Nonprofit, Award-Winning Community News and Views for Windham County, Vermont • Since 2006
News

A generational wealth gap

Disparities and lack of opportunity for people of color have prevented them from owning land and other assets that can accrue value over time and be passed to heirs

BRATTLEBORO—For people of color, one impediment to farming is lack of access to farmland.

It cannot be overlooked that a generational wealth gap exists and has only grown for people of color, preventing them from owning land and other assets that can accrue value over time.

By being marginalized for so many generations, people of color have not had the wealth — including farmland — passed down over time that white people have. And, over those generations, the gap has widened.

Annual reports released by the Federal Reserve show that, since 1989, the top 1 percent of the world has captured $21 trillion in wealth while the bottom 50 percent lost $900 billion. Most of the Black community is in the lower half of the hierarchy.

“For people of color in the U.S. the root of financial insecurity stems from institutional racism and white supremacy that has existed since the founding of this country,” says Solana Rice, co-founder of Liberation in a Generation, described as “a national movement support organization building the power of people of color to totally transform the economy — who controls it, how it works, and most importantly, for whom.”

In a YouTube video explaining the concept of the generational wealth gap, Rice notes that home ownership — a basic way for people to grow wealth and one in which parents often help children — for people of color is nearly impossible “by design.”

Slavery, Jim Crow laws, and centuries of discrimination of all kinds have hindered the ability of people of color to build wealth and own land.

As far back as 1865, Union General William Tecumseh Sherman, during the Civil War, ordered that plots of land no larger than 40 acres be given to freed families. President Abraham Lincoln signed that bill but was assassinated. Andrew Johnson, his successor, reversed the bill and thousands of freed slaves who had received land were evicted, despite having created wealth for their white owners for nearly 250 years.

Wealth grows as interest compounds over time. Even today, Black people make less than white people do and are far more likely to be unemployed and discriminated against. Wealth takes time to grow as interest compounds over time. For the American middle class, however, home equity accounts for two- thirds of wealth.

Government has perpetuated this Catch-22.

In the 1930s, President Franklin D. Roosevelt acted via the New Deal to unleash mortgage credit to the entire population, but the new Federal Housing Administration wouldn’t insure mortgages to risky areas, generally where people of color lived.

The government went so far as to map out those neighborhoods, a process called “redlining.”

Federally enforced segregation affected every part of life, including whether your home accrued value. In 1998, discrimination was seen as “unprofitable,” and the government made an effort to close the color wealth gap, but most people of color — despite even a high credit score — received sub-prime loans that actually devalued over time.

The wealth gap shows “we still have a long way to go,” U.S. Sen. Cory Booker, D-N.J. said on the Netflix series Explained. Booker’s parents in 1969 were turned away from houses for sale because of their color and even set up a sting to prove it.

As former First Lady Michelle Obama famously said, “I wake up every day in a house that was built by slaves.”

Christian E. Weller and Lily Roberts wrote for the Center for American Progress in March of this year that “closing the racial wealth gap is a generational challenge that requires new yet doable policies” and put forth numerous proposals to help.

“The work of the National Advisory Council on Eliminating the Black-White Wealth Gap shows two important things. First, it is possible to develop and enact in short order a number of policies that could have a meaningful long-term effect on reducing the Black-white wealth gap. Second, a smaller — but still substantial — Black-white wealth gap would persist, even if policymakers enacted all policies mentioned in this report in addition to several large-scale proposals. Eliminating the disparities between Black and white wealth is a generational undertaking, but it is one that this country can and must tackle.

“But a substantial Black-white wealth gap will remain — at least between average wealth for Black families and average wealth for white families — even if all of these proposals were immediately enacted. Broad measures that benefit both Black and white households have a diffuse effect on the Black-white wealth gap at the average, although they can substantially shrink this wealth disparity at the median.”

They point out that even a targeted government response will take time and will not “fully erase the massive intergenerational advantage that white households have in building wealth.”

These intergenerational wealth transfers, they say, come in the form of gifts and inheritances as well as access to social networks.

From 2010 to 2019, white households in which the heads of household were 55 to 64 years old received gifts and inheritances equal to $101,354 (in 2019 dollars). By comparison, Black households received $12,623.

Furthermore, older white households expected to get an additional $75,214 as gifts and inheritances, while Black households expected $2,941.

Perhaps hope

A light of hope may be forthcoming on a national scale in President Joe Biden’s post-Covid stimulus relief package. Of the $10.4 billion in the American Rescue Plan to support agriculture, about half would go to “disadvantaged farmers,” about a quarter of whom are Black.

Such a boost could start to correct years of loan access denied to Black farmers and other systemic discriminations — even, some say, as a result of USDA policy administration.

Today, Black-owned farms average about 100 acres versus the national average of 440 acres, federal statistics show. Of the 3.4 million farmers in the United States today, just 45,000 are Black, according to the USDA, down from 1 million a century ago. Black farm ownership peaked in 1910 at 16 to 19 million acres — about 14 percent of total agricultural land, according to the Census of Agriculture.

A century later, 90 percent of that land had been lost.

The Vermont Legislature is also considering an act relating to promoting racial and social equity in land access and property ownership through grant programs, financial education, and other investments aimed at Vermonters who have historically been discriminated against.

The bill, which remains in the Committee on General, Housing, and Military Affairs until the Legislature reconvenes in January, will create the Vermont Land Access and Opportunity Fund if passed.

Land would be donated by individuals and organizations and held in trust by NEFOC with cultural respect and community conservation easements.

Like what we do? Help us keep doing it!

We rely on the donations and financial support of our readers to help make The Commons available to all. Please join us today.

Originally published in The Commons issue #616 (Wednesday, June 9, 2021). This story appeared on page A3.

Share this story

Links

0

Related stories

More by Virginia Ray