Women Of Color Lag Behind In Wealth

MICHEL MARTIN, host:

I'm Michel Martin, and you're listening to TELL ME MORE from NPR News.

Coming up, a conversation with actress and activist Marlee Matlin.

But first, another conversation about how different groups are fairing as they try to gain or maintain economic stability in these difficult times. Yesterday, we took a look at the question of why African-American men have among the highest unemployment rates of all groups in this recession. Today, we're going to focus on women of color and their struggle to build wealth. Now, wealth is different from income. It's what you have left after you subtract what you owe from what you own.

A report from the Insight Center for Community Economic Development says, apart from their cars, single black and Latino women have a median wealth of $100 and $120, respectively. Now, that's compared to $10,000 for black men, $12,000 for Latino men and $41,000 for single white women.

We wanted to know more about these jarring disparities. So we've called on Mariko Chang. She is the author of the Insight Center report. We're also joined by Lynette Khalfani Cox, she's the author of most recently, "Zero Debt: the Ultimate Guide to Financial Freedom." And we've also got Professor C. Nicole Mason, director of the Women of Color Policy Network at NYU. Welcome to you all. Thank you all so much for joining us.

Ms. MARIKO CHANG (Author, "Lifting As We Climb: Women of Color, Wealth and America's Future"): Thank you for having me.

Ms. LYNETTE KHALFANI COX (Author, "Zero Debt: the Ultimate Guide to Financial Freedom"): Thank you for having me.

Professor C. NICOLE MASON (Director of Women of Color Policy Network, New York University): Great to be here.

MARTIN: Mariko Chang, what accounts for this incredible gap?

Ms. CHANG: Well, women of color actually face a double disadvantage with respect to wealth. First, they're affected by the vast racial businesses and wealth that are passed down from generation to generation. So parents can provide things for their children like money for college, or help with the down payment for loans.

And people of color historically have had much less wealth because of different policies and other institutional factors. And so we actually see history repeating itself over and over and continuing to affect today's generation.

MARTIN: You pointed out this is really the first piece of work to bring together all these various strands and really look at the question of wealth versus income. And the study is relatively recent, but it did get a lot of attention when it first published. What reaction have you gotten to this? Do people believe it?

Ms. CHANG: Most of the comments that I've seen have either not really understood what the data was about or, you know, thought that I was trying to equate self-worth with net worth, which is absolutely not the case. You know, women of color (unintelligible) worth, you know, only $5. So we're talking just here about finances.

But also, I think, people will think, well, I know lots of wealthy women of color and I know lots of poor white women. So how can it be that they have, you know, such a low median wealth. And I like to point out to people that the median is simply at the point where half have more and half have less. So we can't necessarily equate having a low median wealth with the entire picture of how well women of color are doing financially.

MARTIN: Professor Mason, what's your take on this? I mean we're so used to hearing about the educational gap between men of color and women of color, particularly among African-Americans. More African-American women getting college degrees and advanced degrees and so on. I think this will be a shock to many people. So, first, I'd like to get your analysis of why this disparity is as large as it is and what are the main contributing factors?

Ms. MASON: Well, Michel, this is a really, really important report. And I just want to put it in context. So you can imagine if black women went to the bank today and put their ATM card into the slot to withdraw their wealth, all they would withdraw is $100, and that's alarming. And what's really important about this for us to understand is that it's just not only about wealth and assets, it's also about the resources that women have to be able to ride out an economic storm.

So this is really critical in terms of building women of color's wealth and their ability to provide an education for their family to contribute to their community in real ways. Being able to retire securely. So what that means is that we don't have the opportunity to save in the same way.

MARTIN: Lynette, will you chime in here, too. You've also written about the fact that sometimes the spending patterns among women of color in general and black women in particular don't (unintelligible) to their benefit. You've also talked about, for example, many women of color feel obligated to help family members in need in a way that perhaps other people don't.

Ms. COX: That's right.

MARTIN: Talk more about that.

Ms. COX: Sure. While there's no question that we've seen some institutional barriers to wealth creation for women of color, I think we also have to address some cultural factors by which women may be shooting themselves in the foot, so to speak. Certainly, you know, overspending, overconsumption in this country is a broad-based issue, not just for women and certainly not just for women of color.

But we do in fact see it in high levels among African-American women, for example, who might be more inclined to help out a sister who's having a financial problem. Help out children who might be needing school funds or other monies at the expense of, say, that woman's own retirement funds. And certainly some of this is about overall improvement of family and/or community. But I do think at a certain level women have to look at whether or not their behavior is self-defeating to a certain extent.

