Black women, with only $5 to our name

Explaining the shocking disparities in wealth

Black women - 5 dollar median wealth
The fact that Black women possess so little wealth is a product of institutional and historical oppression, not a lack “personal responsibility.”

A shocking study released last week revealed to the world that the average median wealth for women of color between the ages of 36-49 is only $5. By comparison, the average median wealth of white women in the same age group is $42,600—still only 61% of their male counterparts. These statistics confirm what has long been a visible feature of U.S. capitalism—that one’s place in society is based primarily on the class, nationality and gender that a person is born into.

The study was conducted by the Insight Center for Community Economic Development, analyzing data collected by the Federal Reserve in 2007. These numbers thus represent the grim economic reality prior to the current recession. A United for a Fair Economy report has since stated that the sub-prime mortgage crisis is producing the greatest loss of wealth in U.S. history for African Americans.

The study defined “wealth” as the sum of one’s income and assets subtracted by one’s debt. Using this formula, they determined that for all working-age Black women (ages 18 to 64) the median wealth is only about $100. Forty-six percent of these women had zero or “negative wealth,” which means their debt was far greater than their income and assets. Latina women do not fare much better—possessing a median wealth of only $120—with 45 percent having zero or negative wealth.

While the average wealth among white people is significantly higher, and the proportion of whites with zero or negative wealth is far lower than that of people of color, these figures alone can be deceiving.

White people as a whole have certainly not escaped the devastating effects of capitalism. In fact, vast sections of white workers have practically nothing. The 23 percent of single white men and women (ages 18-64) who have zero or negative wealth amount to tens of millions of people in very real poverty.

Moreover, although the median wealth of $42,600 for single white women certainly seems large in comparison to that of Black and Latina women, it hardly amounts to a life of real security. A single white woman—for instance, a secretary—who bought a house 15 years ago with a $100,000 mortgage, and has since paid off half of it, could technically have $50,000 in “wealth” according to this study. But that does not mean she has $50,000 sitting in the bank; in fact she could have almost nothing in the bank and still be living check to check.

Medical emergencies, housing crises, or college expenses easily and frequently drain that sort of “wealth”—a portion of one’s housing equity or a modest “nest egg” in the bank. Instead of having “wealth” to fall back on, many of these workers are in fact teetering on the edge of poverty as well.

The real story of the economic gap between whites on one hand and people of color on the other requires going deeper than numerical averages and the potentially misleading definition of “wealth.” The question is why Black and Latino communities remain so disproportionately poor, without even the most meager forms of economic protection that many working-class white families have access to.

What explains the “cycles of poverty?”

Slavery
The logic of capitalism—which has been enforced upon Black people since the beginning
of the transatlantic slave trade—remains just as powerful today.

According to a recent study conducted by Bread for the World, 34 percent of all Black children live in poverty, and an estimated 90 percent will participate in a food assistance program before they reach the age of 20.

What explains these shocking statistics that point to the cyclical nature of poverty in the African American community? These predictions of continued poverty among Black children are not based on the idea that Black families will make worse decisions than their white counterparts.

Rather, they are based on an assessment of the long-term economic trends that have afflicted Black and Latino communities and are unsolvable under capitalism. This problem is clearly institutional and historical, not a product of insufficient “personal responsibility.”

A big part of the wealth disparity has to do with the transfer of inheritances from one generation to another. In a capitalist society, it is accepted that wealth is largely inherited, and the American Dream is based around the idea that poor families can struggle to give their children opportunities they never had. Black and Latino families have been historically cut off from this intergenerational transfer—the basis of “family wealth” that is the first line of support during hard economic times.

A PSL Editorial “Washington boycotts Conference Against Racism—again” addressed this issue a year ago:

“Throughout U.S. history, Black workers were routinely the last hired and first fired. During the Great Depression, the Social Security Act of 1935 did not cover agricultural and domestic laborers—which constituted 90 percent of Black workers. Absent Social Security benefits, large numbers of Black families had little or nothing left by the end of life to pass on to the next generation thus reinforcing the differential in opportunity and support between Black and white youth.

”In the mid-twentieth century, the government’s Federal Housing Administration helped create the white suburban “middle class” by providing $120 billion in housing equity to real estate developers that almost entirely excluded Black families.”

Black workers maintained a significant share of industrial jobs throughout the 1950s and 1960s, but remained confined to under-funded urban centers (or the still poverty-stricken Deep South), while tax dollars flowed to suburban educational systems and job expansion. It is thus no surprise that the decades-long process of deindustrialization has hit Black workers the hardest. The removal of manufacturing jobs left urban workers to scrap for low-paying service work (such as retail), where it is impossible to accumulate wealth. Others found work in unionized public sector jobs, which seemed to promise the opportunity of a middle-class lifestyle.

In most foreclosure “red zones,” however, it has been precisely this so-called Black “middle class” that has suffered most. This is due largely to a lack of inherited family wealth, as well as the predatory lending schemes that banks have used to target Black and Latino families in particular.

Unfortunately, the Insight Center study also failed to address the real impact of the racist police state, which has focused in on deteriorating urban communities and thrust permanently unemployed Black and Latino workers in mass into the prison system. This 30-year state assault on urban communities is the main reason the United States has the highest prison population in the world. Given the scarcity of decent-paying jobs under capitalism, to possess even the smallest criminal record can disqualify one from the opportunity of meaningful economic advancement. In today’s economy, having just one family member out of work has a serious effect on the entire household.

