KIM BROWN, TRNN: Welcome to the Real News. I’m Kim Brown.
There is so much wealth concentrated in the hands of white Americans it would take 228 years for a black family to amass the amount of wealth a white family has today. This is according to a new report released by the Institute for Policy Studies earlier this week. The report is titled “The Ever-Growing Gap: Without change, African-American and Latino families won’t match white wealth for centuries.” The report cites 30 years worth of data from the years 1983-2013, and its findings show that despite the social policy gains of the civil rights movement, these have not translated into meaningful wealth gains for black and Latino families.
We’re joined today with one of the authors of the report, Josh Hoxie. He heads the Project on Opportunity and Taxation at the Institute for Policy Studies, and he previously worked as a legislative aide to Senator Bernie Sanders. Josh joins us today from Washington. Josh, welcome.
JOSH HOXIE: Hi, thanks for having me again.
BROWN: Josh, there is a lot to unpack here. Clearly the source of this inequity has its origins in slavery, in intentionally harmful, discriminatory policy practices, such as black soldiers being shunned from the GI bill after World War II, and black farmers and black domestics excluded from the New Deal. But unfair policies of the last 30 years have also significantly contributed to this gap. What did you find?
HOXIE: Historical policy definitely has played a role in contributing to the racial wealth gap. And one of the interesting things about studying wealth is that it’s really where the result of past policy meets the present that’s impacting people’s lives. So income can tell us a snapshot of where people are at right now, but wealth really gives us that longitudinal view. And as you pointed out, the historical public policies in this country have contributed directly to the growing racial wealth gap we’re witnessing today. And unfortunately, current policies that we have right now also contribute to the racial wealth gap we see today.
Just one example of that is the tax expenditures that we see come out of Congress year-in, year-out, which now total over half a trillion dollars, $600 billion, to be exact. So we’re seeing this money come out that’s designed to be helping people generate wealth. It’s for retirement savings, it’s for home ownership, it’s for things like saving for your child’s college. But the problem is that it’s being skewed into fewer and fewer hands, people at the tippity-top of the economic spectrum who don’t need huge subsidies in order to maintain or generate wealth. People at the bottom are not getting the same amount of help, or anywhere near the amount of help that people at the top are getting.
BROWN: And your report notes that, that there has been tremendous accelerated wealth, growth by the top 1 percent of Americans. You cite the Forbes 400 and you say that they have seen wealth gains of over 700 percent in the last 30 years. I’m curious, because most of the Forbes 400 are white Americans, now, if you were to somehow exclude these very wealthy hundreds of people from this equation, does that change the wealth gap at all? Does that shrink it between when you’re looking at average black, white, and Latino families? Or is the gap still about the same?
HOXIE: Well, it’s certainly true the wealth has concentrated over the past 30 years in an incredible amount into the tippity-top of the economic spectrum. The Forbes 400, as you mentioned, had an average wealth gain of over 700 percent. For context, that’s 10 times faster than the rate of growth for an average Latino family and 27 times the rate of growth for an average black family. So no doubt that money has been concentrating significantly.
And to you direct question, I think there is a role that money concentrating at the top plays in driving the averages up for white families. Because if we look at the median income, or median wealth, excuse me, black wealth over the past 30 years for the median family has actually gone down. So we talk a lot in this report about the average family which, you know, the statistical average is being pulled up by those at the top, and the same is true for white families.
Now, the median white family has gone up, but less than the average, which implies that the top of the spectrum is pulling up that average. But for the black median family and for the Latino median family those rates have been going down. So what we’re seeing is that a typical family that you see on the street is not doing as well as they were 30 years ago when it comes to generating and maintaining wealth.
BROWN: And there’s so many factors that go into this. You know, when we talk about looking at a snapshot of the average black family compared to the average white family, you know, the rates of unemployment play a role in this, as do pay discrepancy between whites and non-whites. Also, it seems like families of color are not able to hold into the money that they do have. When this accumulates over decades and generations, this is how this gap grows. So what has accounted for all this? Is it racial discrimination, at its core? Or is there something more?
