“The problem of the Twentieth Century is the problem of the color line.” – W.E.B DuBois,
W.E.B DuBois famously proclaimed the problem of the Twentieth Century to be that of the color line. The Twentieth Century brought about great change in race relations in America. Gone are the days of Jim Crow and “Separate but equal”, and laws such as the Civil Rights Act of 1964 and the Voting Rights Act of 1965 provided basic civil rights to millions of African-Americans.
I recently read a Washington Post article by Ylan Mai that discussed the rising tide of economic segregation in America. One of the growing factors enhancing economic segregation is that of the growing importance of one’s credit score. African Americans have always had lower credit ratings than their Caucasian counterparts, but since the economic downturn of 2008 the gap has widened.
“Even near the height of the country’s economic boom, blacks had lower credit scores than whites. Data collected by the Federal Reserve from 2003 — in the most comprehensive study on race and credit scoring to date — showed that less than a quarter of blacks had prime credit scores. Meanwhile, about 65 percent of whites were in this top tier (Mui).”
Low credit scores effect your purchasing power. Car loans, home loans, and (some) education loans are determined by your credit scores, and now some employers and landlords are choosing potential employees and tenants based off of their credit score. To base employment and housing on credit scores promotes economic segregation because African Americans and Hispanics are the ones mostly effected by such practices.
The sub-prime mortgage scandal has only made the situation worst.
“Borrowers with the new breed of subprime loans defaulted at alarming rates, sending the economy into a tailspin. Many of those mortgages were made using false information or shoddy underwriting. Instead of helping black communities build wealth, the lending boom destroyed it … A Pew Research Center analysis last year found that the wealth of blacks plunged 53 percent during the recession, driven by falling home prices. The average net worth of a black household in 2009 was $5,677, according to the study, the lowest of any racial group. After years of record prosperity, homeownership rates among black Americans have plunged to the lowest level in 16 years. Unemployment has reached levels not seen since the 1980s (Mui).”
Even more disturbing than the sub-prime mortgage scandal is the “racial surtax” banks such as Sun-Trust, Bank of America, and Wells Fargo were imposing on African Americans and Hispanics:
“… the Justice Department reached a $21 million settlement with SunTrust over what it called a “racial surtax” on home loans. For instance, it said black borrowers in Atlanta were charged $745 more in fees than white borrowers with similar credit histories and qualifications (Mui).”
The key to overcoming economic segregation is self-empowerment. Self-empowerment begins with education. The education gap between Caucasian and African American children have risen over the last decade, we have to invest more in education and become more involved in promoting the value of education in the lives of our children. Secondly, we cannot continue to allow 70% of African American children to be born to single parents. Children raised in a single parent household face challenges children raised in two-parent households do not face. The African American community has become stagnant when it comes to family, education, and economic growth over the last 40 years.
Do not be fooled by rappers and others walking around talking about they are “about this money”, According to Pew Research the median net worth of African American households is only $5,677, compared to $113, 149 for Caucasian households. African-Americans are not wealthy, and that is not because of racism or lack of opportunity, it is because we have grown to become a community that value Jordan’s over education, who rather invest in cars and clothes than saving accounts, and who care more about Love & Hip Hop than how “Lil Ray-Ray” is doing in school. Overcoming economic segregation begins and ends with us.