Why Blacks and Hispanics Are Poorer
Hello All,
Todays posting tackles a difficult topic - the role of race in attaining wealth.
Race is the classic American problem. In many ways the reality of race differentials in American society illustrate an ongoing discrepancy between our enlightenment ideals and socioeconomic reality. From the civil rights era to current debates surrounding the Obama candidacy and immigration policy, racial differences have demonstrated that they still matter.
More importantly, race matters for wealth building. Generally speaking African Americans and Hispanic families have lower overall levels of net-worth. Relatative to other groups, they are less likely to inherit, own homes or stocks. Its an uncomfortable fact, but nonetheless a fact.
Why might this be? There are a number of explanations. Among these are discrimination and culture. The discrimination hypothesis argues that people don't like minorities and therefore choose not to employ them or let them into prestigeous univerisities, etc. The culture argument says that normative standards in minority communities discourage wealth accumulation via reciprocal ethics - e.g. when anyone has any money they are expected to give it away, therefore nobody can get rich.
The alternatives are more compelling. According to Lisa A Keister, three major factors impact patterns of wealth building among minority families. These are education, family disruption and fertility. Consider this, if families don't have educated parents, then lifetime wages are lower. As anyone who has been divorced can tell you, family disruption interrupts processes of child's learning and dilutes resources. And finally, families with more children have fewer resources to go around. All of these are more prevalent in minority families.
So, it seems that lower wealth in African-American and Hispanic familes has less to do with discrimination and culture, and more to do with family dynamics and educational attainment.
Best,
James
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9 comments:
I think it's a bit of cop-out and say "education, and family dynamics." It's sort of saying poor people are poor because they don't have money.
The question still remains why are the eduction level lower and family dynamics different? More importantly, we should answer what we can do about it.
Could explain the role of fertility?
My grandmother had 7 kids, 3 went to college and the rest learned a vocation. She had an 8th grade education and raised them by herself. The majority make average to above average income.
I agree with Dong, how do we fix this gap? I think that's an impotant question.
What abpout finding that compared African Americans and Caucasian with the same FICO score, but Caucasians were offered lower interest rates? The is dtill the issue of discrimination. http://www.springerlink.com/content/m6v7533050135240/
You are facing a topic that is effectively the "third rail" of politics and economics. Dong raised a valid point about the cause of the obvious education and family dynamics differences. There are certainly some buzz words that apply: Hope, Opportunity, & Values.
Do bad students make a school bad or does a bad school (teachers, facilities, etc) make bad students? If your mentors (parents, athletes, neighbors) all lack a college education would you expect to earn one?
I personally see many of these problems as the result of self fulfilling prophesy. Children and teens who are subject to low expectations their whole life will have low expectations for themselves.
My minority friend who had supportive parents expected their children to succeed in school, and they did exactly that. To do it they had to endure their peers telling them on a daily basis how "uncool" it was to get good grades and participate in (non-sports) extra circulars. They were told to quit "acting white" when they spoke with proper grammar or took honors classes.
On the other hand, both of my parents have MS degrees and it was always expected that I would attain the same level of education. My grandparents too had advanced degrees (mostly paid by the GI bill). I did not get a single grade below a B my whole school career because that was what was expected of me.
Without that support it would have been impossible to be where I am today. My wife worked as a day care worker with a woman who literally said, "I gotta fine ma kidz a pra'dusa [music producer] caz at leas' one of um gotta become a rapper." If your parents think that is your (and their) best shot at wealth then it should be obvious why there is such a wealth gap.
The issue of single parent households and absentee fathers can also be traced back to similar roots. Men aren't held responsible by their community to be real fathers, and there is a massive lack of positive male role models. Again it is "uncool" to live your life in the traditional order: get a degree, get married, then have sex (and only have 2.5 kids). It isn't easy (and certainly not "cool") but that is a big explanation for the wealth gap.
Discrimination still exists as Green Panda pointed out in the link to that article. It isn't that easy to completely rule out discrimination.
Furthermore, beyond family dynamics, one has to look at the resources these families started out with. Where Caucasian families came as immigrants from European countries with only the clothes on their backs, they were able to work paying jobs and gradually move up. African-Americans came over as slaves. They had no start-up capital. Even once slavery was abolished, many African-Americans ended up as sharecroppers. African-American roots started in a place that was as extreme poverty as it comes.
I agree with Dong that we need to ask the "why" in these matters. With education for example, there is still segregation. Look at school's in Los Angeles and you'll see the upper middle class white kids lumped in a few schools while the Latinos and African-Americans make up the bulks of others.
Theories don't equate to fact, James. Leave a little room and time for these ideas to be tested empirically before offering your conclusions.
Well, what a nice conclusion to reach in the span of only a few paragraphs. I think it's hilarious that your post basically said, "there are a couple of theories... and this is the right one. Here is the answer to the problem." Whatever theory you believe, the topic is an incredibly complex one, and it deserves a more nuanced explanation than what you gave.
First and foremost I'd like to ask why did you pick this topic? Being a Mexican American myself I'd like to know why an educated white person who writes a blog about couples finances would propose such a question. You stated yourself that this is a fact. If so, why the need to bring it up or discuss it? As a white person in America I'm sure you're very aware of "white privilege". It has been said that there are two types of white people; those who use it and those who don't. For you to propose that because our parents aren’t educated or because we have too many family members we’re doomed to live in poverty? My friend’s parents emigrated from El Salvador for political reasons in the 80’s they came over here with the shirts on their backs and with three kids. That was an accomplishment in itself. They had no education, they worked blue collar jobs (for less money because they were undocumented) and they struggled to make ends meet. Now they own their own house, and all of their kids are college grads and my friend is about to finish her MSW. Obviously if they were white they could have gone to better universities. Yes this is a stretch but bear with me. They would have because A. The parents would have the money to pay for it. B) They would have lived in a different area and would have had a better education system than the one they were in (LAUSD). C) They wouldn’t have had to work to help support the family while they were in high school and college. For you to say that discrimination has nothing to do with it is a very ignorant and idiotic statement. If my friend would have gone to let say Harvard or any other university out of Los Angeles I don’t think they would have lasted the 4 years required to finish their degrees, why? Because as any minority will tell you white people (not all but a good chunk) as much as I hate to say this because it makes me sound like a racist myself are in fact racist. If I travel to Orange County (I live in Los Angeles) I can feel it. The treatment I get at a restaurant or they way someone will give you a dirty look or the way I’m looked down on. Now that’s just Orange County which is only a couple of miles and there is a strong population of Hispanics there, now imagine going to a university hundreds of miles away from a strong Hispanic population. The tension would be too much. Now I don’t know if you had nothing else to write about in your blog and you are unaware of this so I’ll give you the benefit of the doubt, but please next time when you want to make a comment on race, don’t. It just makes you sound like a racist.
This sounds a lot like the "education and family dynamics" of poor and rural whites, too. So, then, these whites are black?
Just a quick point of clarification.
I do not believe that Race itself - e.g. being genetically White, Black or Latino has a impact on wealth. There is very little genetic variability between "races". Instead it is a question of the sociological or economic differences that seem to map to different racial or ethnic categories.
Best,
James
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