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The wealth gap has a wealth of causes

Ed Gaskin

Discussions about closing the Black wealth gap often focus on aspects of personal wealth building, such as financial literacy or savings and investment. The implication is that the gap is due to a lack of effort and financial education. As evidence, people point to refugees who arrive with little, unable to speak English, and yet achieve great success. Meanwhile, Blacks — who have been here for 400 years, speak English and get an American education — largely remain trapped at the bottom.

Measures of community wealth include collective assets, tangible and intangible resources, and community well-being. Land and homeownership — and how we own, manage and use that property — is critical to building that wealth. If Black Americans own a home, it’s usually their single largest asset. And although the factors driving home values are outside any individual’s control, they primarily determine community wealth.

Property location and the neighborhood quality are key factors. Attributes associated with good neighborhoods include public safety, quality schools, and amenities and services such as grocery stores, efficient public transportation and entertainment venues. On all these metrics, majority-Black neighborhoods compare unfavorably to mostly white ones.

Black communities face problem-oriented policing — deploying more police to neighborhoods with high crime rates. This practice results in more arrests, which then justifies deploying more police, which further depresses property values. Despite increased policing, there is no corresponding feeling of security. Instead, residents fear crime and the police.

Unjust environmental policies disproportionately harm Black communities because cities select them for troublesome land uses. For example, Grove Hall in Dorchester occupies just 3% of Boston’s land, but it contains 38% of the city’s brownfields. Additionally, the number and size of heat islands versus green spaces differs by neighborhood and significantly affects property values.

Zoning rules about where liquor stores, smoke shops and adult entertainment providers can operate also play a key role in determining property values.

Spatial injustice is revealed by where cities locate transfer stations, junkyards, scrap metal recycling yards, waste management facilities, water treatment plants, polluting factories and other environmentally undesirable facilities. Such decisions affect property values.

Government use of eminent domain and urban renewal strategies have also destroyed community wealth, sometimes by running highways right through Black communities. When communities must relocate, they are never made whole financially or psychologically. Imagine how much richer Black Bostonians would be if they still owned their Beacon Hill properties. These actions have also reduced community self-efficacy.

Historically, housing policies have harmed Blacks by concentrating poverty in certain areas. Practices such as racial steering can have a significant impact on an individual’s success, according to sociologist William Julius Wilson. Efforts to keep Black people out of white areas are also harmful because homes in white neighborhoods appreciate faster than similar homes in Black neighborhoods. Redlining — not offering mortgages or insuring homes in Black areas — suppressed community wealth there, while covenants prohibited Blacks from buying homes in white neighborhoods, and restrictive deeds limit the amount of equity homeowners can access. Predatory lending practices further shrank wealth when Blacks were sold mortgages they couldn’t afford and lost their home and equity as a result. According to Signe-Mary McKernan and her colleagues at the Urban Institute, the subprime mortgage scandal reduced Black wealth by 47.6%.

Government underinvestment in Black neighborhoods over time has made matters worse.

Additionally, mass incarceration has left many Black people with criminal records, hindering their ability to find jobs and earn a living, which would enable them to buy a home. Having so many returning citizens who are unable to rent or buy homes destabilizes the community.

Finally, the lower life expectancy for Black people leaves them less time to build generational wealth.

Environmental, spatial, zoning, housing and investment policies harm people in Black neighborhoods and thus reduce the overall wealth as well as individuals’ personal wealth. We must eliminate the systemic racism that is reflected in these policies. Closing the wealth gap requires a holistic approach that goes beyond individual efforts and financial education. We could have used American Rescue Plan money to address disparities. Not doing so was a policy choice that proves my point.

Ed Gaskin is executive director of Greater Grove Hall Main Streets in Boston.

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