Co-written by Edsel Brown, State Economic Chair of the Maryland NAACP
On April 27, 2015, hours after the family of Baltimore resident Freddie Gray had laid their son to rest in a public funeral attended by thousands, Maryland Governor Larry Hogan declared a state of emergency for the city of Baltimore. The large-scale protests and sporadic violence that had erupted throughout the city following the suspicious death of yet another young black man had convinced local elected officials to brace for the worst.
Comparisons to the 1992 Los Angeles riots flooded the media, particularly given the storyline of the brutal police treatment of a black man in a city with rampant poverty and racial inequality. And while the nation wrestled with solutions regarding police brutality to prevent another "Freddie Gray incident," the calls to fix the larger problem of folks being left out of the American Dream slowly faded away.
But that remains the bigger challenge. While Baltimore isn't the poorest city in the country, it is the place where black children have the least hope of escaping poverty. A poor child in Baltimore is more likely to grow into adulthood making thousands of dollars less in income than his or her already poor parents. This fear of being "trapped in poverty" deserves just as much effort to fix as does the fear of police violence.
Income inequality is only part of the picture. Nationwide, a typical black family owns only $7,113 in assets compared to $111,146 in wealth held by a typical white family. Latinos fare only slightly better, at $8,348 of wealth for the median Latino household. The combination of this racial wealth gap with already low incomes and a lack of upward mobility have led to the powder kegs of racial frustration and despair in some of the nation's largest cities.
Unfortunately, the solutions to these problems aren't simple. While securing equal educational opportunities for poor youth across the nation is critical, education alone does not solve the racial wealth gap. Even when you control for education and income, communities of color lag behind their white counterparts significantly when it comes to wealth accumulation. This means that the wealth gap isn't merely a symptom of other forms of structural racism; it has its own unique systemic causes.
During the hardest two years of the Great Recession, both black and white first-time homeowners saw their net worth drop by more than a third, with whites faring slightly better. But in the two years before the Great Recession, when the housing market was booming, white homeowners grew their net worth by 50 percent, while black homeowners stunningly lost 47% of their net worth. Regardless of how the housing market was doing, blacks were more likely to lose wealth than build it.
Why? Even when they were able to secure loans, black homeowners often faced higher interest rates, lower home prices, and lower rates of appreciation in the (segregated) neighborhoods where they purchased their homes.
The federal government needs to do a better job not only of promoting homeownership among communities of color, but of finding ways to eliminate disparities in home equity between white homeowners and homeowners of color. While some of its recent actions are encouraging, including the launch of a foreclosure prevention program for struggling homeowners whose home values have dropped dramatically, there is still much that can be done, including additional reforms to Fannie Mae and Freddie Mac to allow them to rebuild capital and ensure they are serving communities of color. The racial wealth gap will only begin to close once we address some of the very real barriers that households of color face, not only purchasing an asset, but also in using that asset to build wealth.
If we start to address those issues, we can begin to break down the buildup of frustration, anger, and economic anxiety in these communities. Combined with common sense law enforcement reform, these changes would put our nation on a positive path towards affirming, in multiple ways, that #BlackLivesMatter.