HOXIE: Well, if we look back historically, I mean, there has been a racial wealth gap in this country for as long as we’ve had a country, and before that. So this is nothing new. But we’ve, what’s new is that we sort of decided, or some folks in this country, have acted like we live in a post-racial society, that we’re in this place where race plays much less of a role that it did in previous generations. And it’s simply not true, as you see day-in and day-out in the news for the criminal justice system. And less often talked about on the news is this economic disparity when it comes to race.
So the criteria that’s played a role is incredibly multifaceted and intersectional, and we could spend all day talking about all the factors that contributed to it. But the sheer racism of public policy, especially in the mid-20th century, and in particular looking at redlining, when the majority of people who are homeowners were able to buy their homes as a result of federal public policy, that excluded non-white people. I mean, 98 percent of those FHA housing subsidies that led to the birth of the middle class went to white families. So what we saw was all these people that think, like, oh, I was able to buy a house and do well by myself. They don’t remember, or choose not to remember, that their parents or grandparents were able to buy a house, which enabled them to get a leg up, and the root of that wealth creation comes from federal policy. So there’s a, you know, just straight racism when it comes to that.
Now, modern policy is much less direct than that. Redlining has historically been devastating to non-white communities, to black and Latino families. But there’s also, as you mentioned, wage disparities. There’s, you know, the things that exclude a lot of professions that non-white folks tend to work in. So we see things like farm workers were left out of minimum wage laws, and those farm workers tended to be non-white, mostly black and Latino. So things like that historically and up to the present day have played a major role.
And there’s also a tremendous number of what we call wealth-stripping practices that take place, which–you know, this comes down to lack of financial protection. And directly I’m thinking of things like payday lending schemes, and other financial schemes that, when people do get a little bit of money, have it stripped away from them by these predatory practices for which we see a much higher rate of that activity in the black and Latino community. So there’s a tremendous amount of historical racism that’s contributed to this, and then current policy that also plays a role.
BROWN: So, Josh, your report says that it will take 228 years, two-two-eight, for a black family to attain the level of wealth that whites have today, but 84 years for a Latino family to hit that mark. What accounts for this difference?
HOXIE: You know, there’s major historical differences, I don’t have to tell you, between black and Latino families in this country. The long reach of slavery going on to today is, you know, just has a major–or going back to the founding of the country–is much different for these two groups. What Latinos have been able to do is generate more wealth than black families, and recently they’ve been able to hold on to it more. But still dramatically, dramatically less than white families have been able to. The numbers are [merely] staggering.
So I mean, when we look at, like, 30 years from now, so not even talking about 200 years from now, but just 30 years from now in 2043, so 30 years from when the most recent data we have, when non-whites will make up the majority of the American population, we’ll see the racial wealth divide in that period double from $500,000 where it is now to over $1 million, where it will be then. And at that point, whites will no longer make up the majority of the American population. So it seems like we’re moving directly in the wrong direction as we want for things like fairness and equality, but also in things like population change and demographic change we’re seeing in this country.
BROWN: So one of the things that’s included in your report is a list of solutions or possible remedies, things that could help to mitigate this big gap. You include an audit of federal policies to understand that the role that the current policies play in perpetuating the racial wealth divide. You also suggest fixing the unfair, upside-down tax incentives to make sure that households of color also receive support to build wealth as they go along.
Are there any politicians on any level, local, state, national, federal level, that your organization has found who is proposing these types of policy solutions? And any politicians who actually recognize this for what it is and what it means for generations to come?
HOXIE: Yeah. I would say that politicians are evolving on this issue quickly. And one of the reasons is that we saw with Thomas Piketty, the French economist who wrote the book Capital in the 21st Century, which became an instant bestseller in the United States and really took the country by storm, he warned us that if we didn’t take action we would see gilded aristocracy. We’d see wealth continue to be concentrated until it was an unstoppable force in a short amount of time.
