Hi, everyone. Good evening. Nice to see you here. My name is Richard Locke. I'm a Professor of Political
Science and International and Public Affairs,
and currently serve as the provost of Brown. And I want to thank you
all for coming tonight. This fourth in our series of
how structural racism works, a project being directed by
five Professor Trisha Rose, my colleague and friend,
based on her own research. And then I am very pleased to
be co-sponsoring as provost. This is the fourth session
in this larger series, which is not just a series of talks,
but actually, a research project that's
increasingly engaging colleagues and students,
and something that I think could be very much a
signature Brown project. Now, while race and
racism are enduring topics that are at the forefront
for many in their daily work and in their lives,
these subjects have become central
for all of us here at Brown over this past
year, but over several years, I would argue. And part of the
intent of this series is to try to help inform
many of us on campus, try to inform our
conversations on campus, and share more widely the many
ways in which structural racism manifests itself in our
society, preventing our progress and prosperity as a university,
but also as a nation. Now, we launched this
series last semester, focusing on
Professor Rose's work and providing an
overview of what she terms the gears
of structural racism and how they interplay. That was the first
session of the series. And through subsequent
sessions, we have heard perspectives
from scholars here on campus about the
origin and enduring evidence of structural racism
in our society. We have also brought
in outside experts to explore more deeply
the various gears that we learned about in the
opening lecture in December. Last month, Brandeis
professor Tom Shapiro was here discussing how housing
and policies related to housing reveal how deeply entrenched
racism is in our country, affecting everything
from education and economic opportunity
to health and wellness. Today and tomorrow, we will
learn more about wealth, and specifically, how
disparities by race in assessing and
accumulating wealth both fuel and contributes to
structural racism. I would like to thank our
speakers for joining us for this evening's lecture
and for tomorrow's lunch discussion, and I would
like to also offer a special welcome back to
Brown to Professor Darity, an alumnus of the university. So it's great to
have you back here. Hope that this is one of many,
many frequent visits to campus. And now to invite our
speaker, let me invite Tricia Rose to the podium. Thank you. [APPLAUSE] That was a fabulous introduction
to the project, which allows me to simply introduce
this amazing speaker and his terrific research. William Sandy Darity, Jr. is
the Samuel DuBois Cook Professor of Public Policy, African
and African American Studies, and Economics at
Duke University. He's the founding director of
the Samuel DuBois Cook Center on Social Equity and
has served as chair of the Department of African
and African American studies. Darity's research focuses on
inequality by race, class, and ethnicity, stratification,
economics, schooling and the racial achievement
gap, north-south theories of trade and development,
skin shade and labor market outcomes, the economics of
reparations, the Atlantic slave trade and the
Industrial Revolution, the history of economics,
and the social psychological effects of exposure
to unemployment. He was a fellow at the
Center for Advanced Study in the Behavioral
Sciences at Stanford, a fellow at the National
Humanities Center, and a visiting scholar at
the Federal Reserve Board of Governors. He received the Samuel
Z Westerfield Award from the National
Economics Association in 2012, the organization's
highest honor. He holds a PhD in
economics from MIT and a much more important
BA from Brown in 1974, and has published
or edited 12 books and more than 210 articles
in professional journals. And he's currently on
sabbatical as a visiting scholar at the Russell Sage Foundation. Of course, he's
incredibly distinguished. But one of the things that
makes his work so pivotal and so generative is the use of
scholarly, and particularly economic, methodology
to think through not only social problems,
but new ways of framing those problems so that more
generative solutions emerge. And that's really what
this whole series is about. As much as the project is
about my personal interest intellectually, it's really
about that kind of approach. How can we take
scholarly methods and press them into service
to difficult and complicated questions and social
problems in ways that bring the public
and various disciplines into conversation? So I want to thank you
for coming tonight. And join me in welcoming
Professor Darity. [APPLAUSE] So I'd like to begin by saying
that I think what triggered the chain of events that brought
me here was Bob Korstad-- one of my colleagues who
will be speaking tomorrow-- and I viewing a video
of Professor Rose giving a talk about structural racism. And we both saw the video,
and we were deeply impressed. And we said, well,
she's working on things that are very similar to
what we're working on, and so we should get
in touch with her about the possibility
of collaborating across our centers. And so when I contacted
Trisha about that, she said, well, you should come
and give a talk in our series. So that that's
the genesis of how it came to be that I'm here
to share some observations with you this evening. I'm especially
interested in thinking about the relationship between
wealth and structural racism. And I'm going to elaborate
on that in a moment. But let me say
upfront that I think that wealth or net
worth-- the value of one's assets minus the value of
one's debts, what you owe versus what you own-- is the
most significant indicator of the degree of
structural racism that we can draw upon
utilizing economic statistics. So let me say that up front. This is the most important
indicator of structural racism. So first, I want
to emphasize what the distinction is
between wealth and income, because this is important. So in the context of the
way in which we define the concepts typically,
wealth is a stock while income is a flow. So it's a stock of
accumulated value over time, net value-- as I said, the
difference between the value of your assets and your debts
in contrast with the flow concept of income, which is
primarily determined for most people by their earnings. So you can have unearned income. It could be
something in the form of the receipt of certain
kinds of transfer payments. Or you could be drawing interest
off of your existing assets. But primarily for
most individuals, income is generated
by their earnings. And this is an
important distinction. Yesterday, the Washington
Post ran an article about some research that we
had done out of the project that I'm going to talk
to you about tonight on the relationship between
wealth and incarceration. And our study demonstrates
that black youths who are from families with a wealth
position in excess of $69,000 are more likely to
experience incarceration over the course of
their subsequent years in life than a white