MARTIN: A lot of your analysis spoke to single black and Hispanic women. Although, the wealth gap was extremely large for single white women as well. That single black and Hispanic women had median wealth of $100 and $120 respectively as we said, whereas the median for single white women was $41,500. But we also know that the rate of marriage among white women tends to be greater. At some point, I think it is true that a majority of white women will be married. And I wondered, what role does marriage play the benefit of having a second income, at least at some point in one's life, play in these numbers?

Ms. COX: Actually, a lot of research shows, you know, for all the reasons that you mentioned, that people who are married have much greater wealth generally than people who are not married. But it would be a mistake to conclude that marriage, then, is the answer. A lot of research has also shown that women of color specifically are less likely to find marriageable men. You know, men who they want to marry that have stable jobs. You know, who have high levels of education.

Also, women of color are more likely to be widowed at younger ages. So the average age at widowhood for black and Hispanic women is 54. Whereas for white women it's 62. So even if women do marry, they then find that they often have to support themselves much earlier than they had anticipated.

MARTIN: Lynette Khalfani Cox, can we talk to you about this whole question of people not wanting to believe it? You've been in this business of trying to get people to really face their financial situation for quite some time. This is your mission. How much of this is sort of attitude and not really understanding what the situation is? And how much of it is structural?

Ms. COX: Well, I can tell you there is a huge denial factor at play here. When this study first came out, I actually wrote a piece about it for AOL's Black Voices website. And the amount of comments and the disbelief was quite shocking to me. Some people, I guess, either not knowing, first of all, that I was indeed an African-American woman, said, who is this person to say this about us? They really didn't necessarily, you know, get the link to the research that I provided there.

But there was definitely some confusion about, as Mariko said, net worth versus self worth. People were saying, who is to say we're only worth $100? And so, you know, a lot of people did chime in and say, listen, here is the definition of net worth. Take all of your assets, subtract everything that you owe, all your liabilities, the result is a figure known as your net worth.

So there was that question and I there's definitely an educational effort to be done there. But then I think there were a huge number of people who said, you know, most of my friends are very middle class people. We have degrees, we have jobs, we have nice cars, we have, you know, nice homes. Certainly, you know, our net worth doesn't average $100. And this just can't be true. Again, not taking into account that we're talking about median numbers across a broad swath of, you know, community.

We can all talk about the 200 friends we know, or the 2,000 friends we know. But we're talking, really, about, you know, much greater numbers than that. And I believe that the numbers are accurate, especially because, as a money coach, so many people come to me to talk to me about their financial problems. And so perhaps the information that I get also is skewed to a certain extent because people are coming to discuss their financial issues and to try to get relief (unintelligible).

MARTIN: Or they're more proactive.

Ms. COX: Yeah, maybe they're more proactive, right.

MARTIN: Perhaps they're more proactive than other people. I mean it could work the other way.

Ms. COX: And it's not even and I shouldn't even say that they just have problems. Some people simply want to do better or take their finances to the next level and achieve greater levels of wealth. But certainly we do know that debt is a major issue in this country. Mortgage debt, student loan debt, credit card debt, auto loans, et cetera.

And obviously when you have those high levels of debt, it impacts your ability to save and to build net worth.

MARTIN: If you're just joining us, this is TELL ME MORE from NPR News. We're talking about the profound wealth disparity between women of color and their white peers. And I'm joined by three women who've looked at these issues closely.

So in the time that we have left, I would like to talk about policy. First of all, is this an appropriate issue for public policy to address? I mean many people can say, that's a shame, wish it weren't like that. But this is not an appropriate role for public policy at this point when the barriers to achievement have been taken away.

I mean you cannot argue anymore that, for example, we have legally enforced segregation. You can't argue that people are barred from certain schools because of the color of their skin. There are those who might argue that's a shame. But this is an issue for individuals to address on their own, as opposed to the society who addresses as a matter of policy.

So in the time that we have left, I'd like to ask each of you to weigh in on that question. Who would like to go first? Lynette, would you like to go first?

Ms. COX: Oh, sure, I'll jump in here. I definitely think it's both. It's a question to be addressed at the policy level, but also very much so at the individual level. Just sort of quickly, on the homeownership front, this alone, and obviously we've just come through a period of significant financial reform, but the fact that African-American women, for example, were two, perhaps three times as likely to receive subprime loans, home loans, during the mortgage boom, is a very disturbing figure.

In other words, these women were just as qualified, just as creditworthy as their white counterparts. But they were saddled with more costly loans, which obviously depletes their net worth. That's an issue that should be addressed at the policy level and it is being addressed.

