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By: William Darity Jr.

It is now standard fare to hear that black economic progress requires young people in particular to alter their attitudes and behaviors. They repeatedly are told, in effect, “to pull up their pants”, to take financial literacy classes, to be more punctual, to speak “proper” English, and to be more polite or courteous. The mantra of black self-improvement as the route toward economic equality even has been trumpeted by President Obama.

Unfortunately, black self-improvement is far from enough to eliminate the enormous economic disparities that confront African Americans. Doing the “right things” does not translate into equal status in the United States. For example, blacks who have completed high school and have acquired some college education have a higher unemployment rate than whites who never finished high school. Field experiments conducted in Milwaukee and New York City by Princeton sociologist Devah Pager reveal that white men with a criminal record have a greater likelihood of being called back for jobs than black men with no criminal record.

Perhaps the most dramatic economic gap between blacks and whites is associated with wealth disparities. Indeed, racial gaps in wealth – the difference between the value of a household’s assets and debts – are the most pronounced indicator of black-white economic inequality in the United States. Data drawn from the Survey of Income and Program Participation in 2009 establishes that the wealth (or net worth) held by the median white household was $113,149 while it was a mere $5677 for the median black household. Therefore, the average white household had a net worth close to twenty times the average black household.

This gap will not be closed by the acquisition of more information about managing personal finances or more careful savings practices by black households. Plausible changes in black behaviors will do little to close the staggering racial gap in wealth. Indeed, the average black household would have to save 100 percent of their income for at least three consecutive years to close the wealth gap through their own savings activities. Moreover, a study conducted by the economists Maury Gittleman and Richard Wolff shows that once household income is taken into account, saving rates between blacks and whites are much the same. Indeed, in some income categories, the black saving rate is even higher than the white rate. Furthermore, again taking into account household income, the return on black owned portfolios is similar to the return on white owned portfolios.

The explanation for the black-white wealth gap is not racial differences in financial practices, but the fact that white households receive much larger transfers of resources from previous generations. These transfers take two major forms: inheritances and in vivos. Inheritances are resources that move from an older generation to a younger one upon the death of the member of the older generation. In vivos are transfers that occur while the older generation still is living; these can include assistance parents might give a newlywed couple with a down payment for a mortgage on a home, funds parents might provide for the college education of their child, the provision of a child with an automobile, or grandparents establishing a trust fund for a new born infant. These types of transfers have nothing to do with individual merit, but they lock down racial wealth differences across generations.

Indeed, blacks have considerably less, on average, to transfer to subsequent generations because of a historic denial of the opportunity to accumulate wealth. First, blacks were denied the foundation in wealth that would have been associated with landownership; the ex-slaves never received the 40 million acres of land associated with the promised 40 acres and a mule. Second, while blacks did manage, by dint of perseverance and extraordinary effort to accumulate 15 million acres of land in the South by the early 20th century century, it was appropriated by whites via terrorism, theft, and fraud. By the close of the 20th century blacks owned only about 1 million acres of land in the US South. Third, practices of legal segregation limited the location and value of homes that blacks might purchase. Fourth, discriminatory practices in the banking sector limited black access to credit as a source of entrepreneurial wealth development.

Therefore, what is required to address these huge inequalities is not a program of self-improvement; we need a social movement that addresses not only racial inequality in wealth but wealth inequality in general. Apart from the racial gulf in net worth, the top one percent of the nation’s households possess close to 40 percent of the nation’s wealth. Although young people tend to have more energy and imagination than those of us in the graying years, this is a movement that requires engagement from Americans of all ages. If we truly are concerned about racial economic disparities, we need to change the way in which American society transmits resources from generation to generation for all Americans.