youth who comes from a family that might have
negative or zero net worth. So in the article in
the Washington Post, there's a graphic to
demonstrate our results, and the graph is mislabeled. The graphic artist put income
on the horizontal axis, where it should
have been wealth. So people frequently
confuse the two. My conversation this
evening is about wealth. It is not about income. So that's critical to
establish at the outset. So why the focus on wealth? Well, wealth from
my perspective is the most significant dimension
of economic well-being. Now, let's think
about the things that wealth actually
provides us with. The first is it provides
us with a fund of resources that can be utilized
in emergency situations without destroying
our bank account. So for example, if a
family is confronted with a severe medical
emergency, or they're confronted with
the loss of a job by one of the individuals
who is a source of earnings for the household, if they
have a solid wealth position, they can weather that
storm much more effectively than other households. Secondly, you can have
reduced economic stress or financial stress
simply by knowing that you've got this
backstop that we call wealth. Third, higher levels of
wealth can provide families with greater access to
tony private schools or neighborhoods with
high cache public schools. And in addition,
high levels of wealth can provide families
with the opportunity to provide their
sons and daughters with a debt-free
college education. And finally-- and this is not
the last item on the full list, but on the list that I'm
going to give you-- finally, your capacity to participate
politically in American society is heavily influenced
by your wealth position, because we are,
unfortunately, a plutocracy. So as I said, the racial
wealth gap, I think, is the foremost index
of structural racism. In the process of giving
you some information about the research
that we've done, I think I'll give you a fuller
sense of why I make that claim. But I also want to emphasize
that there's a conceptual issue here at stake, also. So I want to argue that the
way in which we should look at the determinants of wealth
is better characterized or understood by
what I would like to refer to as stratification
economics rather than labor economics. I've kind of had a lifetime
war with labor economics. Some people think I'm
a labor economist. I don't like to claim that. So I claim myself as being
a stratification economist. But let me explain why I
think this distinction is important in the
context of thinking about the accumulation
of wealth at a personal or at a family level. So the labor economist,
as I would understand it, would take the
position that wealth is something that is determined
entirely or primarily during the course of an
individual's lifetime based upon their own behavior. So a labor economist would
say individuals' levels of human capital,
usually associated with their level of education,
determines the income that they can receive. And individuals with
more human capital have higher levels of income,
and therefore, they're more capable of engaging in
higher levels of savings. And so wealth is ultimately
determined by the individual's level of human capital. So the same factors that are
determining an individual's income for a labor
economist are also determining their
level of wealth. I want to tell a
different story. So the stratification
economist would focus more cleanly or clearly
on inter-generational transfers as the source of wealth. So from the perspective of
a stratification economist, parental wealth
is the key factor that determines
personal or family wealth in the next generation. And we'll see how this
plays out in a moment. But this intergenerational
transmission effect takes three major forms. The first is inheritances. The second is something that
we call in the jargon in vivo transfers. That's just a fancy name for
the donation of resources from the older generation
to the younger generation while the older generation
is still living. We sometimes refer to these
things simply as gifts. When we ask people in surveys
about their receipt of gifts, however, there's a tendency
to underestimate what the scope of these things are. So for example, if parents
provide resources for a younger person to go to
college, those resources are not typically
identified as gifts by individuals who respond to
survey questions of this type. There's an assumption--
well, that's what parents are supposed to do. So as a consequence,
people don't typically enumerate those as gifts. But some other examples
might be the provision of support for a
young couple to make a down payment on a new home, or
the setting up or establishment of a trust fund for a child
at birth by the grandparents or by the parents. All of these are gifts. If a young person is
confronted with some type of economic emergency--
particularly in the period when they're 18 to 25 years of
age-- if their parents step in and provide them
with additional support, that's a gift. That's an in vivo transfer. So when we start thinking
about in vivo transfers, it's not just a question
of how much is transferred, but it's also a
question of the timing. The timing can be
critical in terms of creating or
maintaining opportunities for further success
for the individual. And the third dimension of this
intergenerational transmission effect is that the
wealthier your family, the easier it is for the family
to set a stage of opportunities for you. So regardless of whether or
not your parents actually directly transfer
resources to you, you will probably live
in an environment that is more conducive to
greater health and success later in life if your
family is wealthier. Now, there's a
technical reason why I think the labor
economists have a tendency to underestimate the importance
of the intergenerational transmission effects. In research-- and
I'm going to be a little bit critical
of my good friend Tom Shapiro, who
spoke here recently. Because I think one
of the consequences of this technical
problem is a tendency to overestimate the
importance of home ownership as a driver or
determinant of wealth versus the importance of
intergenerational transmission. So frequently, what people do
is a simple statistical exercise in which they examine the shares
of different types of assets as contributions to wealth. And of course, for most
people in the United States in particular, the largest
share of their wealth position is the equity that they
have in their homes. So as a consequence,
some people will infer that it's home ownership
that is driving wealth. But of course, that
leaves open the question as to what are the factors
that determine whether or not you can own a home
in the first place and whether or not
you can purchase a home that is in a high equity
or low equity neighborhood. Are you purchasing a home that's
likely to appreciate greatly or not? And so then we get
back to the question of what resources individuals
have at the point of purchase of a home. And those resources are
typically heavily influenced by the resources that
they've been able to obtain from their parents. So the labor economists'
view of things would suggest that
individual merit is closely allied with
