Featured Story: The Racial Wealth Divide
Earlier this week, the Center for Enterprise Development (CFED) released a report on the racial wealth gap. Among its findings was that it would take 228 years for black families to accumulate the average wealth white families have right now. While this comes as no surprise to those in the asset building field, it represents the much needed attention race still requires in conversations and work around building economic capacity for all Americans.
Reporting for Marketplace, David Brancaccio spoke with two of the report’s authors, CFED’s Dedrick Asante-Muhammed and the Institute for Policy Studies Chuck Collins. Rather than focusing on income, the report framed the economic disparities between whites and people of color as an issue of wealth. “[I]n a way, wealth is where the past shows up in the present. And it’s where we see the legacy of racism in asset building,” Collins said. The legacy of racism can be seen in the housing market, for example, where people moved in droves to the suburbs after World War II as a result of federal policy that encouraged homeownership for white Americans while purposefully excluding black Americans. Asante-Muhammed believes that in order to remedy this “we have to have some policy focused on bridging this racial wealth inequality.”
Housing policy is not the sole culprit of the wealth gap, however. “The [authors] attribute the divide primarily to tax policies aimed at helping households build wealth, save for retirement, buy a new home, start a business or pay for college—policies they say primarily benefit wealthy families, not low-income communities,” writes the Wall Street Journal’s Kate Davidson. Closing the gap would require congressional action to reform the tax policies that benefit wealthier households while doing very little for low- and moderate-income households.
Optimizing one’s tax breaks requires itemized deductions, which lower-income households typically do not do says CNBC’s Darla Mercado. “Further, tax-deferred retirement savings plans help workers build wealth,” Mercado writes, “but households of color are less likely to have access to these plans, the report found.” So, while tax reform is clearly necessary to close the gap, it is equally important that eligible families are aware of the various benefits available to them.
News Highlights: Affordable Housing, Affordable Housing, and Affordable Housing
“Most big American cities and their surrounding suburbs have housing regulations that strictly limit the number of new housing units that can be built. As a result, the demand for housing in the most economically dynamic cities has dramatically outpaced the supply,” writes Vox’s Timothy Lee. Tokyo has a (surprisingly) simple answer: keep up with demand. By issuing more permits and allowing continued construction of new housing, demand for housing in Tokyo does not outpace supply. However, this is much easier said than done because housing regulations are set at the national level in Japan. In comparison, much of U.S. housing policy is set at the local level and as a result is plagued by nimbyism.
Writing for CityLab, Scott Latta covers Portland’s growing housing market. As housing prices in the area rise, people of color and low- and moderate-income households are either being displaced or priced out of the market. Revising zoning laws to allow for higher density neighborhoods with more multi-family units is a potential solution, but it’s not perfect. “Even if multi-family housing goes up in these neighborhoods, it won’t be priced so most people can afford it,” writes Latta. The reason? Developers often pay cash for houses that people already want only to demolish them in order to build multi-family units. These units are often priced much higher than what is considered ‘affordable’.
In his latest piece for the Washington Post, Terrence McCoy reports on inequities poor tenants face in the midst of D.C.’s housing boom. McCoy focuses on the residents of Brookland Manor, an apartment complex in northeast D.C. that houses mostly low-income tenants and the latest addition to the District’s growing list of mixed-use developments. As Brookland Manor prepares to begin construction, McCoy investigates the ways in which heavy handed enforcement of rules and regulations have resulted in an explosion in the number of eviction proceedings. “A growing number of these lawsuits are over small or questionable infractions, including walking a dog without a leash and a suicide by firearm in an apartment, as well as late rent payments of less than $100,” he writes.
News in Brief: Granny Flats, Nostalgia, Wendy’s, and More
- The fight for granny flats continues as major cities across the country try to figure out how to address the affordable housing crisis. The Washington Post’s Emily Badger reports.
- In Rooflines, Miriam Axel-Lute reflects on how her study of the evidence around children’s savings accounts converted her from a skeptic to a supporter.
- Writing for Governing, J.B. Wogan explores ways in which municipalities across America are beginning to reckon with racial equity in local policy and regulation.If the manufacturing industry is not coming back, why do we collectively pine for its return? The New Yorker’s Gary Sernovitz says it because of our culture of nostalgia.
- People are moving less frequently reports the Boston Globe’s Evan Horowitz, and it suggests that economic opportunities—like “higher pay and grander opportunities”—are decreasing.
- Keeping the momentum going following the release of the White House report on student debt, Bloomberg’s Shahein Nasiripour reports on the high default rates amongst those who did not complete their degree and Mark Huelsman sets the record straight on debt-free college in Slate.
- “Some economists think that continued GDP growth will require restoring a struggling segment of the labor force to where it was before the recession,” writes the Atlantic’s Gillian White. The group? Low-skill workers.
- States that expanded Medicaid under Obamacare appear to have healthier people compared to states that did not reports Margot Sanger-Katz for the New York Times.
- “It is illegal for an employer to require workers to cash their paychecks at a company that collects a fee,” reports the LA Times’s Natalie Kitroeff and yet, many within the garment industry—an overwhelmingly immigrant industry—pushes such services on its workers in order to get around labor laws.
- In his youth, Greg Kauffman worked for Wendy’s. He pens an open letter to the company addressing its failure to sign the Fair Food Program, which “protects workers by creating real economic consequences for violations of human and labor rights.”
- ThinkProgress’s Rachel Cain reports on Missouri Community Action Network’s simulation meant to mitigate the stigma against and build empathy for those in poverty.
- Writing for Forbes, Richard Eisenberg covers Millennial savings habits and the steps they’re taking to save for retirement.
The Politics of Race | Center for American Progress | August 15, 2016
Did Welfare Reform Increase Extreme Poverty in the U.S.? - Looking Back on Two Decades of Data | Heritage Institute | August 16, 2016
Emerging Issues in Mortgage Servicing | Urban Institute | August 17, 2016
Welfare Reform Turns 20: Looking Back, Going Forward | Cato Institute | August 22, 2016
The 20th Anniversary of Welfare Reform | Progressive Policy Institute | August 22, 2016Assets Learning Conference | CFED | September 28-30, 2016