[Congressional Record (Bound Edition), Volume 160 (2014), Part 5]
[Extensions of Remarks]
[Pages 6763-6764]
[From the U.S. Government Publishing Office, www.gpo.gov]




          INCOME INEQUALITY IN THE AFRICAN AMERICAN COMMUNITY

                                 ______
                                 

                          HON. MARCIA L. FUDGE

                                of ohio

                    in the house of representatives

                          Friday, May 2, 2014

  Ms. FUDGE. Mr. Speaker, today we find ourselves five decades since 
the passage of the 1964 Civil Rights Act, as well as the onset of the 
War on Poverty and still, race and economic empowerment remain 
entangled in stark and distinctive ways throughout the nation. Not only 
has income inequality persisted over the years, but perhaps even more 
daunting is the wide and growing gulf in wealth inequity between Black 
and White America. Wealth, that is what one owns minus what one owes, 
anchors families. It provides a layer of stability in times of economic 
distress, and serves as an intergenerational stepping stone to 
prosperity. It is wealth that families often rely on to provide a 
critical means of support for higher education, downpayments for home 
purchases, capital for starting a business, or direct wealth transfers 
to heirs via cash inheritances. So while income is vital for meeting 
daily needs, wealth moves families beyond survival mode and opens up 
critical doors of opportunity that are necessary to thrive economically 
over the long haul.
  Historically, discriminatory practices have played a significant hand 
in manifesting wealth differentials within Black and White communities. 
Everything from housing policies and practices that made it more 
difficult for communities of color and particularly African Americans 
to gain access to homeownership as early as their White peers, to tax 
policy which overwhelmingly favor affluent households, much of the gap 
in wealth acquisition that we've witnessed over the long haul is not 
reflective of a natural order of responsible and irresponsible money 
management, but instead, is the result of centuries of policy actions 
that have advantaged some, while simultaneously disadvantaging others. 
The fallout from these practices remain, providing perpetual advantages 
and disadvantages relating to wealth acquisition, transfer, and growth.
  In recent years, however, the Great Recession took a heavy toll on 
most. But while few families escaped the sting of wealth loss following 
this world-wide economic disruption, even fewer were more strikingly 
impacted than African Americans. In fact, according to the Pew Research 
Center, over half of the wealth amassed among African Americans was 
lost in just four years as a direct result of this historic recession. 
After which, the already tremendous racial wealth gap actually widened. 
In fact, as it stands today, for every dollar in wealth held by Whites, 
Blacks hold a shockingly meager 5 cents.
  Recent research has examined the reasons behind the widening of the 
racial wealth gap. After tracing the same households over 25 years, 
including the most recent period in which we've witnessed the widening 
of this gap, it was determined that primarily five factors are at play: 
(1) Years of homeownership; (2) Household Income; (3) Exposure to 
Unemployment; (4) Higher Education Acquisition; and (5) Inheritances or 
other sources of financial support from family or friends.
  In briefly examining each of these issues we know that historical 
residential segregation starkly limited opportunity for home equity 
acquisition among African Americans. We know too, that Whites are more 
likely than Blacks to receive inheritances or receive large financial 
gifts from family members that can then be used for home downpayments, 
and thus, create a situation where Whites are perpetually better 
positioned to transition into homeownership. And finally, we know that 
Blacks were disproportionately impacted by subprime mortgage vehicles 
during the run up to the housing crisis, thus increasing their risk of 
foreclosure, and limiting their equity acquisition potential.
  Further Blacks have historically and continue to suffer wage gaps as 
compared to Whites across both genders and every level of education. 
Blacks are also more likely to experience unemployment at some time 
during their working lives and when unemployed, are more likely to 
experience longer bouts of joblessness than their White counterparts. 
As a result, Blacks are more apt to tap into any available wealth 
reserves they may have at their disposal in order to meet survival 
needs during disruptions in their income stream.
  While home ownership, income and unemployment greatly influenced the 
wealth differentials, so too did access to higher education. As we all 
know, post-secondary education provides a pathway to higher income, and 
ultimately more substantial wealth portfolios. According to this 
research, just as impactful as higher education is access to 
inheritance. Together, these five factors alone accounted for fully \2/
3\ of the wealth gap increase we've seen between these two populations 
in recent years.
  In correcting this unfortunate trend, it then becomes clear, that 
strong policy action is needed in order to address the wide and growing 
wealth gap that continues to disadvantage the Black community. Moving 
forward, there must be a concerted emphasis on expanding access to 
homeownership within the Black community. While the nation and the 
world was rocked by the mortgage crisis that intricately interconnected 
with the Great Recession, few were impacted more profoundly than the 
Black community. Moving forward we know that home ownership is still a 
key conduit to wealth acquisition for most Americans. As such, special 
efforts need to be put in place to ensure more Black families have 
access to this key wealth building tool.
  Additionally, policies which expand employment opportunities for jobs 
that pay good wages are especially important to the Black community. 
Such a focus can help to alleviate both the persistent wage 
disadvantage experienced by this community as well as the lingering 
problem of elevated unemployment rates. Finally, making college 
affordable and improving elementary and secondary education so that 
Black children are both prepared for college and can afford to stay 
there through degree completion is key for providing a foundation for 
success that could later result in greater access to wealth building 
vehicles.
  Beyond these measures, protecting and strengthening Social Security 
remains a key need for the Black community as this program is 
especially important to a population that is disadvantaged when it 
comes to access to employer provided retirement plans and is less 
likely than Whites to hold other assets from which they can draw upon 
to meet their needs in their retirement years.
  In sum, Mr. Speaker, the persistent economic wealth disadvantage that 
continues to plague the Black community did not come about as mere 
accident of circumstance or

[[Page 6764]]

broad scale pathologies as it relates to financial mismanagement. 
Instead, these differences came about from centuries of policy action 
that served in the interest of some and to the disadvantage of others. 
Despite this nation's bold attempt to correct this injustice decades 
before, the lingering effects of these policies remain. Moving forward, 
it is our responsibility to fulfill the promise of the historic Acts, 
including the 1964 Civil Rights Act, put in place fifty years prior by 
taking bold and substantive action today to finally make real the 
promise of an America that truly provides equal opportunity for all.

                          ____________________