wealth accumulation. But the perspective
that I'm advancing is that individuals receive--
particularly from wealthier families-- receive a higher
array of non-merit resources, and that's what permits
them to accumulate wealth. So that's my prelude. Now I'd like to talk a
bit about the project that we've been
engaged in at Duke. This is a project that's called
the National Asset Scorecard for Communities of Color. That's a mouthful. It's actually a description of
what motivated this project, but it is not a description of
what the bulk of the project has been devoted to. So we were asked to design
an asset scorecard for cities across the United
States that took into account racial and
ethnic wealth differences. So the typical
scorecards are not scorecards that look at
racial or ethnic differences in wealth, but they
focus exclusively on general inequality
within a metropolitan area. So that was the
motivation for doing this. But we've done a lot more
than this with the project. And I notice that my
colleague, Bob Korstad, who is speaking tomorrow, is
in the back of the room now. So hi, Bob. So this is a project that has
been undertaken in conjunction with Derrick Hamilton, who's
a faculty member at the New School. We are supporting this project
through the Samuel DuBois Cook Center on Social Equity at Duke. And Bob is also one
of the directors of a program in that center. And I think you'll hear more
about their work tomorrow. So at the outset,
of course, I must thank the individuals
and the entities that have supported this project. Our true angel in
the development of the National Asset Scorecard
for Communities of Color was Kilolo Kijakazi, who was
a program officer at Ford. She is now at the
Urban Institute. Her successor, Amy
Brown, has been extremely supportive
of this effort as well. The Ford Foundation
has provided the bulk of the financial support
for our initiative. But we also had some support
from the Federal Reserve Bank of Boston for the study
that we conducted specifically in the city of Boston or the
metropolitan area of Boston. And we've also had
some sponsorship from the Federal Reserve Bank of
San Francisco for the new study that we just released
call the Color of Wealth in Los Angeles, which is on the
ethnic and racial distribution of wealth in the Los
Angeles metropolitan area. So I want to thanks
these folks initially. Also, Anne Price, who's
the Managing Program Director with the Insight
Center for Community Economic Development, who have
been collaborators on a number of our reports. This is the team that has
participated in this project. I'm not going to read
everybody's name off. But what I want to emphasize
is, if people are concerned about having a diverse team
of researchers on a project, this truly is one. It's diverse on the
basis of gender. It's diverse on
the basis of race. And interestingly
enough, I think it's quite diverse in
terms of the institutions that the individual
researchers are affiliated with-- public, private, small. Sue Stockley, for
example, is at what we call a directional school,
Eastern New Mexico University. So this is a very, very
diverse team of researchers, and I think a very
powerful group. We've done a lot of interesting
work together, some of which I'm going to tell you
about this evening. So when I first
came in, Dr. Henry said to me that the
economists here don't ever talk about the recession. OK. So then I said, well, who
selects the economists who are at Brown? Clearly, I know. So the Great Recession and
the racial wealth gap-- this is all I'm going to say
about the Great Recession, but at least, I guess,
it's more than you normally hear about it. So what we were
interested in looking at is what happened to the
racial and ethnic distribution of wealth during the course
of the Great Recession. Did the differential get bigger
or smaller across the groups? So here we have some very gross
aggregate groups-- whites, blacks, Asians, and Hispanics. And we can look at their
wealth position in 2005 prior to the onset of
the Great Recession, and we can compare
it with two years after the Great
Recession took place using the survey of income
and program participation. So the first thing to note
is if you look at 2005, the racial wealth
gap is enormous. And in fact,
interestingly enough, the group with the
highest level of net worth was Asians in 2005. This is actually a
higher level of net worth at that point than
whites in the United States. So the great recession
appears to be associated with sharp declines in the
wealth positions of all of these groups. But the magnitude of the
declines varies quite a bit. So if you look at the most
dramatic absolute decline, it occurs for Asians,
who go from having $0.24 more at the dollar
of net worth than whites to having $0.68 per dollar
of the net worth of whites. So the net worth
of whites declines, but it doesn't decline
as dramatically as it does for any of
the other three groups. So blacks go from having $0.9
per dollar to $0.05 per dollar. And Hispanics go from
having $0.14 per dollar to $0.06 per dollar. Both groups gain
a penny in 2011. So I think this is a
very dramatic indicator of the magnitude of
the wealth losses that were associated with the Great
Recession, but particularly, the racial and ethnic
differences in the magnitude of the wealth losses. And I would add
that we speculate that the reason why Asians' loss
in wealth was so substantial is because of their
disproportionate location in states that benefited the
most from the housing boom and were hit hardest
by the housing bust. So we put out a
report that we call "Umbrellas Don't Make It Rain." And the premise of that report
is that if you observe people with umbrellas
every time it rains, you cannot infer that the fact
that they're holding umbrellas has caused it to rain. So observing an association
between two things doesn't mean that one
is causing the other. So a very standard claim by
individuals who say that-- and I think this is a false
dichotomy-- by individuals who say that class
trumps race is the claim that, well, our
patterns of wealth inequality probably track our patterns
of income inequality. Well, so if we look
at this diagram, we can see that whites
who are in-- I'm sorry, blacks who are in the third
quintile of the income distribution have a lower
net worth than whites who are in the lowest quintile
of the income distribution. As you can see, as you go down
the income distribution ladder, the proportionate
differentials in wealth become larger and larger. So even in this
highest quintile, where the gap proportionately
is the smallest, you can see that
the absolute amount of the difference in wealth,
net worth at the median is in excess of $180,000. So racial wealth inequality
is not explained by income. And this is one of
the first results that we report in "Umbrellas
Don't Make It Rain." Here's a second result that
we report in "Umbrellas Don't Make It Rain." Here's a very striking
finding, another one. You can see here that
whites who are unemployed have a higher net
worth than blacks who are working full time. Now, of course, if you're
black and you're unemployed, your median net worth is zero. Now, this is the one that
