Poverty is one of the most important and pressing issues facing African American families. Poverty shapes many of the experiences of African Americans, from their experiences with marriage and childbearing, to violence in their intimate relationships, to their experiences with health and health care, and finally, to their experiences with education. Wages are the primary source of income for individuals and families. Yet income is only part of the equation when we consider access to the American Dream (via wealth). Wage workers are generally more familiar with their income in terms of dollars per hour, whereas salaried and professional employees are generally more familiar with their income expressed as their monthly salary.Wealth is the total value of one’s assets minus the cumulation of one’s debts. The problem with the way that wealth has been measured in the past is because the median income measure masks the incredible disparity at the top of the income distribution.
Occupations remain highly race and sex segregated, and that one of the most important and significant outcomes of occupational segregation, resulting from legacy, blocked access, discrimination, and inadequate preparation, educational attainment, is disparities in income. The difference in median household income for African Americans and whites is 62%. African Americans are twice as likely to be poor as whites. This is because of the history of slavery and Jim Crow segregation, whites have been able to work in the professions, build businesses, and accumulate wealth over several hundred years. Whereas African Americans have been able to do so only recently. Second, among the affluent who work for a living – the professional classes –as opposed to those living on an inheritance –African Americans are more likely to have come from lower and middle-class backgrounds than their white counterparts, and thus, they have had to personally invest more in preparing for entry into their professions.
The explanation for the difference of wealth verses welfare between African Americans and Whites lies in the predatory lending practices that target the poor and, disproportionately, African Americans. Poor African Americans hold, on average, $57 in assets compared to $24,000 (a gap of 420 times) held by their white counterparts. Because the poor live on the proverbial economic edge, living paycheck to paycheck, any emergency, be it medical, a layoff, a short trip to jail, or even something as routine as having to miss a shift at work because the baby-sitter is sick, can plunge these families over the edge, into homelessness. Many African American families live every day with severe threats to their very existence.
There are four key components to the “American Dream” 1. Owning a single family home, 2. Being able to afford quality child care, 3. Being able to afford a college education for one’s children, and 4. Being able to afford full health insurance. The dream that was within reach of working Americans during the 20th century is out of reach for all but the affluent in the 21st century. