How America Built the Racial Wealth Gap

Straight Up: Will leaders ever step up to fix the mess that social policy and our checkered past created?

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Old-age insurance and Social Security initially excluded most African Americans. Agricultural and domestic workers, the great bulk of the black workforce when these New Deal-era policies were first enacted, found themselves expressly sidelined. Likewise, access to unemployment insurance and even to GI Bill benefits was turned over to local administration and discretion, allowing bias at many state and local jurisdictions to severely curtail the provision of coverage to African Americans when introduced.

Characterizing many of the New Deal-era social policies that built today’s robust American middle class, distinguished political scientist Ira Katznelson wrote in his important book When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America that ” … Most Blacks were left out. The damage to racial equity caused by each program was immense. Taken together the effects of these public laws were devastating.”

No arena of policy bias was perhaps more significant with regard to wealth accumulation than how social policy curtailed black access to home ownership and encouraged residential segregation. The tale has been recounted in many places, including in Oliver and Shapiro’s award-winning book.

Of more immediate relevance today is that residential segregation helped pave the way for targeted predatory subprime lending in minority communities. Indeed, recent scholarly research shows that segregation was a key factor in the extent of predatory lending and risk of home loss and foreclosure in response to the recession. Analyzing patterns in the nation’s 100 largest metropolitan areas between 2006 and 2008, sociologists Jacob Rugh and Douglas Massey found (pdf) that the higher “black segregation a metropolitan area exhibits, the higher the number and rate of foreclosures it experiences.”

This history is known, but the real remedies are scarcely voiced, much less seriously discussed and debated, in the public arena. Politics is always a complicated and messy thing, to be sure. Even when handled well, it involves the art of the possible, not the utopian or ideal. But people must not misunderstand or become complicit in a distorted take on their own history and circumstances. America and American social policy built the black-white wealth gap.

I am not suggesting that the policy agenda or remedies here are simple and obvious. What I am saying it that there is an unambiguous moral obligation here that cannot be denied, yet in the current social context it can hardly be given political voice.

The great scholar, activist and writer W.E.B. Du Bois understood the tragedy of this circumstance all too well. Writing in the Souls of Black Folk in 1903, he characterized the depth of disprivilege that blacks faced. “He felt his poverty,” Du Bois wrote, “without a cent, without land, tools, or savings, he had entered into competition with rich, landed, skilled neighbors. To be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardship.” Indeed.

What sense are we to make of the contrast of conspicuous success on the one hand — witness Obama, Winfrey and Jordan — and the abysmal depth of the fundamental black-white wealth divide on the other hand? I think the cynic would say that America has found it necessary to make a viable path to success for those extraordinary talents of any race to rise. But inasmuch as the numbers don’t lie, America never intends to do right by those it has wronged and marginalized for generation after generation. I don’t want to be cynical. Yet it seems that for some, membership has its enduring disprivileges!

Lawrence D. Bobo is the W.E.B. Du Bois Professor of the Social Sciences at Harvard University.