The Hidden Cost of Being African American How Wealth Perpetuates Inequality by Thomas M Shapiro | 1.62 MB
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Title: The Hidden Cost of Being African American: How Wealth Perpetuates Inequality
Author: Thomas M. Shapiro
Year: 2004

Description:
Over the past three decades, racial prejudice in America has declined significantly and many African American families have seen a steady rise in employment and annual income. But alongside these encouraging signs, Thomas Shapiro argues in The Hidden Cost of Being African American , fundamental levels of racial inequality persist, particularly in the area of asset accumulation--inheritance, savings accounts, stocks, bonds, home equity, and other investments-. Shapiro reveals how the lack of these family assets along with continuing racial discrimination in crucial areas like homeownership dramatically impact the everyday lives of many black families, reversing gains earned in schools and on jobs, and perpetuating the cycle of poverty in which far too many find themselves trapped.
Shapiro uses a combination of in-depth interviews with almost 200 families from Los Angeles, Boston, and St. Louis, and national survey data with 10,000 families to show how racial inequality is transmitted across generations. We see how those families with private wealth are able to move up from generation to generation, relocating to safer communities with better schools and passing along the accompanying advantages to their children. At the same time those without significant wealth remain trapped in communities that don't allow them to move up, no matter how hard they work. Shapiro challenges white middle class families to consider how the privileges that wealth brings not only improve their own chances but also hold back people who don't have them. This "wealthfare" is a legacy of inequality that, if unchanged, will project social injustice far into the future.
Showing that over half of black families fall below the asset poverty line at the beginning of the new century, The Hidden Cost of Being African American will challenge all Americans to reconsider what must be done to end racial inequality.

From Publishers Weekly
Shapiro, coauthor of Black Wealth/White Wealth, has helped establish that the racial gap in wealth-i.e., assets, including property-is more enduring than the gap in income. That gap, a 10-fold ratio, is exemplified by what the author terms "transformative assets"-gifts, from parents and others, that work to lift succeeding generations economically and socially beyond their own achievements. Interviews with black, white and Hispanic families in Boston, Los Angeles and St. Louis show families with similar incomes living in stratified neighborhoods (and better school districts) thanks to parental help. Most of the white interviewees don't recognize the role of Shapiro's form of privilege in their lives, while middle-class blacks report far more issues with needy parents, relatives and friends. Shapiro, who holds a chair in law and social policy at Brandeis, also shows why it costs more for blacks to buy homes: discrimination in credit, higher interest rates (whites have more capacity to pay "points") and depressed home values caused by residential segregation all contribute. At the same time, Shapiro says, policies such as the federal tax break on mortgage interest perpetuates inequality by making the relatively rich richer. He proposes several class-based, tax-eased solutions at the federal level that go beyond social security: children's savings accounts; individual development accounts that match savings; and down payment accounts to help buy homes, drawn from a partial tax credit for renters. Such policies, he reminds us, would hardly be outlandish; they echo previous asset-building policies such as the Homestead Act, the GI Bill and Veterans Administration home loans. A reformed estate tax, he argues, would also help move toward fairness. With all the data Shapiro convincingly pulls together, this should be an essential document for policy groups and could reframe the debate around affirmative action and reparations.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist
Shapiro follows up on his earlier work, Black Wealth/White Wealth (1995), which reflected on the racial inequality that is passed from one generation to the next. In this book, Shapiro relates stories, drawn from interviews with both blacks and whites, from the Boston, L.A., and St. Louis areas, of how individuals and families use their assets to secure advantage and opportunities. Shapiro focuses not just on inherited wealth but also on what he calls transformative assets, which help to get families beyond their own achievement levels, for instance, providing a down payment for a home. He explores the equity values associated with owning homes and the connection between home ownership, community, and high-quality education. He also examines government policies that impact racial inequality, including the post-World War II housing boom facilitated by the FHA, which excluded black participation, negatively affecting generations to follow. Shapiro does an excellent job of showing the connections between racial inequality, opportunities, and family wealth. Vernon Ford
Copyright © American Library Association. All rights reserved