I think is the killer. So you might make the argument,
if you are a labor economist, that the wealth
differentials by race should track educational
differentials. On average, blacks might have
less educational attainment than whites, and
so maybe that's why there's a racial wealth gap. No. So if we take a look
at this diagram, you can see that blacks
with a college degree have about $10,000
less in net worth than whites who never
finished high school. Let me repeat that. Blacks with a college degree
have about $10,000 less in net worth than whites who
never finished high school. So educational
differentials do not explain the racial wealth gap. Now, here's another
striking finding that emerged in our work. We tried to do an
analysis of liquid assets. Now, liquid assets
are those assets that can be rapidly transformed
or converted into cash. So if a family is confronted
with an emergency of some sort, what are the resources that they
can draw upon to quickly try to address that emergency. So those are what
liquid assets are. So for example, a home is not
a particularly liquid asset, because it's probably
going to take you some time to be able to sell it. Or you're going to have to try
to make arrangements to take out additional debt on
the equity in your home, and that can't be
done overnight. It might be able to be
done within a week or so, but it's generally not something
that you can do overnight. So these are the assets
that you can immediately convert to cash. So this might be, for
example, a savings account. So if we want to
look at this, we'll find that the racial differences
or ethnic differences are quite striking here as well. So if you look at
overall liquid assets, you'll see that whites, at
the median, have about $23,000 in 2011. Blacks have about
$200, Asians $19,500, and Latinos about $340. If we consider liquid assets
where we take out retirement income-- because usually, if
you have a retirement account, it's highly liquid, but there
may be a penalty associated with drawing upon it. If you take out retirement
accounts altogether, whites-- at the median,
their liquid assets drop to about $3,000. But blacks have $25, Asians
have a similar amount to whites, and Latinos have about $100. So again, if we focus
not on wealth overall, but on wealth that can be
converted rapidly to cash, we find that there are sharp,
sharp racial differences. So what did we learn
from the great recession? First, black and Latino
families have few liquid assets to take risk or deal with
financial emergencies or shocks. Second, it's
communities of color that suffered the most in
terms of losses in net worth during the course of
the great recession. And third, among those
groups that suffered losses, Asians suffered the
largest absolute loss in home values and wealth. But this is a
narrative that's not satisfactory in
terms of giving us an adequate picture
of the full dimensions of the issues at play. So there are two
issues that we want to address by moving
forward with the project of the National Asset Scorecard
for Communities of Color. The first is asset
markets are local. So if anybody has
looked at home prices in my hometown of Durham,
North Carolina versus New York City, versus
Oakland, California, versus Providence,
Rhode Island, it's fairly clear that the
price of a home that has a similar structure and
a similar amount of space can be quite different
in different locations. So that's simply an
indication of the local nature of asset markets. We can't take that into account
or investigate its implications without doing
metropolitan-level studies. The second
consideration is the one that's more important
from my perspective, and this is what this
got me strongly engaged in pursuing this project. So I think it's
unsatisfactory for us to analyze racial and
ethnic groups entirely on the basis of these
gross aggregate categories, like black, white,
Asian, or Hispanic. There's potentially
a significant amount of variation within those
gross categories based upon national origin. And so we wanted to
develop a project where we had the
capacity to investigate the conditions for very
specific or narrowly-defined national origin groups. So those are the motivating
considerations for our project. So the National Asset Scorecard
for Communities of Color was introduced to develop
a survey instrument that would be applied at
the metropolitan level in several cities. The cities would be selected
because they would give us access to more narrowly-defined
national origin groups than the national data sets
typically give us access to. And as we say in
point 4, we also wanted to provide a template
for a more permanent data collection infrastructure. And we would be
thrilled if somebody would take this exercise off
of our hands-- for example, if the survey of consumer
finances the Federal Reserve administers actually did
conduct a survey in such a way that they could
examine these more narrowly-defined ethnic and
racial groups in the way that we have on this project. So NASCC Survey
Construction-- we used family racial and
ethnic identification on the basis of self-reports
by the individual in the household
who's best qualified to discuss family finance. The individual would
give us their own and their spouse's
race, ethnicity, ancestry, and/or
tribal affiliation. We made use of the
asset and debt module from the panel study
of income dynamics to shape our
questionnaire, and we made use of the multi-city
study of urban inequality as a model for doing
metropolitan-level investigations. And then we had some
supplemental questions. We had some topical questions
regarding the great recession, asset and debt questions that
are particular to communities of color. And we asked about self-reported
health, religious affiliation, and gender. So this is our code book. It's probably hard to read. But here's the
method that we used. We sent out 70,000
letters in advance. And the Survey Research Center
at the University of Virginia administered the surveys. These are phone surveys. So there were 87,000
numbers that were dialed, 12,000 interview hours. And that generated five
interview hours per completion, which means the other
way to look at this is we got 0.2
completions per hour. This is actually-- this is
why the project was extremely expensive, and we
couldn't have done this without the kind of
support that Ford provided. And there were 2,747
completed responses across the four cities. The four cities that
we examined initially were Tulsa, Oklahoma, Washington
DC, Los Angeles, California, and Miami, Florida. Then the Federal
Reserve Bank of Boston came in and said they would like
us to do the city of Boston, so we had a fifth city. And interestingly
enough, the first report that we issued out
of this project was on Boston, even though
that was the last city that was surveyed. About a week and a
half ago, we just brought out the new
survey on Los Angeles. The one Boston is called The
Color of Wealth in Boston. The one on Los Angeles is
called The Color of Wealth in Los Angeles, and our
next one will be The Color of Wealth in Washington DC. So to do this, we wanted to
ensure that our responses were representative, so we
weighted the respondents based upon data from the
