NAREB Building Black Wealth Tour & Other Initiatives Help Blacks Gain Wealth
The Black-White wealth gap is so expansive in the United States that the 400 wealthiest Americans control the same wealth as all 48 million Blacks living in the country, according to research by the National Association of Real Estate Brokers (NAREB). The wealth imbalances perpetuate the racial disparities in housing, education, employment, income, and health that create inequitable environments nationwide.
The median wealth for White households is $188,200, compared to $24,100 for Black families and $36,100 for Hispanic households. What’s so discouraging is despite all the talk about equity, equality, and a ‘Reckoning on Race’ during the protests after the brutal murder of George Floyd in May 2020, the wealth gap remains vast, with Blacks unable to significantly move the needle in a positive direction.
Martin Luther King Jr. underscored the intersection of racial and economic disparities by highlighting the systemic nature of the wealth gap. “The inseparable twin of racial injustice was economic injustice,” Dr. King said. Author Ta-Nehisi Coates succinctly captures the reality of the racial wealth gap, reciting the historical and ongoing exploitation of Black communities that have contributed to their disproportionate economic struggles. “The plunder of Black life was drilled into this country in its infancy and reinforced across its history.” Comedian Trevor Noah puts the wealth gap in a different perspective, saying, “We tell people to pull themselves up by their bootstraps when we never gave them boots.”
The quotes are a reminder that without addressing the root causes of inequality, simply expecting individuals to overcome barriers and close the wealth gap won’t happen. These comments call attention to the urgent and ongoing nature of addressing this issue, as it has been ingrained in our society for centuries. Ultimately, these quotes serve as powerful reminders that the racial wealth gap is not just a problem of the past but demands immediate action toward creating a more equitable future. The racial wealth gap is not solely a result of individual choices or lack thereof. The systematic and institutionalized discrimination against people of color has played a significant role in perpetuating this gap.
Black wealth in America has a complex and often overlooked history. Despite the country’s economic prosperity, the significant racial wealth gap persists. To understand how this gap came to be, we must delve into the historical context of Black wealth. During slavery, African Americans were considered property and were not allowed to own any assets or accumulate wealth. Even after the abolishment of slavery, laws, and social norms continued to restrict Black families from accessing economic opportunities and building wealth.
In the late 19th and early 20th century, the Jim Crow laws enforced segregation and discrimination, further hindering Black Americans from accumulating wealth. They were denied access to education, jobs, housing, and other resources that would allow the building of a financial foundation for themselves and their families.
Despite these oppressive circumstances, Blacks made significant strides in establishing communities with thriving businesses, churches, and schools. However, these accomplishments were often met with violent backlash, such as the Tulsa Race Massacre of 1921, where a prosperous Black community in Greenwood, Oklahoma, was destroyed by a White mob, resulting in a significant loss of Black wealth and lives.
In the mid-20th century, systemic barriers persisted, especially in housing and employment. The seeds for today’s wealth disparities grew from the racist public policies and private practices regarding housing in this period.
The early 1900s saw a rise in segregation laws, policies, and practices fueled by the Jim Crow era. Minority groups were systematically excluded from specific neighborhoods and denied access to affordable housing options. Redlining, a practice where banks would deny loans or charge higher interest rates based on the racial makeup of a neighborhood, further perpetuated housing discrimination. The Civil Rights Movement of the 1950s and 1960s brought attention to housing discrimination during the fight for equal rights and opportunities. This led to the passing of the Fair Housing Act in 1968, which made it illegal to discriminate based on race, color, religion, sex, or national origin when selling or renting a house.
After World War II, government policies led to the most significant expansion of the American middle class and the suburbs in the nation’s history. This resulted from policies like the GI Bill, which provided veterans with free college education and inexpensive home loans. However, Black veterans were rarely able to take advantage of these policies because of the discriminatory way they were administered.
Meanwhile, the Federal Housing Administration (FHA) also contributed to discrimination against Blacks through practices such as redlining and racially restrictive covenants. Redlining involved the FHA’s refusal to insure mortgages in or near Black neighborhoods — a policy that devalued properties and perpetuated poverty in those areas. Racially restrictive covenants, often supported by FHA policies, were agreements that prohibited the purchase, lease, or occupation of properties by non-whites, effectively segregating communities and limiting Black homeownership for decades.
