Alice Liu

Professor Shamecca Harris

English 11000

11.1.20

Racial Wealth Gap: Is the U.S. Government to Blame? 

Why is the United States of America known to be the land filled with opportunities, when inequality, racism, and discrimination continue to put minorities, especially Black people, at an economic disadvantage? In 2016, an examination of the wealth disparity in the US reveals, “the net worth of a typical white family is nearly ten times greater than that of a Black family” (McIntosh). So how did the laws and policies of the United States government contribute to the wealth gap between black and white Americans? The growth of racial wealth gap can be attributed to the times when America was just 13 colonies. After slavery ended, the U.S. government further exacerbated the wealth disparity between Black people and white people by passing laws and policies that promoted discrimination. The U.S. government pushed Black Americans deeper down the economic ladder by passing policies such as slavery, New Deal programs, GI Bill, and not preventing discrimination practices of redlining.

The impact of Slavery on the racial wealth gap

Homeownership is a symbol of wealth in America and because black people started out as slaves in early American history, they were unable to own land, therefore unable to “begin accumulating wealth until slavery was abolished in 1685” (O’Connell). Since the 1600s, African Americans were enslaved and forced to do manual labor without pay. In contrast to white slaveholders, they were also not allowed to own land. Not only were they not allowed to own land, they were also prevented from getting an education and education is another pathway that people use to move up the wealth ladder. 

When slavery was abolished, the government failed to deliver the promise of forty acres and a mule to the freed slaves resulting in millions of blacks having no job, money, or a house (Strand and Mirkay). With no government support behind their backs, Black people were left to find a job themselves, which were usually low pay because they were discriminated against and uneducated therefore, they were unable to accumulate their wealth, which further contributed to the wealth gap seen today. Furthermore, in a study done by Heather A. O’Connell, a professor with a Ph.D. in the Sociology department at Louisiana State University, she found that within the U.S. South, more Black people were living in poverty when compared to their white neighbors, especially in areas that have stronger historical connection to slavery, such as agricultural places. This demonstrates that slavery did put Black Americans at an economic disadvantage that can still be seen today, as more Black people are living in poverty in the South when compared to their white neighbors. This poverty can be due to the programs established in the New Deal. 

The New Deal’s discrimination against Black Americans

During the Great Depression, President Franklin D. Roosevelt established a series of programs known as The New Deal, to provide economic relief to the public. Many of the programs were discriminatory against black Americans. For example, although the National Industrial Recovery Act (NRA) created job opportunities for millions of unemployed Americans, the first available jobs were offered to White people and better jobs were given to white Americans while black Americans were left with unfavorable and lower paying jobs (Mintz). Since black Americans were left with lower paying jobs during the great depression and were offered the last available jobs, this further contributed to the wealth gap difference seen today. Another program established was the Agricultural Adjustment Act (AAA) and in this act, the government would pay farmers to not farm in order to solve the problem of the dust bowl, however 40% of all Black workers made a living as sharecroppers and tenant farmers. Since they were farming rented land in exchange for a house in the land of the white landowner, they received no pay from the government, therefore a lot of them were laid off (Mintz). Like any other regular human beings, when these black workers lost their job, they could not even provide money for their families, let alone save money to accumulate their wealth.The NRA and AAA pushed black Americans deeper into poverty and made it extremely difficult for them to recover from the Great Depression, thereby preventing them from accumulating wealth, as opposed to their white counterparts. 

The New Deal programs are not entirely discriminative

While there were several programs in the New Deal that were discriminating and disadvantageous to Black Americans, the National Youth Administration (NYA) helped young people between the ages of 16 and 25 regardless of their race and gender to stay in school and to help those who have completed their educational studies in finding a job. This was mainly beneficial to blacks who resided in the northern cities (Mintz). This program allowed Black Americans to receive quality education and helped them find a job afterwards so they can provide for themselves without discrimination. Since this benefited the blacks residing in the North, they were able to begin to accumulate wealth. They were also able to find socially and economically better jobs that were not sharecropping or becoming a tenant farmer, as opposed to the blacks residing in the South. While it did help decrease the wealth gap of white and black Americans in the North, the NYA increased the wealth gap between Northern Blacks and Southern Blacks. 

The institutional racism of redlining

Shortly after World War II, a practice called redlining began, which further widened the existing wealth gap between the two races. Redlining was a discriminatory real estate practice where Black Americans were prevented from purchasing homes in white neighborhoods. The banks would refuse to invest in predominantly black areas and would refuse to give loans to Black families that wanted to purchase a home in white neighborhoods. The government did not stop the banks and realtors from practicing redlining (Scheper). When banks refused to invest in the redlined neighborhoods, the businesses, schools and property value located in those neighborhoods were unable to grow in contrast to the white neighborhoods, which the banks did invest in. This contributed to the Black neighborhoods getting poorer and more dangerous to live in. 

The areas that Black Americans were living in did “not have quality education compared to an invested white neighborhood…negative health outcomes, employment rates, exposure to crimes are all higher in these poor neighborhoods” (Strand and Mirkay). Homeownership is no longer the sole symbol of wealth in America, the location of the home became extremely significant because of the benefits that the neighborhoods can provide such as better educational facilities, health facilities, and safety. When Black Americans wanted to move to better neighborhoods, which were predominantly white, the banks refused to give them mortgage loans, therefore they had no choice but to stay in these poor and dangerous neighborhoods. The kids received inferior quality of education compared to kids in the white neighborhoods, and they most likely went to lower quality colleges where there is little to no opportunities to network with affluent figures, thereby the ability to establish a respectable high-income career significantly decreases. Since, a lot of the redlined neighborhoods also had high rates of crime and were poorer places, there were higher chances for the children to become involved in crimes at a young age. All these factors can diminish the motivation in these children to pursue a better future. Although redlining is illegal now, the lasting effects that it had on the racial wealth gap can still be seen today, as more white people live in better neighborhoods and black people remain in poorer and more dangerous areas. 

