WASHINGTON WATCH: Wealth Gap Between Blacks And Whites Has Tripled (VIDEO) | Roland Martin Reports

WASHINGTON WATCH: Wealth Gap Between Blacks And Whites Has Tripled (VIDEO)

It’s a given in black communities that education is the key to social and economic growth. It’s what we believe. It’s what we teach our children. But there is new research out of Brandeis University in Boston that shows that that may not be enough. The wealth gap between blacks and whites has tripled in the past 25 years.

We’re talking about why and how to close the gap with William Spriggs, chief economist for the AFL-CIO; and Michael Fletcher, national economics reporter for “The Washington Post,” who has written extensively on this subject.

 

MR. MARTIN:  Welcome back.

It’s a given in black communities that education is the key to social and economic growth.  It’s what we believe.  It’s what we teach our children.  But there is new research out of Brandeis University in Boston that shows that that may not be enough.  The wealth gap between blacks and whites has tripled in the past 25 years.

We’re talking about why and how to close the gap with William Spriggs, chief economist for the AFL-CIO; and Michael Fletcher, national economics reporter for “The Washington Post,” who has written extensively on this subject.

Gentlemen, welcome back to “Washington Watch.”

MR. MICHAEL FLETCHER:  Thank you.

MR. WILLIAM SPRIGGS:  Good to be here.

MR. MARTIN:  The thing about this study [is] they clearly show that, even if it’s a question of education, even if black folks are going to college, the amount of debt that they are accruing is much higher than that of whites who are going to college.  And so we say, “Get that college degree.  Get that higher job,” but the problem is they are still beginning in a much deeper hole.

MR. SPRIGGS:  That’s correct, and the other thing about it is that this wealth gap – this is accumulated differences in income, so the wealth gap really represents centuries of discrimination and slavery.  So, we are going to start way behind.  You can’t just overcome that with education.  This –

MR. MARTIN:  Now, I –

MR. SPRIGGS:  — this isn’t just savings differences.

MR. MARTIN:  — I don’t want to run past that, because when we talk about this, what this is really dealing with is what is passed down.  The fact of the matter is, for African-Americans, our wealth is largely tied up in our homes.  The housing foreclosure crisis wiped out 53 percent of black wealth.  And so when people say, “Aw, man, you bring up slavery.  It really doesn’t apply” – but you do have to think about this in terms of what was the income of your parents and your grandparents and your great-grandparents.

MR. FLETCHER:  It is so relevant.  I mean you can go all the way back through the arc of American history:  homestead programs, black people excluded.  You know, G.I. Bill stuff – black people largely excluded.  Residential segregation – we were excluded from capital markets, getting mortgages for so long.  Then finally, when we started getting them, who was channeled into subprime mortgages?  So, you can kind of go down that –

MR. MARTIN:  Right.

MR. FLETCHER:  — entire arc, and discrimination plays a huge role – even though, like you said, people, you know, they … don’t want to hear that.  But that’s a big factor.

And when you have a[n] economic crisis now – and whites were affected, too, but blacks have so much less of a margin, you know.  And that’s where inheritance comes in.  That’s where family wealth comes in, where if someone loses a job, you can maybe call up an uncle, or a mom and –

MR. MARTIN:  Right.

MR. FLETCHER:  — get a loan to tide you over.  Maybe you can save that house [and] not go into foreclosure.

African-Americans have so much less latitude when it comes to that, and that’s because of the history.

MR. MARTIN:  So, how do we – well, I love to talk about it from a spiritual standpoint.  How do you stop the generational curse?  How are you able to reverse this?  What are the possibilities?  What are the strategies to begin to say, “Look … I don’t want my children to be in this position.  This is what I need to begin to do now”?

MR. SPRIGGS:  So, some of it we can control, but we can’t get too quickly away from what we can control.

MR. MARTIN:  Right.

MR. SPRIGGS:  So, there are a number of homes right now that are underwater, if they were able to avoid foreclosure.  And so we do need to have continued focus on efforts from the Administration, now that Fannie and Freddie practically own America’s housing stock, to find ways to get people from being underwater, to forgive the debt, to get the price of the loan down to the value of the home.

