This week, our ongoing discussion of redlining and racial wealth disparities continues with another entry from historian David Kaiser. In my recent discussion with David, he noted that the vast majority of racial wealth disparities between black and white Americans occurs among the top 10% of the income distribution, while black-white disparity in the bottom 50% are very, very small. Moreover, he pointed out that, between 1940 and 1980, black homeownership rates rose slightly faster than white homeownership rates. These numbers tend to deflate the narrative that redlining excluded blacks from the economic boom that followed the New Deal and World War II.
In response, TGS correspondent Clifton Roscoe wrote in to raise a few points that could complicate the postwar economic picture that David painted. In particular, Clifton claims that, while redlining certainly cannot entirely account for wealth disparities between blacks and whites, real disparities exist outside the top of the income distribution.
I’m quite pleased to see this robust (but friendly!) exchange happening around this issue. It’s going to take a lot of outside-the-box thinking to change our understanding of where inequality comes from and what to do about it, and I’m gratified to provide a platform for it. So without further ado, here’s David’s response to Clifton.
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Dear Glenn,
There are two specific factual differences between what I said in my talk with you and what Clifton Roscoe said. The first relates to increases in black home ownership over time. I was citing a 2010 paper by William Collins and Robert Margo, available here. According to it, black homeownership rose from 21% in 1940 to 56% in 1980, while the white rate went from about 43% to 75%. Mr. Roscoe cites a Zillow study showing the black rate going from about 21% to 42% in the same period, while the white rate rose from about 45 % to about 70%. I have no way of telling which study was more accurate, or how the Zillow study could come up with such a much lower 1980 figure. In any case, both studies show conclusively that redlining did not prevent a very substantial increase in black homeownership, 1940-80.
My biggest point in my talk with you, Glenn, was that the black population was not left out of the economic gains generated by the New Deal, the Second World War, and the immediate postwar period—that it gained more rapidly during that period than it has since. That tells me that progress depends a lot more on the general economic climate and the government's policy toward lower-income Americans than it does on the extent of racism, since legal racism was much worse in the earlier period than since 1980.
My source for the statement that the racial wealth gap is almost entirely confined to the upper halves of the white and black populations was a Quillette piece by Samuel Kronen, which said exactly that. Here is the key paragraph from his piece (see the above link for his citations):
But the wealth gap perfectly illustrates the problem with using statistical disparities to diagnose and address social issues. An analysis by the left-leaning People’s Policy Project reflects just one of the problems with what Coleman Hughes had called the disparity fallacy by uncovering an element of the racial wealth gap that’s gone unremarked upon in most mainstream discourse—almost all of it is coming from the top. The gap between the wealthiest 10 percent of the white population and the wealthiest 10 percent of the black population accounts for 77.5 percent of the total wealth gap. And although the racial wealth gap exists to some degree across class lines, if we were to eliminate the disparity between the bottom 50 percent of blacks and whites in terms of wealth, a full 97 percent of the total gap would remain. Only three percent of the racial wealth gap is explained by the disparity between the poorer half of each population, while the vast majority of the gap is explained by the disparity between the top 10 percent of the wealthiest white and black Americans in the population.
It is very hard to say—for me at least—whether both that statement and Mr. Roscoe's table, “Family Wealth in Different Distributions,” could be correct. I would welcome any attempt to reconcile them. I would also note, however, that because there were in 2019 more than five times as many white people in the United States as black, and four times as many white people as Hispanics, in Mr. Roscoe's table the total number of white families with negative assets seems to be about twice as large as the number of black families with negative assets. The wealth gap affects many millions of Americans of all races, and any real solution would have to help them all.
I too am glad that Clifton Roscoe took the trouble to respond, and I hope we can all move this discussion forward.
David Kaiser
The Racial Wealth Gap Redux
I appreciate David Kaiser's willingness to respond to my post. I'm glad that he responded to my feedback in a cordial way because that was my intention as well. .
There seems to be a good explanation for the differences in historical home ownership rates that David Kaiser pointed out in his response. The paper by Collins and Margo looked at subsets of the population when doing home ownership comparisons. Here's an excerpt from their paper:
To be included in the core sample used in this paper, the household head must be male, in
the labor force, not currently enrolled in school, and between the ages of 25 and 64. We focus on
this particular slice of the population because it has been intensively studied by scholars
interested in the long-run evolution of racial differences in income and educational attainment.
Although there are some differences in magnitudes, the fundamental time-series patterns
revealed by the core sample are not changed appreciably by broadening the sample to include all household heads (Appendix Tables 1 and 2).
The numbers used by Zillow and the numbers I quoted from the US Census Bureau use a broader set of households, including those headed by women and people older than 65. It's not surprising that the absolute levels of home ownership quoted by these sources are different.
Black home ownership rates using a broader set of households are available at the St. Louis Fed's FRED (Federal Reserve Economic Data) web site:
https://fred.stlouisfed.org/series/BOAAAHORUSQ156N
Their data goes back to 1994. Black home ownership rates have never gone above 50% according to their data, let alone as high as the 56% mark that's quoted in the paper by Collins and Margo. A spot check of data points from the two sources show that US Census Bureau numbers are consistently lower. .
I'm not sure how to respond to Samuel Kronen's essay in Quillette. It's a long post and he seems to be trying to counter arguments about various racial gaps that have been made by people like Ta-Nahesi Coates. The discussion of the causes of these gaps is part of a much bigger debate about whether various forms of bias explain these gaps.
When it comes to wealth, Kronen makes the point that wealth is concentrated within a small segment of the population. He then suggests that discussions of racial wealth gaps across the broader distribution aren't valid. The first point is true, but it doesn't offset the significant wealth gaps that take place along the entire distribution. The St. Louis Fed post I quoted makes note of these gaps at various points (e.g,. 25th percentile, 30th percentile, 75th percentile, percentage of the population that are millionaires, percentage of the population with negative net worths, etc.). The US Census Bureau numbers I quoted show similar discrepancies along the entire distribution as well.
Folks can compare the net worths of ultra-wealthy people like Jeff Bezos and Oprah, but that exercise doesn't tell us much about what's happening with average Americans. Many of us would find the differences at various percentiles more interesting.