), the wealth gap was already too large to bridge. Then came the 1980s era of mass incarceration, where black men became 11 times more likely to be incarcerated compared to his white counterpart, and the administration held firmer punishments for the possession or consumption of crack cocaine which was favored by black people, as opposed to powder cocaine favored by wealthy white Americans.

The educational infrastructure in America is also racially biased - since schools are funded based on local tax bases, the redlined neighborhoods continue to have poor facilities in schools. Due to these factors, the wealth gap has increased instead of decreased, especially after the 2008 subprime crisis and the subsequent recession. While white household median income rose by a third from 1983 to 2016, black household median income actually shrunk by 50%.

Yes, some individuals certainly succeeded, but even slogging one's way up the economic ladder was fraught with difficulties. Studies have shown hat inherited wealth is a more accurate indicator or a youth's likelihood to succeed, as opposed to intelligence. This, combined with resume whitewashing, where "black sounding" names are less likely to be hired, has created a losing battle for the black community. Even though on paper it is said that racism is being fought, especially in the Black Lives Matter era, structural racism continues to make matters worse and worse.

The COVID-19 public health crisis has further worsened the lot for the black community, who were still recovering from the 2008 financial crisis, which wiped out 53% of their wealth. During the pandemic, about 22% of all American businesses faced shutdown, but about 41% of black owned businesses witnessed closing. Many of these businesses closed since black business owners couldn't access the Payrole Protection Program, which favored larger firms with preexisting credit history with banks. Studies actually showed that if two business owners, one white and one black, with the exact same financial profile, approached a bank for a PPP loan, the white owner fared better than the black in securing the loan. Further, most black owned businesses are sole proprietorship ventures, which the scheme did not cover. As of today, less than half the African American population are employed, thanks to the coronavirus.

The black community continues to face completely unfair circumstances and impediments to their growth and success. Structural racism must be addressed in order to ensure that this community is able to achieve the heights it should have reached soon after the Civil War.