Review
"This book almost unerringly finds its mark."-- Crisis
"Powerfully mixes poignant individual stories and moral outrage with clear statistical analyses and a strong exposition of a workable solution to continued, severe racial inequality."-- Boston Globe
"How can disadvantage persist so long after most laws, minds and practices have changed? Shapiro argues in this sober and authoritative book that we should look to disparities of wealth for the answer.... Few of his proposals may be tried in the current political climate, where far more pressure goes toward abolishing inheritance taxes altogether. Yet by giving such a frank and probing appraisal of the long-term damage wrought by unequal wealth, Shapiro continues to press the case for resolving America's most stubborn and profound source of racial division."-- Washington Post Book World
"With all the data Shapiro convincingly pulls together, this should be an essential document for policy groups and could reframe the debate around affirmative action and reparations."-- Publishers Weekly
"An important book about the troubling and persistent disparities of wealth along racial lines. It deepens our critical understanding of how inherited wealth distorts real meritocracy and equal opportunity." --Bill Gates Sr. and Chuck Collins, co-authors of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes
"Shapiro's book deserves attention for its focus on an enduring fissure in Americans' ideas about themselves. There were and are considerably fewer self-made men in the New World than the current mythology enumerates. Those who enjoyed success largely did so abetted by the sweated labor of those whom they owned or hired, not to mention their wives, who kept their homes clean and bore their children. Inequality was the favored few's leg-up on life. If that advantage persists, as Shapiro suggests it has, and if it is being replicated through generations, because of the financial advantages reaped by the founders of those generations, as he also suggests, then it is time to consider ways to redress the balance of inequality."-- The New Leader
"This important book takes the critical next step in wealth research: Through intimate portraits of American families it shows how wealth matters. Shapiro convincingly demonstrates how parents use household wealth to foster advantage for their children--and how African Americans are at a distinct disadvantage in this game by virtue of a relative lack of family assets. Important reading for anyone interested in how race and class works in contemporary America." --Dalton Conley, author of Honky
"A great read and a remarkable advance in showing how assets take on profound importance in shaping racial inequality in America. With its masterful combination of indepth interviews and quantitative data, it will convince even the most skeptical reader that the playing field is far from level." --Mitchell Duneier, author of Sidewalk and Slim's Table: Race, Respectability, and Masculinity
"This insightful study adds to a growing body of research documenting that asset holding has important effects on well-being, independent of income. Shapiro explores complex relationships among race, home ownership, and educational opportunity. He assesses the cost of being black in these crucial interactions. He introduces the concept of transformative assets to describe inherited wealth that makes a difference in life chances. This book should be read by anyone concerned about race, wealth, and the future of America." --Michael Sherraden, Benjamin E. Youngdahl Professor of Social Development, Washington University in St. Louis
"Shapiro does an excellent job of showing the connections between racial inequality, opportunities, and family wealth."-- Booklist

Book Description
The author of Black Wealth/White Wealth argues that assets hold the key to understanding how racial inequality is passed down from generation to generation

About the Author
Thomas M. Shapiro is Pokross Chair of Law and Social Policy, Heller School of Social Policy and Management, Brandeis University. Black Wealth/White Wealth , which he wrote in collaboration with Melvin Oliver, received wide spread acclaim and won several awards, including C. Wright Mills award, the American Sociological Association Distinguished Scholarly Award, and The Myers Center Award for Human Rights.

