Black History Month has become the time to reflect on all the progress black Americans have made, but the sobering reality is that when it comes to wealth – the paramount indicator of economic security – there has been virtually no progress in the last 50 years.
Based on data from the Federal Reserve’s Survey of Consumer Finance, the typical black family has only 10 cents for every dollar held by the typical white family.
While there is no magic bullet for racism, access to wealth, and the security to pass it down from one generation to the next, would go a long way toward changing the economic trajectory for blacks.
As researchers who study historical and contemporary racial inequality, we mostly conceive of wealth as a maker of success, but its true value is functional: the independence and economic security that it provides.
Out of slavery
Until the end of legal slavery in the U.S., enslaved people were considered valuable assets and a form of wealth. In the South, entrepreneurs and slave owners took loans out against the collateral value of their property in the form of people to fund new businesses.
The U.S. government has a long history of facilitating wealth for white Americans. From at least the Land Act of 1785, Congress sought to transfer wealth to citizens on terms that were quite favorable. In some instances, land could be attained by the luck of the draw – but only if you were a white man.
While the 1866 Homestead Act sought to include blacks specifically in the transfer of public lands to private farmers, discrimination and poor implementation doomed the policy. Black politicians during Reconstruction attempted to use tax policy to force land on the market, but this was met with violent resistance.
While blacks did make gains in wealth acquisition after chattel slavery ended, the pace was slow and started from a base of essentially nothing. Whites could use violence to force blacks from their property via the terrorism of whitecapping, where blacks were literally run out of town and their possessions stolen. This includes the race riots, as in Memphis in 1866 and Tulsa in 1921, which systematically destroyed or stole the wealth blacks had acquired, and lowered the rate of black innovation. Black wealth was tenuous without the rule of law to prevent unlawful seizures.
This trend remained stable for the next 50 years. In 1965, 100 years after Emancipation, blacks were more than 10 percent of the population, but held less than 2 percent of the wealth in the U.S., and less than 0.1 percent of the wealth in stocks. Wealth had remained fundamentally unchanged and structurally out of reach of the vast majority of blacks.
Housing assistance and education
These racially exclusionary systems endured well into the 20th century.