The debt phenomenon

Debt is a huge problem for working people of all nationalities. The mainstream media frames this issue, falsely, as another issue of “personal responsibility,” and teach workers to be ashamed of debt. In fact, the debt phenomenon is a natural outgrowth of the trends of capitalism.

Although the working class has become far more productive in the last 40 years and the national wealth has nearly doubled, real wages for U.S. workers have been stagnant over the same period. This is largely due to the process of deindustrialization and the lack of union power. During this same period, however, the process of globalization—which privileges the U.S. dollar—allowed many foreign- produced items to remain available to U.S. workers.

But if the capitalist class is unable to get rid of all its products at a profit, because wages remain too low to consume them, a crisis of overproduction occurs. When the capitalists cannot sell, the entire system is in jeopardy. So what is relied upon to bridge the gap between higher prices, sinking wages and an overproduction of goods? Credit, loans and mortgages. It is no coincidence that the personal credit card—available to the average worker— emerged during precisely this same period. They provided bankers with the added benefit of keeping workers trapped by high interest rates, always paying bills, but never paying off their debts entirely.

The debt crisis has only intensified with the current recession. Right now companies are firing workers left and right and many of those who are able to keep their jobs have had to take pay cuts, furlough days and give up wages and benefits. Credit makes up the difference.

African Americans and debt

The Insight study revealed that women of color carry especially high burdens of credit card debt. Some conservatives were quoted as saying that Black women just were not taught good values and responsibility. The idea is that many Black women foolishly chose to fall into debt over nonessential material possessions.

But the numbers prove that kind of racist stereotyping wrong. Most of this debt is generated from “survival spending.” It is further exacerbated, according to the Insight study, by the fact that women of color are more likely to use their own financial resources to help out extended family members.

In 2007, 62 percent of all bankruptcies in the United States were linked to health and medical expenses. Even with insurance, any medical crisis can send workers, especially underpaid workers, into serious debt. In 2006, approximately one third of all working age African Americans had no health insurance whatsoever. We can only assume that health-induced debt especially burdens African Americans.

The other main cause of debt is higher education. The average student loan debt in this country right now is $23,200. A 2002 study from the State PIRGs' Higher Education Project revealed that 39 percent of all students graduate with what they deem to be “unmanageable levels of debt.” The study called “unmanageable” those debts that require monthly payments that are more than 8 percent of their incomes. For African American students, the number with unmanageable debt was even higher: an astronomical 55 percent. Again, the lack of family wealth is the real culprit: “71 percent of students from families with incomes less than $20,000 graduated with debt, compared to 44 percent of students from families with incomes more than $100,000.”

Black women and the workplace

In addition to these structural and historical factors, Black women are also, of course, victims of old-fashioned job discrimination, on both racist and sexist grounds. Black women with jobs earn $0.85 on the dollar earned by white women. Black women earn $0.87 for every dollar earned by Black men and $0.63 for every dollar earned by white men. Women with children are paid less than women without children even if they are equally qualified.

In nearly 44 percent of Black families with children, a woman is the primary breadwinner. The grim economic situation confronting Black women thus has even more far-reaching implications in terms of addressing the community’s disproportionate poverty. The unemployment rate for Black women is nearly double that of white women and white men.

Looking forward

The Insight Study draws idealistic conclusions about the possibility of stimulating business ownership among Black women as a means to resolve these longstanding cycles of poverty. Even in the best economic conditions, starting small businesses is often a losing enterprise because of corporate control of the markets. In the worst of times, like the present, these losing odds become simply impossible. Moreover, the Insight Study’s recommendations could only apply to one section of college-educated Black women with some limited access to capital. Their prescriptions for “equality” really amount to mirroring the class stratification among whites, rather than achieving economic security for all workers.

The problems of Black women’s unequal status in society—and the wealth gap—cannot be solved with this or that policy proposal. The whole question revolves around the historical experience of Black people as an oppressed nation. That which forged the African American people together—centuries of unpaid and still uncompensated enslavement— also accumulated wealth for the white ruling classes.

Of course, policy think tanks and analysts would rather not address this history when they calculate wealth. They do not look at decades of underdevelopment in Black communities and the widespread destruction of Black families by the racist prison industrial complex and the War on Drugs.

Instead, they hold out the elusive dream that the next generation of Black youth will finally have the conditions to “catch up” to whites. Some mistakenly believe such conditions exist now because of changes in racial attitudes or because a few African Americans have ascended to positions of power. In fact, the logic of capitalism—which has been enforced upon Black people since the beginning of the transatlantic slave trade—remains just as powerful today.

African Americans have, of course, won monumental gains under capitalism as the result of a militant struggle for equality that they have waged for generations. The achievement of formal legal equality and the elimination of the most blatant discriminatory barriers to employment provided space for Black women to surge into the workforce. As a result, in the 1960s and 1970s, the income growth among Black women outpaced that of other groups.

But these trends have since gone in the opposite direction. The capitalist system’s non-stop squeezing of all workers for more and more profit provides no space for African Americans to “catch up” in terms of wealth. The only potential leveling out that may take place down the road is an equality of poverty, as white workers are systematically losing their homes, retirement plans and higher-wage jobs.

The special oppression that keeps Black women so far behind does not have to be a permanent condition. But it cannot be overcome until capitalism—the system that spawned that oppression and continues to profit from it—is overturned.

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