From The Washington Post
African Americans often seem cut off from the economic mainstream. They face higher risks of poverty, joblessness and incarceration than their fellow citizens do. Community organizing, civil rights legislation, landmark court decisions and rising education have advanced the cause of racial equality. Overt bigotry has been banished from public places, and polls show that whites harbor fewer prejudices than they used to. But these improvements have not been enough.
How can disadvantage persist so long after most laws, minds and practices have changed? Thomas M. Shapiro argues in this sober and authoritative book that we should look to disparities of wealth for the answer. Whites are wealthier than African Americans, and whites' wealth advantage is much bigger than their advantages in either income or education (the point of Shapiro's earlier study, Black Wealth/White Wealth, co-authored with Melvin Oliver). Whites start out ahead because they inherit more from their parents, and America's racially segregated housing markets boost whites' home equities, while depressing those of African-American families. Shapiro, a professor of sociology at Brandeis, takes readers through the implications of these inequities and concludes that African Americans will not gain significant ground in the wealth divide until inheritance and housing policies change.
Wealth is the sum of the important assets a person or family owns -- home equity, pension funds, savings accounts and investments. Wealth is better than income because it is durable. People use income to meet daily expenses, whereas wealth accumulates. People who have wealth tap it only to deal with emergencies or to take advantage of opportunities -- opportunities that usually build more wealth.
Wealth passes down from generation to generation. The main reason African Americans are currently worse off than whites, according to Shapiro, is that today's African Americans inherited less wealth from their parents than today's whites did. It is not hard to see why: The generation of African Americans now passed away accumulated less wealth because discrimination in their day kept most of them poor and denied them opportunities other Americans enjoyed.
The disparity in wealth not only persists, it mushrooms. Without a cushion of inherited wealth, emergencies hit harder, and people who have no nest egg have to let opportunities pass by. Because of the wealth deficit, African Americans find themselves more vulnerable to shocks and less able to capitalize on breaks than whites with the same income. So the next generation will inherit less, too. The wealth gap will not close anytime soon.
Shapiro blends statistical analysis and case studies of selected families in Boston, St. Louis and Los Angeles, showing the relative importance of wealth and the disparities in inheritance by class and race. He also supplies some individual case studies, which give depth and humanity to the numbers.
Wealth begins at home. A home-equity loan can see a family through a spell of unemployment or leverage an investment. Millions of middle-class Americans use tax-deductible home-equity loans to pay for their children's educations. Others buy rental property.
Because neighborhoods are racially segregated, African Americans' homes do not grow in value as fast as whites' homes do. Shapiro calculates that housing segregation costs African Americans tens of thousands of dollars in home equity. Homebuyers look for amenities commonly found in predominantly white neighborhoods. They pay extra for parks, convenient shopping and attractive views. Parents pay huge premiums for what they perceive to be good schools. Few parents can judge schools objectively. Instead, they use easy-to-observe markers, including the race of the students. These preferences raise the costs that first-time homebuyers face when they attempt to buy houses in those mostly white neighborhoods. Economic theory implies that if whites continue to waste money on irrational prejudices like this, market forces will eventually undo the racial disparity in wealth. But the experience of the last 50 years suggests otherwise. Inequality has grown because each new generation has been willing to pay a higher premium for these amenities. The market doesn't punish discrimination; it rewards it.
Whites fail to see any injustice in these differences. Shapiro's interviews convinced him that whites hide their privilege from themselves and, accordingly, feel no guilt for the hidden costs they impose on African Americans. People who inherited tens or hundreds of thousands of dollars nonetheless told Shapiro that they were self-made and self-reliant. They proudly told him how the assets they inherited grew under their stewardship. White parents use wealth to send their children to private schools or to give their adult children down payments for homes. They do not see how such practices hand today's inequalities on to the next generation.
Shapiro argues convincingly that these private matters spill over into public investment, too. He interviewed one upper-middle-class woman who told him that she was unconcerned with troubles in the local public school because she never intended to send her children there. Shapiro points out that her indifference -- and that of others like her -- is just one more obstacle in the path of people trying to improve local public education.
Families and generations are at the core of Shapiro's analysis. So I was surprised that he did not directly address how marriage and family structure fit into the cycles of accumulation, inheritance and investment. Married couples accumulate more wealth than single parents do, according to other researchers. That suggests to me that African-American family issues must play a role in the wealth gap.
Shapiro does connect the wealth gap to public policy. Today's tax law exacerbates the inequality of wealth in the United States. Coming out of World War II, the federal government encouraged home ownership for all and increased the country's rate of homeownership from 44 percent in 1940 to 62 perent in 1960. (It inched up to 68 percent in 2003.) Since 1982, national tax policy has turned conservative in ways that foster what Shapiro labels "opportunity hoarding." He floats several proposals -- such as overhauling inheritance laws -- that might help the country get back on the track of broadening opportunity. Few of his proposals may be tried in the current political climate, where far more pressure goes toward abolishing inheritance taxes altogether. Yet by giving such a frank and probing appraisal of the long-term damage wrought by unequal wealth, Shapiro continues to press the case for resolving America's most stubborn and profound source of racial division.
Reviewed by Michael Hout
Copyright 2004, The Washington Post Co. All Rights Reserved.

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