The Hidden Cost of Being African American: How Wealth Perpetuates Inequality (Paperback)

by Thomas M. Shapiro (Author) "VIVIAN ARRORA, 40 YEARS OLD, is the struggling single mother of a young teenage son, Lamar and 4-year-old twin girls, Bria and Britany..." (more)
Key Phrases: transformative assets, asset poverty line, racial wealth gap, African American, Los Angeles, Leveraging Assets (more...)

Editorial Reviews

From Publishers Weekly
Shapiro, coauthor of Black Wealth/White Wealth, has helped establish that the racial gap in wealth-i.e., assets, including property-is more enduring than the gap in income. That gap, a 10-fold ratio, is exemplified by what the author terms "transformative assets"-gifts, from parents and others, that work to lift succeeding generations economically and socially beyond their own achievements. Interviews with black, white and Hispanic families in Boston, Los Angeles and St. Louis show families with similar incomes living in stratified neighborhoods (and better school districts) thanks to parental help. Most of the white interviewees don't recognize the role of Shapiro's form of privilege in their lives, while middle-class blacks report far more issues with needy parents, relatives and friends. Shapiro, who holds a chair in law and social policy at Brandeis, also shows why it costs more for blacks to buy homes: discrimination in credit, higher interest rates (whites have more capacity to pay "points") and depressed home values caused by residential segregation all contribute. At the same time, Shapiro says, policies such as the federal tax break on mortgage interest perpetuates inequality by making the relatively rich richer. He proposes several class-based, tax-eased solutions at the federal level that go beyond social security: children's savings accounts; individual development accounts that match savings; and down payment accounts to help buy homes, drawn from a partial tax credit for renters. Such policies, he reminds us, would hardly be outlandish; they echo previous asset-building policies such as the Homestead Act, the GI Bill and Veterans Administration home loans. A reformed estate tax, he argues, would also help move toward fairness. With all the data Shapiro convincingly pulls together, this should be an essential document for policy groups and could reframe the debate around affirmative action and reparations.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.

From The Washington Post's Book World/washingtonpost.com

African Americans often seem cut off from the economic mainstream. They face higher risks of poverty, joblessness and incarceration than their fellow citizens do. Community organizing, civil rights legislation, landmark court decisions and rising education have advanced the cause of racial equality. Overt bigotry has been banished from public places, and polls show that whites harbor fewer prejudices than they used to. But these improvements have not been enough.

How can disadvantage persist so long after most laws, minds and practices have changed? Thomas M. Shapiro argues in this sober and authoritative book that we should look to disparities of wealth for the answer. Whites are wealthier than African Americans, and whites' wealth advantage is much bigger than their advantages in either income or education (the point of Shapiro's earlier study, Black Wealth/White Wealth, co-authored with Melvin Oliver). Whites start out ahead because they inherit more from their parents, and America's racially segregated housing markets boost whites' home equities, while depressing those of African-American families. Shapiro, a professor of sociology at Brandeis, takes readers through the implications of these inequities and concludes that African Americans will not gain significant ground in the wealth divide until inheritance and housing policies change.

Wealth is the sum of the important assets a person or family owns -- home equity, pension funds, savings accounts and investments. Wealth is better than income because it is durable. People use income to meet daily expenses, whereas wealth accumulates. People who have wealth tap it only to deal with emergencies or to take advantage of opportunities -- opportunities that usually build more wealth.

Wealth passes down from generation to generation. The main reason African Americans are currently worse off than whites, according to Shapiro, is that today's African Americans inherited less wealth from their parents than today's whites did. It is not hard to see why: The generation of African Americans now passed away accumulated less wealth because discrimination in their day kept most of them poor and denied them opportunities other Americans enjoyed.

The disparity in wealth not only persists, it mushrooms. Without a cushion of inherited wealth, emergencies hit harder, and people who have no nest egg have to let opportunities pass by. Because of the wealth deficit, African Americans find themselves more vulnerable to shocks and l