American Community Survey's metropolitan-level information. But our unweighted
results appear to be fairly similar to
the weighted results. So now this is-- I don't
know-- is this readable at the back of the room? OK. So this is a chart that provides
the complete description of the data that we collected
based upon the respondents' ancestral origin. So one of the things that
you might note if you look up at the top quadrant is
we have the capacity to distinguish between
blacks who we describe as US descendants, more recent
immigrants from the Caribbean, a small sample from
Boston of Cape Verdeans, and a more general
sample of immigrants from Africa in Los Angeles and
in the District of Columbia. Now, I would love to
be able to administer this survey in
Providence, where it would be possible to get a much
larger Cape Verdean population. Now, then if you look
at the Latino population in the survey, you can see
that we can distinguish between individuals who
are Mexican, Cuban, Puerto Rican, Dominican, South American
Latino, Central American Latino, and other Latino. When we rolled out the
report in Los Angeles, the Los Angeles
sample does not have Caribbean or
African-origin blacks in any significant numbers. And somebody in the
audience said to me, well, you don't have a diverse array
of blacks in your survey. And so then I had to point
out that, in fact, we do. Because in other cities, we were
able to capture individuals who are not US black descendents. But then I also pointed out,
as I had already mentioned at that point in the discussion,
that we have Cubans, Puerto Ricans, and Dominicans in the
sample, a significant number of whom are at
least phenotypically black, although they may not
report their race as black. And then if we look
at the Asian groups, we have data on the Chinese, on
Japanese, Koreans, Filipinos, Vietnamese, and Asian Indians. And we probably have the only
sample of Asian Indians looking specifically at their net worth
position that might exist, and it's drawn on Los Angeles
and the District of Columbia. We chose Tulsa, Oklahoma because
it would give us the capacity to examine the net worth
position of Native Americans. And so we actually
have the capacity to distinguish
between individuals who report tribal enrollment,
official tribal enrollment status, and those who do not. And then finally, we
have some respondents who describe themselves as
multiracial in Los Angeles and in the District of Columbia. There are 448 white respondents
across the five cities. I will note that we also asked
them about their ancestry. And so we do have the capacity
to do a study of the net worth position of whites based
upon their ethnic origin. We haven't done
that yet, though. The thing is not moving forward. Let's see if I can
move it forward here. So here's the demographic
characteristics in Tulsa as an illustration
of the kind of data that we were able to get. We even have, as you can
see in the final column, responses to a question
about whether or not an individual had a family
member who was in jail or who had been in jail
over the past five years. You can see that there is--
it's virtually 1/3 of all of the Native
American respondents indicate that they have had a
family member who was in jail. Here's an illustration of
asset ownership in Los Angeles. Now, one of the things
that's particularly striking here is that-- I haven't
shown you yet the wealth information across the cities. But one of the things
that's striking here is that Asian
Indians in particular are a very high wealth group
in the Los Angeles area, but they actually have a
fairly low home ownership rate. If you can look at the
comparison between them and Los Angeles and, say, US
black descendents, US black descendents actually
have a slightly higher home ownership rate
than Asian Indians. But Asian Indians are
extremely wealthy, and US black
descendents are not. So here's the median
value of household wealth across the various cities. And as I said, if you can
see, Asian Indians in LA have a very high
net worth position. But US black descendants
have only $4,000 in median net worth, but
they have comparable rates of home ownership. So this is an
interesting-- another note about the question about the
relationship between home ownership and wealth. OK. So two things I want
to emphasize here. The first is no matter
which city you go to, US black descendants
and Mexicans have the lowest wealth position. And in the city is where we
could get responses for Puerto Ricans and Dominicans. They're at the bottom of the
wealth distribution, also. And you can see in Boston,
US black descendants have $8 in net worth. Now, there is a study that
came about came out recently that said Boston was the
most unequal city in America. That's highly consistent
with our examination of racial wealth
differences in Boston. So here's our major lessons
across the five cities. There's a high
degree of variation within broadly-defined
ethnic categories. So if you go to Los
Angeles and look again at the Asian population,
Koreans and Vietnamese actually have relatively
lower levels of net worth-- not as low as some
of the other groups that are at the bottom
of the distribution, but considerably lower
than other Asians. This was of special interest
to the community that came to hear our rollout of
the report, The Color of Wealth in Los Angeles,
particularly representatives of local community groups
for the Korean community. They were very, very
struck by that finding and thought that it
resonated with what they believed to be the case. The big point is if we talk
about Asians collectively, we will overlook or
mask the variations that occur based
upon national origin within the Asian community. The second thing is-- and I did
not share an income inequality slide with you this evening,
but income inequality pales in comparison
with wealth inequality. So for example, in
the city of Boston, US black descendants have about
$40,000 in median net worth. So it's $40,000 in median
net worth, but-- I'm sorry. $40,000 in median income,
$8 in median net worth. Whites have about
$90,000 in income. So it's slightly more
than twice as much. But they have $250,000
in median net worth. And so the gap in wealth
is substantially larger than the income gap. Third point-- an ethnic
group's relative asset position may vary across cities. So for example,
Koreans and Vietnamese have a comparatively lower level
of net worth in Los Angeles, but they're at the
upper end of the wealth distribution in Washington DC. So we have to pay
attention to differences and the particular
streams of immigrants, the different cities, what
types of occupational profile they might have in
different cities, what types of opportunities they
might have in different cities. Fourth big point is that home
ownership varies across cities and may not be the
only driver of wealth. And finally, as I
noted before, there is a significant amount of
variation in asset positions across and within cities,
but blacks and Mexicans are persistently at the bottom. So here's what
we've accomplished by introducing this study. We now have information about
specific ancestral origin that allows us to
address the variation within broadly-defined