So people like Bernie Sanders took that message out on the campaign trail, and it resonated with millions and millions of people. And even on the Republican side, I mean, you don’t have to go very far to talk to people that will tell you they’re not doing very well, while we all know that millionaires and billionaires have never done better.
So the basic discussion around inequality is resonating with the American people. We have not yet gotten to the point where people are putting the pieces together that there’s a racial component to that. It wasn’t in Piketty’s book. I mean, Piketty wrote 700 pages, so it’s hard to knock that he should have added a couple hundred more to the brick of the book he wrote, which was phenomenal. However, he sort of left out this important step, that not only is wealth concentrating in fewer and fewer hands, those hands have a certain color, and that color is white. And what we’re talking about is these policies that would address that in a very intentional way.
So we haven’t seen the government-wide audit that we discussed introduced in Congress yet. We’re hoping so, that we don’t need Congressional action, that this could actually come potentially in the first 100 days of the next administration. So what we’re talking about there is just simply looking at federal policies to say, which one of these are contributing to the racial wealth divide, and how much, and which one of these would help mitigate the racial wealth divide, and how much? Because we think we know, but we would love to see serious government evidence-based action on this topic to do an audit.
And Thomas Shapiro, the researcher at Brandeis University, has done significant work on this. So we have not seen that introduced yet or yet talked about. But we’re confident that it’s raising in people’s consciousness as we continue this work.
One of the issues that has been talked about, especially in the past week, has been a federal estate tax, which the estate tax or inheritance tax would be a levy on the intergenerational transfer of massive amounts of wealth. Currently on the books is an estate tax that would tax estates over $10 million for married couples. So that’s been a bit of a political football this week, because Donald Trump said he wants to eliminate it. Hillary Clinton has said we should keep it. So that’s been in the public eye.
From where we sit, the estate tax plays a serious role in checking the concentration of wealth that we’re seeing, the intergenerational transfer of wealth that continues to transfer billions and billions so people who don’t work for this money, who just inherit it, if under a Trump administration would not pay a single dime in taxes, where folks who would have to work for their money pay the same taxes that you and I pay every, every year.
BROWN: Josh, when reading your report, it mentions the R-word, reparations. This is a word, and this is something that has been discussed and pushed, and at the same time summarily dismissed by those on the left and the right. But at the same time, it seems as if some sort of reparations policy, and not exactly clear what that would look like, what that would actually be like in people’s hands. But it sounds like reparations could be a huge tool in order to shrink this gap in a relatively short amount of time. Let’s say less than 228 years.
HOXIE: Yeah. I mean, there’s been legislation introduced to study what would reparations look like? I mean, that’s been on the books for 20 years, and we’re supportive of legislation to say we know this is a problem, what would it look like if we were to get serious about solving it? That’s a good step in the right direction. We obviously need to start taking steps that will begin to reduce the racial wealth divide, and begin to fix this ridiculous situation that we’re seeing now, where it would take hundreds of years just for one, for black families to reach the level that white families are currently at.
Ta-Nehisi Coates at the Atlantic magazine did a fantastic essay a year or so ago on reparations that brought the topic back into the public discussion and discourse, but we haven’t seen much action on that since. I would love to see more discussion of that happen within Congress and at the presidential level.
BROWN: The report itself is fascinating. I absolutely recommend that everyone read it. If you’d ever wondered why in America whites have more and people of color have less, this report is extremely insightful, and I suggest you check it out. We have been speaking with Josh Hoxie. He is from the Institute for Policy Studies. He’s also the co-author of this report, “The Ever-Growing Gap: Without change, African-American and Latino families won’t match white wealth for centuries.” Josh, we certainly appreciate your time today. Thank you so much.
HOXIE: Thank you. It’s always a pleasure to be on the Real News. Thanks for having me.
BROWN: And thanks for checking out the Real News.
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