On the individual front, though, I really do think that all of us all of us women, all of us Americans need to look at our own activities and the things that we do that may either promote or discourage financial wealth building. You know, I should point to your listeners also, in addition to this tremendous study from Insight, another great study that just came out from Prudential Financial, which looked at women's financial behaviors and essentially it found that only one out of three women had a financial plan in place for the future to deal with, you know, retirement, paying for their kids' college education and so forth.

As women, we need to do a number of things. We need to get financial help. We need to stop procrastinating about things that we know we should do. And we need to learn to put ourselves first in some cases and not always think that the weight of the community, the weight of others is sort of resting on our shoulders.

MARTIN: Okay. Mariko Chang, pick up that point there, please. Do you think this is a matter of policy? And if so, what kinds of policies?

Ms. CHANG: Absolutely. I think what a lot of people fail to realize, perhaps because they haven't really thought about it before, is that the policies that we have currently, so many of them are already helping people build wealth. They're helping people build wealth through tax deductions, things like the home mortgage interest deduction.

But we have policies everywhere that really contribute to something that I call the wealth escalator. And this is something that I talk about in more detail in the book that I have coming out next month called "Shortchanged." But the wealth escalator are policies that are in place that helps people translate their income into wealth much more quickly.

So things like tax deduction, things like fringe benefits that you get through your employer, the structure of government benefits, like Social Security, structurally, women of color are least likely to benefit from all of those types of wealth-building effects because of the types of jobs they have. For instance, they're less likely to have pensions and 401K accounts. Those types of things where employers actually help contribute oftentimes to people's retirement savings.

So there's lots of structural reasons that are related, I guess, to public policies that are helping a lot of people build wealth. But women of color are disproportionately unlikely to have access to those wealth-enhancing benefits.

MARTIN: All right, well, you'll have to come back when your book comes out and tell us more about that.

Professor Mason, if you'd give us a final thought about this and the question of whether you think this is an issue for policy to address. And if so, what kinds of policies should be considered? Because you can just imagine the conversations some people are having with themselves right now, if not, at us, where they're saying, you know what? Nobody gave me anything, and therefore, that's unfortunate, but, you know, every boat on its own bottom, as it were. So since you're our policy person here...

Prof. MASON: So, you're absolutely right, Michel, many like to think it's an individual problem and it's about attitudes and it's about beliefs, but it's also a structural and institutional problem that has been mounting for some time now, for, you know, generations now. So as a result, we're going to need some targeted policies at the federal level to really, really get a hold of this.

And some of the things, I think, are really going to be important is targeted in culture specific policies and programs that not only address attitudes, but address some of the discriminatory policies that have been in place. I think the next thing we need to do is creating enforced legislation to counter racial and gender discrimination and bias in the labor market and in loans as well. Because there is we do have some good legislation on the book, but we're not enforcing it. So it's going to be really important that we create those offices and enforcement policies.

And then the other thing I think is critically important is that we're going to have to start at the very bottom and do some financial education and literacy programs in communities and in schools. That's going to be really important to address and so that people understand the difference between wealth and income and, you know, how do you build savings over time and how do you build assets over time? And I think what's also critically important is some of the things Mariko mentioned about tax credits and what's available to homeowners and some of the other tax benefits, we need to let communities know that these things are available and it's for them as well.

MARTIN: And the final question I have for you, Professor Mason, is for those who say I don't belong to that group, what does this have to do with me? Why should I care about this?

Prof. MASON: Well, this is a community issue. The way our communities are set up, we don't have, you know, a large, black, wealthy community living, you know, apart from low-income blacks. We're all living in the same communities. So when our communities don't have assets and wealth, it impacts us all.

Ms. COX: And I would argue it's even a broader than just in communities, this is a nationwide issue. This is about America's competitiveness in the global marketplace. If we don't have women of color who are, you know, able to be productive homeowners, send their kids to college, to create businesses and jobs, et cetera, that brings down all of society.

So it's even I would argue bigger than just, you know, our communities. This is really a national issue of international importance.

MARTIN: Lynette Khalfani Cox is a personal finance expert. She's the author of most recently the book "Zero Debt: The Ultimate Guide to Financial Freedom." She joined us from NPR member station WBGO in Newark, New Jersey.

We were also joined by Professor C. Nicole Mason. She's the executive director of the Women of Color Policy Network at New York University. She happened to be in the Washington, D.C. area and joined us in our studios there.

And with us on the phone, Mariko Chang, author of the study "Lifting as we Climb: Women of Color, Wealth and America's Future." She joined us from her office in Boston. And ladies, I thank you all so much for speaking with us.

Prof. MASON: Thank you.

Ms. COX: Great to be with you, Michel.

Ms. CHANG: Thank you so much.

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