Race and poverty

Race and poverty

In a paper recently published in Sociology Mind (1), Amadu Jacky Kaba of the Department of Sociology, Seton Hall University, New Jersey, considers the black-white wealth gap in the United States. Wealth, which has been defined as “what you own minus what you owe”, is as he reminds us, of inestimable significance. It creates access to quality education and housing. It provides insurance against fluctuations in income. It opens routes to prestigious, highly paid occupations.

Dr Kaba notes at the outset that the United States in the richest country in the world. In 2008, when only China had a GDP of more than $7.992 trillion, that of the US was $14.44 trillion. In general, the longer an ethnic group has lived in America, the wealthier it has become. But although black Americans are one of the longest established populations therein, this rule unhappily does not apply to them.

European-Americans and Asian-Americans have accumulated more wealth than black Americans. Black Americans on average hold only between 10% and 25% of the wealth held by whites. A 2003 study found that the median wealth for whites was about 6.4 times that of blacks. Only 18% of black households had wealth of more than $100,000.

This wealth gap has huge social and political consequences. For example, at least 25% of African-Americans have no assets to protect them from economic hardship. A 2009 study showed, likewise, that 19.1% of blacks had no health insurance compared to 10.8% of non-Hispanic whites.

Because of the wealth gap, fewer blacks are enrolled in colleges and universities and black families carry a heavy burden of debt. Inadequate educational facilities for black children in conjunction with lower rates of college attendance make for high rates of unemployment. Moreover, substantial numbers of blacks have low status, badly-paid jobs. And whereas 6.7% of whites were below the poverty line in 2007, the comparable figure for blacks was 24.8%. A proportion of the high crime rates in black communities and the high prison rates for black males can be attributed to poverty, according to Kaba.

Turning to the causes of the racial wealth gap, Kaba points out that even when blacks are matched for education and occupation with whites they have less wealth. Some of the factors involved here are that qualified blacks are more likely to be refused mortgages than whites and tend to have to pay higher interest rates on home mortgages than whites on similar incomes; that neighbourhoods are valued according to racial criteria; and that blacks are charged more for certain goods and services, notably cars and insurance. In short, Kaba contends that discrimination persists and is one cause of the wealth gap.

The fact that between 1984 and 2007, the black-white wealth gap increased four-fold was in his view directly linked to government policies that disproportionately benefitted higher income families and redistributed income to them, to wit, tax cuts on investment income and on inheritances, and tax deductions on mortgages and college savings. Higher incomes facilitate saving and since whites have higher incomes than blacks they consequently save more and thereby accumulate more wealth. There are also racial differences in what is called risky asset ownership. Thus, blacks are less likely to invest in the stock market and given the potential of equities to increase in value and to generate income this has a considerable effect on net worth.

Another possible cause of the wealth gap cited by Kaba is the legacy of slavery. Until emancipation, enslaved blacks were self-evidently unable to acquire wealth and to transfer it to the next generation. The author also contends (not without evidence) that “humans tend to attempt to help their own [racial] groups first”. Or as Professor Rushton puts it in Race, Evolution, and Behaviour, “…people give preferential treatment to those who genetically resemble themselves”. The political under-representation of blacks in Congress may therefore have exacerbated the black-white wealth gap. It is noteworthy in this context that as of June 2011 there was no black member of the Senate.

One striking omission from the list of causes of the wealth-gap adduced by Kaba is population differences in IQ. The author presumably believes that black educational under-achievement is entirely attributable to the wealth-gap in conjunction with institutional racism in the education system. He reports in this context that black faculty members in higher education are less likely to be awarded tenure than whites. However, the evidence for race differences in IQ is now overwhelming. Yet as Thomas Sowell has observed, black political leaders and spokesmen are amongst the strongest supporters of the suppression of this evidence. This omission aside, Dr Kaba is to be commended for his sobering exegesis.

Leslie Jones, 17 August 2011

1. “Explaining the Causes of the Black-White Wealth Gap in the United States”, Amadu Jacky Kaba, Sociology Mind, 2011, Vol.1, No 3, pp 138-143





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1 Response to Race and poverty

  1. Hi Leslie,

    Great post. When I read things like “19.1% of blacks had no health insurance compared to 10.8% of non-Hispanic whites” it makes me so happy we have the national health service here in the UK. I’m not saying its perfect because it definitely has its problems but its an excellent safety net.

    You have a great website by the way.

    All the best

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