Benefits of GI Bill for White Americans only

In addition to redlining, the GI Bill also contributed to the racial wealth gap. The GI Bill was established by the government and it provided educational assistance, unemployment insurance, and housing to those who served in the army and the dependents. But black veterans were excluded from these benefits. Since the GI Bill was not offered to Black veterans, it made it extremely difficult for black veterans to pursue a higher education, thereby preventing them from getting a higher paying job. They were most likely also living in poverty when they were unemployed since they were unable to receive unemployment insurance. They were also excluded from housing, and as shown in redlining, housing plays a huge role in wealth, and the safety and the future of black kids. 

Furthermore, the Veteran’s Administration (VA) inhibited black veterans from receiving unemployment benefits and they terminated the unemployment benefits when black veterans refused to be employed on a substantial low wage. Therefore, poverty was prominent in black families during the 1940s and 50s (Herbold). Since the GI Bill did not provide educational assistance to black veterans, they were limited to work for low wage jobs. If they were to refuse these jobs, the VA would terminate their unemployment benefits, which can further exacerbate their poverty-stricken situation. The GI Bill and the VA further prevented Black Americans from accumulating wealth and moving up the social and economic ladder. 

A chance to minimize the racial wealth gap

In 2014, approximately 32% of uninsured adults had medical debt and those who were uninsured were more likely to file for bankruptcy. In addition, a study conducted in Boston demonstrated that the wealth disparity between the Latinos and Blacks were “twice as likely as Whites to have medical debt”. Those who made up the uninsured were the minorities, such as Black Americans (Austin). It is an established fact that healthcare is expensive and it can be extremely unaffordable to those who don’t have medical insurance. Healthcare is a necessity and people who receive medical care have a difficult time paying off medical debt, and medical debt is not in the equation of gaining wealth. Oftentimes, medical debts can push people into bankruptcy and prevent people from spending their money on things that can increase their wealth, such as investing in real estate or the IRA. Since the majority of people who accumulate medical debts are uninsured black people, this further increases the wealth gap between them and white people. 

To tackle this issue, President Obama signed the Affordable Care Act (ACA), which provided affordable healthcare and insurance to Americans. The ACA has been proven to be effective in reducing the disparities in health insurance coverage between White Americans and people of color (Austin). The ACA gave black people access to affordable health insurance, making it easier for them to afford medical services without racking up an enormous medical debt. Without the aftermaths that medical debt can bring, the wealth gap between the two races can decrease a bit. 

Conclusion

The United States built its foundation on the blood, sweat, and tears of slaves. White Americans’ wealth is attributable through the free labor that they demanded from the Black Americans. The gap between Black and White Americans has been prevalent since the beginning of American history. After slavery was abolished, the government established discriminatory and unjust laws and policies such as allowing the practice of redlining, and excluding black people from the benefits of the New Deal and the GI Bill. These policies suppressed black people from economic growth, while continuously supporting white people for economic success. The unfair advantages that Black Americans received from these laws and policies can be seen today as a lot of black people are either living in poverty or are significantly less opulent when compared to white people. Although we see current policies such as Obamacare make an effort to alleviate the wealth gap by decreasing the medical debt that can be accumulated by uninsured black people, it is not enough to combat hundreds of years of slavery, racism, and discriminatory policies. The United States needs to pay retribution to Black Americans because without them, America would not be where they are today.  

Works Cited

McIntosh, Kriston, et al. “Examining the Black-White Wealth Gap.” Brookings, Brookings, 27 Feb. 2020, www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/.

Schermerhorn, Calvin. “Perspective | Why the Racial Wealth Gap Persists, More than 150 Years after Emancipation.” The Washington Post, WP Company, 19 June 2019, www.washingtonpost.com/outlook/2019/06/19/why-racial-wealth-gap-persists-more-than-years-after-emancipation/.

Mintz, Steven. “African Americans and the New Deal.” Digital History, 2019, www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2.

Austin, Algernon. “Obamacare Reduces Racial Disparities in Health Coverage.” Center for Global Policy Solutions, globalpolicysolutions.org/resources/obamacare-reduces-racial-disparities-in-health-coverage/.

Scheper, Jeanne. “View of Mortgaged Minds: Faculty-in-Debt and Redlining Higher Education: Radical Teacher.” View of Mortgaged Minds: Faculty-in-Debt and Redlining Higher Education | Radical Teacher, radicalteacher.library.pitt.edu/ojs/radicalteacher/article/view/247/265.

Herbold, Hilary. “Never a Level Playing Field: Blacks and the GI Bill.” The Journal of Blacks in       Higher Education, no. 6, 1994, pp. 104–108. JSTOR, www.jstor.org/stable/2962479. Accessed 2 Nov. 2020.

Strand, Palma Joy, and Nicholas A. Mirkay. “Racialized Tax Inequity: Wealth, Racism, and The U.S. System of Taxation.” SSRN, 27 Aug. 2019, poseidon01.ssrn.com/delivery.php?ID=908065002113091030028024000117016092002057081068083017073031115026123030111000067025031050122061114096018115064009093017094072000023046060084076117012083081078087041015095126068087006083000080115012109075120092086075017105024031028089080083118006022.

O’Connell, Heather A. “Impact of Slavery on Racial Inequality in Poverty in the Contemporary U.S. South.” OUP Academic, Oxford University Press, 27 Mar. 2012, academic.oup.com/sf/article/90/3/713/2235802.