ethnic and racial groups. We can examine specific
geographic contexts where asset products and
prices are more similar. We can identify asset and
non-asset-based attributes and variables that are more
specific to communities of color whereas
national data does not. One of the things that I
didn't show you this evening was our findings on the use of
payday loans across the cities. We are now going to
expand our project to pay more attention to
fluctuations in income and work hours. We also can design
modules that can be specific to each
localized context, and the regional
variation allows us to examine how state-level
policy influences might affect metropolitan income and
wealth inequality outcomes. So I'll stop there and share
a conversation with you now about what we've done. But the heart of the
matter is the NASCC project has allowed us to look at ethnic
and racial variation in such a way that we have not been
able to do so previously. But we still reach
the final conclusion that the racial wealth gap
is palpable, substantial, and occurs everywhere
where we've looked so far. [APPLAUSE] So I'm playing
devil's advocate here. So you have a lot
of data that seems to be suggesting that, on
the one hand, some of this is intergenerational
wealth transfer. But it also seems that someone
could raise the question-- well, how do you know that
it's not a behavioral problem? Because we know this is
the predominant story, is that it's the behavioral
component that's driving this massive, consistent gap. So in other words,
can you specifically use your vast
research to help us understand how to respond
to that kind of claim? So that's the
standard narrative. Some kind of black
dysfunction, personally irresponsibility and
the like must explain these kinds of difference. Well, there's a study that
Wolf and Gittleman did in 2004, which we are trying to update,
which actually demonstrates that if you control
for household income, the black and white savings
rates are equivalent. And actually, in some
income categories, the black savings rates
is slightly higher than the white savings rate. That's said in the
context of the society where the savings
rate is relatively low by international standards. You could say nobody
saves in America. But if you look at the
actual measured savings rates in their study, there
is no significant difference between blacks and whites, Even more pronounced
is they're finding that there is no significant
difference in rates of return on portfolios once you
control for household income. So household income-- once you
control for household income, there's no evidence of any
kind of behavioral differences that are significant. But the other thing
I want to emphasize is the work that we did
on working hard, getting a higher level of education. None of those kinds of
behaviors or practices are associated with
any significant closure of the wealth gap. So you can go out and
get a PhD, as I did, but you're unlikely to
have a wealth position that is comparable to an individual
who's white who also has a PhD. And in fact, you may
have wealth position that is lower than that of
somebody who is white who has less education that you do. So the payoff to
effort is not going to be equivalent with
respect to wealth. The last thing I
want to say here is I've never really understood
why there was a presumption that blacks were more badly
behaved than anyone else or that the proportion of black
folks who are badly behaved is greater in the
black communities than other communities This
has always baffled me a bit. So for example, we have
another study called "Bootstraps are for Black Kids." And one of the things that
we find in that study using the panel study
of income dynamics is that black
parents who provide some support for their kids
to go to college or university have a net worth
at the median that is 1/3 of the net
worth of white parents who do not provide any
support for their kids to go to college. So there's frequently this
claim that blacks are not motivated about education. If anything, our
findings suggest that blacks are more
determined to try to provide greater educational
opportunities for kids than whites. And that may be because we
don't have the type of wealth to protect us
without having access to higher levels of education. Thank you very much. So if I understand
correctly, you're saying that the gap is
explained by differences in intergenerational transfers. How many generations does
it-- is that accumulated over multiple generations, and
therefore, looking forward, might it change, and
might time close the gap? Do you understand the question? Is it one generation, or
two, or three, or ten? Can you tell me
how you think time would change the gap if
there's transfers from one generation to the next? I don't understand how there
would be some dissolution of that effect over time. As there's increased
generational transfer among the various
communities, will that increase their wealth? Well, only if there
was an intervention to give the communities
that have less to transfer more to transfer. Otherwise, you just keep things
the way they are indefinitely So are they transferring less
or not transferring at all? Because they don't have
the opportunity, nothing to transfer? They have less to transfer. So as I said a
moment ago, we find that black families that do
provide support for their kids to go to college have 1/3 of
the net worth of white families who don't provide
any such support. This does translate into
greater levels of acquisition of education for those kids
who do receive some support from their parents. But the difficulty is the median
net worth of those households is $24,000. The median net worth for all
black households in the United States is $5,000 to $6,000. So there's a much
lower proportion of blacks who are giving
any support to their kids to go college. So you lock in the
process indefinitely. The other thing is
providing support to your kids to go
to college does not alter-- there's no evidence
that it alters the wealth gap for that generation. So you have to have some kind of
major infusion of new resources into those communities that
have very low levels of wealth to have any kind of
impact on this process. So it requires a
wealth redistribution. So the question is how would
we go about doing that. I've been advocating
for years something that we call the baby bonds. It's not a bond at all. It's an endowment
or a trust fund that would be provided to each
newborn infant in the United States. It would be federal money. And it would be a
universal program, but it would be a program
without uniform contributions. So in my stump speech, I
say if Oprah Winfrey or Bill Gates had a new child, we'd give
them a $50 trust fund at birth. But for kids who are born at
the lowest end of the wealth distribution, we'd give them a
$50,000 to $60,000 trust fund. So wealthy families give their
kids trust funds routinely. The premise here is that every
child should have a trust fund. We might want to
create a condition where we're trying to
provide social security across the lifetime. And so if that's the case, then
this is a strategy to do that. The nice thing about this
