Income Gap Between Whites, Blacks Continues To Grow

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The wealth gap between whites and minorities has grown in recent decades. Scholars and economists from across the nation are on Capitol Hill for the Color of Wealth Summit, which calls on lawmakers to create policies to reduce racial income disparities. Participant Barbara Robles and minority businessman Earl Stafford talk about ways to address the wealth gap in America.

MICHEL MARTIN, host:

I'm Michel Martin, and this is TELL ME MORE from NPR News.

Coming up, a lawyer ditches legal briefs to find her true passion, belly dancing. That story in a few minutes - we found it in the pages of the Washington Post Magazine. But first, America's wealth gap. There's been a lot of talk since Barack Obama's election about what his election says about the ways America has changed over the centuries. One thing that has not changed is the racial wealth gap. That's the very large difference in the value of the assets controlled by people of different races.

And while certainly, many white people don't feel very wealthy - certainly not as wealthy as they might have a few months ago - the fact remains that for every dollar the median white family owns, the median Latino family owns 12 cents and the median black family, a dime. That's according to the most recent information by the Federal Reserve Board, in 2007.

Today, a group of economists and other policy experts kick off the two-day Color of Wealth Summit here in Washington, D.C. They'll be talking about ways to close the racial wealth gap. One of the participants is Barbara Robles. She's an associate professor at the College of Public Programs at Arizona State University. Also joining the conversation is businessman Earl Stafford; he's the CEO of the Wentworth Group, LLC. That's a firm that invests in small and medium-sized businesses.

You might remember Mr. Stafford's name because he is the person who sponsored the People's Inaugural Ball this past January to allow folks to participate in an inaugural event who otherwise would not have had the opportunity. Welcome to you both. Welcome back.

Mr. EARL STAFFORD (CEO, Wentworth Group, LLC): Hello.

Professor BARBARA ROBLES (College of Public Programs, Arizona State University): Hello, Michel.

MARTIN: One of the conference report findings, Barbara, that many people might find surprising is that the racial wealth gap has not only persisted, it has actually grown between minorities and whites in the last 30 years, even though there are more blacks and Latinos with college educations, more blacks and Latinos with graduate degrees. So Barbara Robles, why has this gap actually widened in the last generation?

Prof. ROBLES: Well, I think part of it is because we still confuse earnings income with wealth. Wealth is the broader measurement of how well we're doing. And, you know, clearly, having an education is very important. But the way to build wealth, assets over the long run is through intergenerational inheritances and transfer. And it's much more than just getting an education. And so what we've got is, now we've got more Latinos and African-Americans and other minority groups being part of the educational opportunity process, but that still means that they're probably the first in their families to actually be the point person.

And so, in a sense, they're trying to not only make up for what has been part of the legacy of wealth stripping from their families in the past, but also trying to provide for their future, not only their siblings and their present family, but their future family.

MARTIN: And they're a real squeeze generation, in a way. Now, just briefly, before I bring Mr. Stafford in, part of your work is to detail the ways in which government policies were designed to expand wealth for some groups and suppress them for others. And obviously, slavery is an example of that, confiscating tribal lands; forced relocations is an example of that. But what about more recently? Are there examples that you can point to where government policies actually worked to favor some groups and disfavor others?

Ms. ROBLES: Absolutely. We've seen that in the last 10 years, there's been acceleration in the rate of growth of the wealth divide. And mostly, this has been because we've had a kind of reversal of a lot of our progressive policies, especially when it comes to fiscal policy. We've seen bigger tax incentives and tax cuts and tax help on a lot of asset building through the tax code for the affluent, while the programs that actually help to bring, what I would say, the working poor and the working families into the middle class, have actually eroded.

MARTIN: Why would you argue that those are racially motivated policies? I mean, there were, in fact, polices, in effect, that were racially motivated for the fact that, for example, that the FHA, the Federal Housing Administration, explicitly sanctioned and participated in red-lining. But it seems to me, tax policies, you can't argue are racially driven, are they?

Ms. ROBLES: Well, actually, that's where the persistence of the gap actually comes into play, because if you've already got a gap that has persisted over time, in many ways it's been communities of color that have been on the low end of the gap. They're not going to be able to participate in these middle class and affluent tax policy benefits because they're not going to be part of that group that actually would receive the benefit from it.

MARTIN: Earl Stafford, what's your take on this? And we ask you because you are very successful. You would have to be to be able to put up a million dollars to sponsor an inaugural ball, to offer that opportunity to people who don't have that. What is your take on this? Have you seen the effect of racially driven policies in your own career, despite the fact that you are very successful?

Mr. STAFFORD: I'm not certain I can explain it like Barbara, but I do know, coming as a businessman in the federal sector, the Small Business Administration has a program called the 8(a) Program, which is designed to assist small and minority individuals to get into the federal market and to establish companies. The problem is, I'm not certain that it's had any impact that it should have with minorities. And the program is 30 years old at least, and we still don't see minority, Latino, Asian, African-American companies graduating from that program and the numbers that they should have.

MARTIN: But your sense is that some of these programs actually ratify - or keep people where they are, as opposed to help them grow.