Additionally, the FHA’s appraisal standards in the mid-20th century significantly exacerbated racial disparities in housing. These standards favored new suburban developments over older urban areas, aligning with the interests of White middle and upper-class homebuyers and sidelining Blacks who were often relegated to inner cities. Consequently, these discriminatory practices entrenched economic inequality and hindered the ability of Black families to accumulate wealth through property investment over generations.
The lasting impact of the FHA’s discriminatory practices remains evident in today’s housing patterns and the racial wealth gap. Black homeownership rates are significantly lower than those of Whites, reflecting the long-term effects of FHA policies that historically barred Black families from climbing the property ladder. This disparity continues to affect the economic stability and upward mobility of Black communities, perpetuating cycles of disadvantage and inequality. These early exclusionary practices have left a legacy of racially segregated neighborhoods, with limited access to quality education, healthcare, and employment opportunities for the residents thereof.
The impact lingers today because most Black families could not pass intergenerational wealth from generation to generation, like many White families.
In an article, two Harvard Kennedy School faculty, Linda J. Bilmes, a former assistant secretary of the US Department of Commerce, and Cornell William Brooks, former president of the NAACP, wrote about the inequities of the GI Bill:
“The original GI Bill, signed into law in June 1944, was hailed as a transformative measure by President Franklin D. Roosevelt. It provided veterans with loan guarantees for a home mortgage, money for college or vocational school, and unemployment compensation. The bill helped over 4.3 million veterans — mostly Irish, Italian, Polish, Jewish, and other working-class European immigrants — to buy a home.
Between 1944 and 1955, GI Bill mortgages accounted for nearly one-third of all new US home loans, with a present-day value of $340 billion. Nearly 8 million veterans used the education benefits to attend college or vocational school. The bill enabled them to become doctors, dentists, teachers, engineers, accountants, and other professionals, as well as to train as electricians, plumbers, builders, and other skilled trades. As they moved to suburbs, these veterans accumulated wealth, boosted the economy, and drove mid-century American prosperity.
The GI Bill did not explicitly exclude the 1.8 million Black Americans who fought in World War II and Korea. But in practice, the bill’s benefits were almost entirely restricted to whites, making it one of the worst racial injustices of the 20th century.
Members of Congress from Jim Crow states insisted that the law be implemented at the state level. This enabled southern states (home to 79 percent of returning Black veterans) to deny GI benefits to Blacks. In Mississippi, for example, a survey of 13 cities revealed that only two out of 3,229 GI Bill home mortgages went to Black veterans. Moreover, most US cities practiced redlining, in which homes outside certain poor neighborhoods could not be sold, or insured, to Black people. Many lenders refused to lend to Black veterans, even though GI mortgages were guaranteed by the federal government. In New York and northern New Jersey, fewer than 100 of the 67,000 mortgages backed by the GI Bill were granted to non-whites.
Likewise, few Black veterans were able to gain access to the educational benefits of the GI Bill. Southern states barred Black people from attending most colleges, universities, and trade schools. Nearly 95 percent of eligible Black veterans were directed to attend historically black colleges and universities, which were then kept tiny and chronically under-resourced. In 1945, about half of HBCUs had fewer than 250 students; few offered professional degrees. Many skilled trades were open to whites only.
During Black History Month, many school children have read about Dorie Miller, a cook with no military training who shot down several enemy planes at Pearl Harbor. Miller, who became the first Black American to be awarded the Navy Cross, died in combat later in the war. But even if he had survived, he probably would not have received the benefits created for World War II veterans under the GI Bill of Rights, because he was Black.”
Despite the passing of the Fair Housing Act, housing discrimination still occurs today. It takes many forms, such as denying a mortgage application or charging higher rates to Blacks. Discrimination also exists in the form of higher rent prices and limited affordable housing options for minority groups.
Housing discrimination has a lasting impact on individuals and communities. It can perpetuate poverty and segregation, as well as limit access to quality education and economic opportunities. Discrimination in housing also contributes to health disparities, as certain neighborhoods lack resources for adequate healthcare.
The embedded racial wealth gap in America must be redressed through a comprehensive effort centered on a campaign to provide Black families and individuals with the information they need to make the decisions that can create wealth for them and their families. NAREB’s Building Black Wealth Tour is a vehicle that leads families and individuals of all ages on pathways to financial success.