redistributive strategy is it doesn't
involve confiscation. So I like to refer
to redistribution without confiscation. So I'm open to other
kinds of ideas, but that's one suggestion. Hi. Thank you so much for your talk. So my question has
to do a little bit with what you just
said, and it's partly about the conversation
around solutions to the problem of the
racial wealth gap. It seems like there are
two general responses to the massive
racial wealth gap. On the one hand, people
say this is a huge problem, and we need political
consensus, so the response needs to be something that's
race-neutral and class based. And the other side-- And the baby bonds proposal is
race-neutral and class-based. And the other side would
suggest that this problem is so enormous and so racialized
that no race-neutral approach will be sufficient. And so I'm wondering--
I'm familiar a little bit with
some of your thoughts and some of your
work on reparations. And I'm wondering how
you see us collectively splitting the difference
between having an approach and a solution to
this that appropriately factors in the racialized nature
of the racial wealth gap while also being
something that could build the kind of political
consensus that's necessary for a
problem of this size. So I'd like to propose that
you could have a policy that we describe as race-neutral,
but it's also race-conscious. And I think the baby bonds
is in the following sense-- that there would be a
disproportionate benefit to children from families
that are at the lowest end of the wealth distribution,
and that to the extent that those families are
disproportionately black, then there would be a
disproportionate benefit for those families
of this policy. So even though the
policy is race neutral, it's not race blind. So that's the first response. The second is you asked
me about whether or not there are race-specific policies
that we ought to consider. And of course, you said
you've read some of my stuff, so you know I'm an
advocate of reparations. But I didn't view this
particular talk or conversation as a motivation for
reparations, because there are other groups besides
African Americans who are the low end of
the wealth distribution. As I pointed out, both
Mexicans and blacks are at the bottom of every city. So we need a policy
would address the needs of those communities as well. But yes, I am an
advocate of reparations, but not solely for the
purpose of addressing wealth inequality, but for addressing
the history of injustice to African Americans
in this country. Professor Darity,
first of all, thank you for a terrific presentation
and incredibly impressive data. It's really amazing what
you were able to pull off. And I guess my
question is really to see if you could unpack a
little bit more the housing and the wealth gap. Because you said you
took issue somewhat with Tom Shapiro's thing. But I kept on thinking
about this wealth gap. And for so many of us,
our wealth is in our home. And is it because these
racial disparities are because of policies that
either denied African Americans access to mortgages
or restricted them to housing in
certain neighborhoods where their value went down, and
then did that just perpetuate itself over time in
terms of the assets, the ability to
send their children to certain kinds of schools,
and the various dimensions? So if you could just unpack the
wealth gap and the housing gap for us a little bit more, I
think that would be helpful. So I want to identify
two streams of events. The latter is what I think
you're-- I know you're familiar with Ira Katznelson's book, When
Affirmative Action Was White. And the latter-- the events
that you're describing are associated with
that process, which is primarily post World War II. But I want to go back a
little further in time. So with the end
of slavery, there was this commitment made to
the formerly-enslaved folk that they would receive
40 acres and a mule. And it didn't happen. And in fact, there
was an allocation made on the coast of
South Carolina and Georgia by General Sherman. But by the end of the very same
year in which those lands were distributed, they
were taken back and returned to the
former slaveholders under the authority of
President Andrew Johnson. So the ex-slaves enter
freedom without any stake, any significant monetary or
financial stake in the United States. 40 acres is actually
not trivial. You could have a
residential community. Say the typical residential home
is on approximately 0.2 acres of land. You could have, I
think, about 900 homes built on 40 acres of land. So it's not trivial. So that's denied. Then, somehow, African
Americans managed to accumulate about 15
million acres of land across the south on
their own behest. These are dysfunctional people
who don't put forth any effort, but OK. At their own behest, they get
about 15 million acres of land. If they have received
the 40 acres, they would have received
40 million acres of land. A bit different, larger. But that 15 million
acres of land progressively gets lost
through seizure, white terror campaigns, and the like. So I want to start there,
because that creates the first set of
circumstances where there's very little to transfer
to the next generations. But you're also quite right
about the post World War II policies, particularly those
policies that provided support for getting home loans, federal
monies, as well as the GI bill. Because those were
the most significant interventions in
the United States to alter the class
structure of the society. And they both occur in the
aftermath of World War II. They're tied to
provisioning the former GIs. And so that gave it
a certain legitimacy that it wouldn't
otherwise have had. The problem is there
was a racial difference in the application
of those policies. And the racial differences
in the applications of those policies
meant that there was much less of an
opportunity for black Americans to enter the middle class
through those routes. And so yes, that
also has an effect. But if you think about the
original set of circumstances, is it the home, or
is it the land itself that is the truly
significant property? I would love to own some real
estate in downtown Manhattan, regardless of what was on it. But I think what's going on with
the Asian American respondents is that their portfolio
of financial assets is so large that the share
of their equity in homes is smaller. And you could have
a portfolio that is heavily devoted
to financial assets if you had the capacity
to purchase them. I just want to
preface this by saying that I am from Orange County,
which is very near LA, and my city is predominantly
Mexican and Vietnamese, and the city next to mine
is Asian, Indian, basically Chinese and Japanese. So I see these statistics
highly consistent with what I know personally. But also, there are few African
blacks within my community, and most of them tend
to be West African. And so when I look at the
statistics you have up there near LA, which is
near where I am, the African black wealth
is $72,000 versus in DC, it's $3,000. So what I want to know is if
you had enough quantifiable data to break the African
blacks down by ethnicity. Because what I would assume is
