A couple of weeks ago Elias Isquith linked to an article from the National Journal about the wealth gap between blacks and whites. It’s important to note here that the article is talking about wealth, not income. The reason why this is important is that while a lot of claims about racism can be attributed to both, the wealth gap also has a significant relationship to cultural attitudes about the accumulation of assets. More on that in a minute but first, a quote from the article:
So what’s going on? It’s not that white families are better at saving more of the income they earn, Hamilton says—although white families are more likely to have savings accounts.
“It’s actually ownership of an asset at a key point in life—an asset that’s going to appreciate, and is going to lead to some sort of forced savings,” Hamilton says. Often, assets young people receive from family members become powerful sources of future wealth. Think of parents paying the down payment on their daughter’s condo, or grandparents creating an investment account for their grandson. Think of the kind of assets that slowly and automatically increase in value for the rest of a person’s life.
I do agree that the assistance of older generations in helping younger generations buy homes is important. My wife and I benefited from the generosity of relatives which in turn helped us purchase a nicer home, in a better neighborhood, with better schools nearby. Furthermore, several years of my college education was financed with my inheritance from my father’s estate. While I would have much rather had my father still alive, he had made it clear to me for years before he passed that the farm and the rest of his assets would be his final gift to us and in that he was correct.
What interests me though is why whites seem committed to wealth creation through the purchase of assets while minorities seem to be making other decisions. On Twitter I took a little heat for an offhand remark I made about the choice of words blacks use to describe their living situation compared to whites. In my completely anecdotal experience many blacks will ask, “Where does he stay at?” while most whites will say, “Where does he live?” This may seem a trivial variation in language but I think it is telling. The former example suggests impermanence and there is a great deal of evidence to support this difference in attitudes.
My last work group was made up of mostly lower-tier employees that all make equal pay (my company has a standard pay scale for all employees). We had 16 workers, of which 3 were black and 13 were white. Of the black employees, all of them live in apartments. Of the white employees, 12 of them own homes and one rents a townhouse (a slight step up from an apartment). Additionally, none of the black employees are married and all but one of the white employees are. We know there is also a marriage gap between whites and blacks (less so between whites and Hispanics – we can probably thank the Church for that.)
The marriage factor is huge. I am a vocal proponent of marriage not just as an important social institution but also because it makes good economic sense. My children have many, many more opportunities because my wife and I have two incomes. It creates margin in our finances and that is used both to give them tangible experiences that improve their intellects and also to build wealth that will allow us to help them in other ways in the future.
What I cannot help but wonder though is what cultural attitudes cause blacks to be less interested in home ownership, investing or passing on their wealth. The article I originally linked to indicates that even among more affluent minorities, there is less wealth accumulation that their white counterparts and there has to be cultural forces at work here. As of this writing I can only speculate. The solution? I keep going back to a marriage-friendly tax code and other governmental incentives towards savings. We know what happened when the government pushed house purchasing, but there are other forms of wealth creation with less potential for abuse by financial institutions. Education is also a component but caution must be exercised in luring everyone into college. Student loans can be crippling and I would rather see trade schools boom than campuses fill up with students borrowing against their futures.
The attainment of wealth is about as American as it gets. What we can clearly do much better though is in making this a goal of everyone and not just certain classes of people.
Mike Dwyer is a freelance writer in Louisville, KY. He writes about culture, the outdoors and whatever else strikes his fancy. His personal site can be found at www.mikedwyerwrites.com. He is also active on Facebook and Twitter. Mike is one of several Kentucky authors featured in the book This I Believe: Kentucky.