A study by the Institute On Assets and Social Policy has revealed that the wealth gap between whites and African-Americans has increased by more than four times between 1984 and 2007 and that the gap is linked to racial discrimination in the housing, credit and labour market.
The Institute On Assets and Social Policy (IASP) found that the wealth gap between whites and African-Americans increased from $20,000 to $95,000 between 1984 and 2007. Middle income white households had greater gains in financial assets than even high income African-Americans, earning $74,000 compared to high income African-American households who could only salvage $18,000.
According to the IASP “The growth of the racial wealth gap significantly affects the economic future of American families. For example, the racial wealth gap in 1984 amounted to less than three years tuition payment for one child at a public university. By 2007, the dollar amount of the gap is enough to pay full tuition at a four year public university for two children, plus tuition at a public medical school. The gap is opportunity denied and assures racial economic inequality for the next generation.” (Shapiro et al: IASP: May 2010)
The IASP pointed to racial discrimination in housing, credit and the labour market for the spiralling rise in the racial wealth gap. For example, the report stated that African-Americans and Hispanics were twice as likely to receive high cost mortgages than whites with similar incomes which has led to the largest source of wealth for minorities being wiped out due to the financial crises and forclosures.
This led to a lawsuit being filed against titan Wells Fargo and the American branch of Britain’s HSBC by The National Association for the Advancement of Colored People (NAACP) for what they call racially discriminative lending practices in March 2009.
Such was the strength of the case that earlier in the same year a federal court denied a motion to dismiss other lawsuits by the NAACP against other lenders who they say have practiced racial discrimination in their lending services.
NAACP interim general counsel Angela Ciccolo said in a statement, “Lenders named in the suits on average made high cost sub prime loans to higher qualified African Americans 54 percent of the time, compared to 23 percent of the time for Caucasians.” (AFP: 13 March, 2009)
In an article by Adrianne Appel titled, ‘Bail-out for who?’ On September 26, 2008, Appel said that “African American borrowers will lose between 71 billion and 92 billion dollars, and Latino borrowers will lose between 75 billion and 98 billion dollars as a result of bad sub-prime loans”, in the bail-out package proposed by President George Bush.
In the state of Michigan alone more than 60 per cent of all sub-prime loans were made to African-Americans which resulted in many of them losing their homes.
According to a report on the BBC “Mr Shapiro said that racial segregation operated by limiting the value of property in a community that is primarily African American, in comparison to a community that is predominantly white.” (BBC:18 May)
The IASP concluded by saying that since public policy created these racially economic disparities it should be public policy which remedies these disparities.
Economic racism: A British perspective
It can be argued that the single most damaging factor which has a lasting effect on progress within black and minority ethnic communities is economic racism. This is the bedrock of racist practice in general as it denies future generations access to better themselves. Whether it is in employment, housing or access to loans economic racism which is highlighted in the IASP report has an impact on black and minority ethnic communities who live in Britain.
A report by the Trades Union Congress (TUC) on14 April 2008 titled, ‘Ten Years After: BLACK WORKERS IN EMPLOYMENT 1997 – 2007’, revealed that between 2001 and 2007 the wage gap between whites and ethnic minorities was 4.2 percent. (P.9)
For example if a white worker was earning £25,000 per year, a black or minority ethnic worker will be paid £1050 less each year. Over ten years that adds up to £10,500, over a life time of work of approximately 45 years it adds up to £47,250.
A TUC report in April 2009 titled, ‘Black Workers and the Recession’ said “...black and minority ethnic workers were still concentrated in low paid and part-time jobs, and they had difficulty in securing progression once they got jobs.” (P.3)
According to a report by the former Commission for Racial Equality (CRE), titled ‘A lot done, a lot to do’, “Currently, 67% of people from ethnic minorities live in the 88 most deprived wards in England.” (September 2007: p.50)
A report for the Cabinet Office titled ‘Ethnic Minorities and the Labour Market’ (P.91) points out that the poor housing conditions of ethnic minorities can lead to labour immobility, as their homes will be of little value and therefore not sell on the market, leaving many in a vicious cycle of being trapped in a deprived area with few employment opportunities.
In March Conservative Leader David Cameron attempted to win the votes of black entrepreneurs by promising to remove the barriers such as the fact that they are four times more likely to be turned down for a bank loan than white business owners. (Read Cameron’s bribe for black entreprenuers ignores real issues)
Cameron had admitted what has long been acknowledged in the black community that banks were racially discriminating against black enterprise.
These examples demonstrates the powerful impact that economic racism has on black and minority ethnic communities not just in America but in Britain as well.
When the IASP mentioned that the wealth gap between whites and African-Americans “…assures racial inequality for the next generation”, the same conclusion can be applied to the UK in light of the examples given; the question is will it be addressed?
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