that perhaps the African blacks near LA also tend to be
West African, and in DC, perhaps they're not. And maybe that might
change the average wealth, or perhaps if you've-- It's a great question. That's a great question. I don't know the answer. Because as you can
see, those three carats indicate that we have
statistical significance in DC, which means that our
sample size is large enough for me to have some confidence
that that's an accurate estimate. I think on the face
of it, we might think that there's a larger
East African presence in DC than there is in Los Angeles,
but I'm not certain about that. But I'm not at all confident
about trying to sort out the LA sample by country of origin. We can do that,
but the numbers are going to be very, very small. And so they won't
be very informative. That's a great question. I just don't know the answer. I was wondering if you have
done any research of this type on Canadian cities,
cities like Toronto. No. No? And the reason why
I ask is that when you go to most Canadian
cities, there really are no ghettos like we have
here in the United States. The housing policies
are different. This is just purely [INAUDIBLE]. From living extensively
among the Caribbean community in Toronto, I would
say the vast majority-- I can't put a figure on it,
but if I would estimate, I would say over 70%
of the Caribbean people in Toronto are homeowners. And so even though they
have this high level of home ownership and they don't live
in ghettoized communities, they have access
to good schools, they have access
to supermarkets, et cetera, et cetera-- because
the way these communities are built, if you have
a development area, you must first make
sure that by bus you can get to supermarkets,
schools, et cetera. So they're very well planned. But there is still
the wealth gap. So I think for the
argument that you're trying to make that
simply owning a home does not really change
the racial wealth gap. I think you'd find
Toronto very interesting. I don't know. I thought you were going to
say something about Canada nice there, but that
wasn't where you went. We have not been able to
administer this survey outside of the United States. We have some hopes
that in collaboration with the University
of Birmingham, we can do so either in
Manchester or Birmingham or both. We have not been able
to do so in-- nobody has made an overture to us
about doing this in Canada or any of the Canadian cities. But we'd be thrilled
if we could do that. We do have a comparable
survey that we have administered
in Udaipur in India, but that's the only other one. Thank you. Well, first off, I
want to echo Rick in saying what
incredible data this is. And I hope it's going to
be available for students and researchers to use. I wanted to follow up
on the description you gave at the beginning of
the different channels by which parental wealth
can affect child wealth. So there's direct inheritance. There's inter vivos
transfers, and then there is what economists would call
installation of human capital-- so all the things that
parents can do to children before they send them
out into the world. And you pointed
that all those show up in this persistence of wealth
from generation to generation. And I guess I have
a two-part question. One is is there a way to get
a quantitative handle on how the third of those channels,
the human capital channel, compares to the other
two channels, which are about direct wealth transfers? And then the second
part is, to the extent that the human capital
channel was important, what does that say about the
utility of the baby bonds proposal that you talked about
relative to simply improving the quality of public schools or
improving access to education, or all sorts of things like
that, that would accomplish the same aim of sending
poor children into the world with better human capital as
compared to the direct wealth transfer? So I don't know if I was
particularly clear about this. I am making the argument that
higher parental wealth is associated with
greater human capital accumulation on the
part of children, but I am not making the claim
that greater human capital is associated with greater wealth. So it's the parental
wealth-- if you were thinking about the reduced form
equation, parental wealth would be the critical
independent variable. And I would be less
inclined to decompose it by the way in which it is
contributed to the child. Because as I said, this
stage-setting effect is also part of the picture. So the way to do
this systematically is to look at intergenerational
variation in wealth position. And with the panel study
of income dynamics, you actually can look
at three generations. And so that's what
we're doing now, is trying to see if we
really can demonstrate that this connection is robust. But what wealth is
transferred to children by black parents for the
purposes of supporting their education appears
to have a positive effect on their educational
incomes, but it doesn't seem to change
their wealth position in any significant way. Well, before I check
for any last questions and before we thank you,
I want to give specifics about Professor
Korstad's talk tomorrow. It's part of this broader
project in the center. It's at 11:30 until
one 1:00, and we will provide some moderate
lunch of some kind. I don't know if it will be
lobster, but maybe sandwiches. And it will be at
Petteruti Lounge. So if you're not
from Brown, that's at the student
center in Faunce Arch just up the street
from 11:30 to 1:00. Are there any final questions? I'm going to get
one more new person. You can ask him
in the reception, because we want to get everyone. And then we'll go, and we'll
have a terrific reception. Thank you very much. I'm looking at Miami at the
Cubans and the other South America Latinos, and I'm
wondering if the difference has to do-- if you even know the
reason for the difference, but if it has to
do with the fact that the Cubans came
with more money, that the Cubans have been here
longer, that the South American Latinos came with nothing, that
they're more recent immigrants, and if you can break that down. So this is speculative,
but there's actually at least two major waves
of Cuban immigrants-- the post-revolution immigrants
and the Mariel boatlift. And I think the wealth
position of the Mariel boatlift immigrants is probably
considerably lower than that of the initial
wave of immigrants. But $22,000 is not a
spectacularly high net worth, but I think it
reflects that variation across the Cuban community that
may be associated with the two different waves of immigration. South American Latinos,
I'm not so sure. I'd have to go back and look
at where they're actually from to have a better sense of that. I don't know the answer
as to whether they're a very different
immigrant stream from the kinds of occupational
and educational credentials that the Cuban immigrants
brought with them. If you think about
it, actually, Miami is the city in which
the white respondents report the lowest level of net
worth across the five cities. So that's intriguing, and we
haven't really figured out why that's the case, either. Well, thank you very
much, Professor Darity. Join me in thanking Professor
Darity for a great talk. [APPLAUSE]
