Blacks own about 8 cents of wealth for every white dollar, report says Urban League study blames racism, highlights new challenges

July 31, 1998|By Erin Texeira | Erin Texeira,SUN STAFF

WASHINGTON -- African-Americans own about eight cents of wealth for every dollar of wealth owned by whites, a gap that is rooted in racism and difficult to narrow because blacks typically have less money than whites to pass on to their children, according to a study released yesterday by the National Urban League.

" 'Oh my gosh,' I hope you're thinking," said Thomas N. Shapiro, a sociologist at Boston's Northeastern University and contributor the annual State of Black America report released yesterday. "This is serious."

The Urban League's 315-page report, issued as the 88-year-old organization gears up for its four-day annual conference starting Sunday in Philadelphia, analyzes such traditional civil rights issues as grass-roots organizing and education problems.

But it also highlights new civil rights challenges: ensuring equal access to the Internet for poor people of color and promoting wealth-building as key components in the struggle for equal rights in America.

Hugh B. Price, president of the New York-based organization, and other authors of the report yesterday focused largely on the first essay, by Shapiro and Melvin O. Oliver of the Ford Foundation, on the black-white wealth gap.

Although attention has focused for years on racial income gaps -- blacks earn roughly 62 cents for every dollar earned by whites, a figure that has scarcely changed in about 30 years -- a critical look at wealth reveals concentrations of significant economic power, Shapiro said.

Such factors as education, patterns of marriage, age and employment affect the wealth gap, Shapiro said. But, in a data analysis that adjusts for all these factors, the average black family still owns about $43,000 less in wealth than the average white family, he said.

"With these factors, those asset gaps should disappear but they don't," Shapiro said. "Therefore, race per se in our historical institutions of the United States continue to lengthen, to build, to broaden that wealth gap. That is clear."

He looked at home buying, the most common form of investment and wealth building in America, for explanation:

White first-time homebuyers are more likely to receive cash gifts and free loans from family members than are blacks.

African-Americans are denied housing loans 60 percent more frequently than whites, and those granted loans pay, on average, higher interest rates than do whites, he said.

Over time, home values typically rise steadily in homogeneous white neighborhoods than in homogeneous black -- or even a racially integrated -- neighborhoods, he said.

Wealth, not the transitory flow of income, determines what choices families have in choosing homes in desirable neighborhoods with respected schools -- and good schools mean a better chance for children to build on wealth parents may pass on, he said.

Another factor in the wealth equation is consumerism, said Milton J. Little, vice president and chief operating officer of the Urban League. Blacks spend proportionally more disposable income than do whites.

"We need to go from purchasing Nikes [tennis shoes] to purchasing Nike stock," Little said.

Pub Date: 7/31/98

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