MR. MARTIN:  And let’s be honest.  The Obama Administration – they, frankly, had a checkered history when it comes to dealing with the housing issue.  [They’ve had] housing plan after housing plan.  We’ve had Secretary Shaun Donovan on this show, and every time he comes back, I’m going, “What?  A new plan?”  That tells me the previous ones were not working as well.

Michael?

MR. FLETCHER:  Indeed, and they’ve been worried about “moral hazard” – right?  They don’t want to encourage, they don’t want to reward people who were, quote-unquote, “irresponsible” in getting loans.  So, they do these kind[s] of incremental things that don’t really get to the core of the problem. And now that we have kind of a nascent housing recovery, African-American communities are still lagging, because the foreclosure crisis hit so much harder.

Bill and I were talking just earlier.  He and I could live in a neighborhood and [have] been paying our mortgage on time every time.  If we have neighbors who didn’t, we’re hit, wealth-wise, too, because our housing values go down.  And that’s what’s affected so many African-American people.

So, you have to find a way to sort of undergird the housing market.  And going forward, it’s two things.  Education and housing are still – even though they’ve hurt us in a way, they’re still the keys to building wealth.  Like, African-Americans still – you know what I mean.  Home ownership is still the biggest source of wealth even for whites and for blacks.

MR. MARTIN:  ’Cause of the points that I’ve made on this show as well is that we talk about what you can also change, where education comes in – is that for African-Americans, once you begin to make – and let’s just be honest – 45, 50, 60, $70,000 – and let’s not talk about six figures – you now all of a sudden are supporting a bunch of other family members.  And that also is impacting wealth as well, because you look back, and you said, “Man!  I loaned out 5, 10, 20, 30, 50, 100,000 [and]-some-odd dollars.”

MR. SPRIGGS:  The other area, though, that people haven’t paid as much attention to has to do with our pension plans.  When the stock market collapsed, a trillion dollars disappeared from the value of those funds.  Almost a third of the value of public pension funds disappeared overnight because of the collapse of the stock market.  Many people have projected that onto the public-sector workers and blame them.

MR. MARTIN:  Right.

MR. SPRIGGS:  Now, the state, of course, losing all of that money in that pension fund, is now on the hook.  They have to come up with the money to make up for it; so, yeah, they’re going to go after the workers.

And we, unfortunately, sometimes buy into the idea that, “Oh, their pension funds – they’re too fat, and they were promised things that we can’t deliver on,” and we’re not holding accountable Wall Street for all that we have been paying for out of this downturn.

MR. MARTIN:  Michael.

MR. FLETCHER:  And let me just to add to that.  Blacks are disproportionately affected when you talk about cutting government worker pensions, because that’s been one area of the economy that’s tended to hire us, you know, up to our education level, pay us equally and that sort of thing.  So, you have African-Americans disproportionately employed by government.  … that is the backbone of the black middle class, and you’re talking about cutting their pensions.  You’re talking about cutting wealth for generations.

MR. MARTIN:  And, folks don’t want to own up to the fact that one of the reasons that’s the case is because we were shut out of corporate America, shut out of the private sector.  And even today, you’re seeing us shut out of these significant jobs.  And, again, I tell folks don’t just think it’s all a matter of – even if you have somebody in, let’s say, the media business.  “Oh, man, yeah; but you got a nice job.”

But here’s the reality.  Look at the anchors who’re making 10, 15, $12 million, 8, $7 million; and you’ve got African-Americans – maybe two or three – who’re at about a million or $2 million.  That’s a huge gap between the two, and it goes to show you again the ability to create wealth, pass down wealth and build it up to be able to expand businesses, things along those lines – all of those things are tied to it.  That glass ceiling is real for us; and so, yeah, we[’ve] got to deal with it.

Gentlemen, I appreciate it.  Thanks a bunch.

MR. SPRIGGS:  Okay.

MR. FLETCHER:  All right.