Mr. STAFFORD: Well, I think so. Again, focusing on that program, we - well, not only in that program, but dealing with small businesses, we have a size standard program that says that if you're a small business and you reach $21 million in revenues, then now you're considered a large business and competing for federal contracts. Well, that's ludicrous because a $21 million company competing against a $21 billion company, it doesn't make any sense. And yet the efforts of the program are to help small companies grow.

MARTIN: If you're just joining us, you're listening to TELL ME MORE from NPR News. We're talking about the persistence of America's racial wealth gap that speaks to the disparity between the amount of assets controlled by people of different races. We're speaking with Barbara Robles and Earl Stafford. Barbara Robles, I think the thing that I think a lot of people would be interested in is what is the way to address that? Because traditionally, Americans have not been very interested in redistributing wealth, particularly in an overt fashion.

That's exactly the kind of thing that our policies tend to criticize in other countries. Like, Latin America right now, where we've seen a rise of political figures - and also in Africa, where we've seen a rise of political figures -who've been very explicitly interested in redistributing wealth. So what are some strategies that you think would be politically acceptable in the United States for addressing this question?

Ms. ROBLES: Actually, I think we're at that inflection point right now, because one of the problems that we've had is that we've always had a conversation where the working poor have been considered to be a particular group that needs additional aid. But they've been treated a little bit differently, as opposed to, say, the middle class. And now that the middle class is suffering from many of the issues that have been persistently with us in the working poor, we're beginning to open up the dialogue by saying, you know what? These are policies that benefit everybody if they're enforced.

And that's the other thing, too. You can have government policies that actually exacerbate the wealth divide and accelerate it by omission, not commission, which means that we've basically pulled back a lot of budgetary resources from enforcement. We've got great laws and great policy but it's, again, the process as opposed to the outcomes.

So now, I think that the middle class, finding themselves suffering from many of the same things that the working poor have been suffering from, are actually joining that dialogue and basically saying, yeah, you know, we need policies that are, across the board, there for everyone.

MARTIN: Earl Stafford, though, talk to me about this, if you would. You are, by any standard, very successful, but also by the standard of just African-American entrepreneurs particularly. So what is your sense of what would be particularly helpful? And why should people endorse these policies? I think people might, some people might look at your career and say, why do we need these kinds of policies when there's an Earl Stafford?

Mr. STAFFORD: Well, I'm blessed, but I think I'm unusual. Let me go back and say this. The way that we're going to impact the working poor is going to be through entrepreneurship. You know, there are three sectors in the marketplace: the producers, the workers, and the clients and the customers. And too often, we as minorities participate either as workers or we buy, you see? It's not until we start having access to the means of production that we start having access to producing something that will really want to generate wealth.

MARTIN: Barbara, as I mentioned, and we're down to our last couple of minutes here, there's a two-day conference kicking off today to address these questions. What are some of the policy recommendations that you think will be discussed at this conference?

Ms. ROBLES: Well, I think one of the things that the group of experts and different stakeholders in this particular conversation are looking at - a very broad-based policy implementation. We're looking at entrepreneurship. We recognize that that's - it's almost under researched, below the radar asset in communities of color. We've always been entrepreneurial. We just have failed, I think, in many ways to appear in the ways in which we get counted. We're also going to be looking at lifelong learning, which is a really big, important thing.

We need to be constantly updating our information set. If we're in a knowledge economy, then our educational opportunities need to be much broader than what they are in terms of the K through 12 focus that we usually have. I think we're going to be looking at things like retirement policy and also, Social Security and what that means.

MARTIN: And finally, you also, as I understand it, are particularly interested in access to credit, access to capital.

Ms. ROBLES: Absolutely. Access to capital has been the biggest problem, and we're seeing it now with the mortgage, the subprime meltdown. We're actually seeing, wow, people with the same kind of credit profile as non-Hispanic whites were actually being pushed into, you know, higher cost mortgage products, etc. So the red-lining has taken on a very insidious but much more subtle and nuanced, you know, manifestation.

MARTIN: A lot to talk about. Barbara Robles is an associate professor at the College of Public Programs at Arizona State University. She's also the co-author of "The Color of Wealth: The Story Behind the Racial Wealth Divide." Earl Stafford is the CEO of the Wentworth Group. It's a firm that invests in small and medium-sized businesses. They were both kind enough to join us in our Washington, D.C., studios. Thank you so much.

Mr. STAFFORD: Thank you.

Ms. ROBLES: Thank you.

MARTIN: As we said, wealth seems out of reach for many Americans during this recession. Many people are struggling to hold on to what they have now, and that includes their jobs. Millions have been laid off, but even those who have not are concerned that they might be next. So, if you are worried that a pink slip might be in your future, what can you do? We'd like to hear your thoughts. What are you doing now to make sure you're prepared for a layoff, or are you already out looking for a new job? Or do you have questions about how to perhaps quietly pursue other options, you know, just in case? Tomorrow on the program, hear answers and advice from our culture coach. So, if you have questions, you can call our comment line at 202-842-3522. Again, that's 202-842-3522. Please remember to tell us your name, or you can always log onto our Web site. Just go to npr.org, and click on TELL ME MORE.

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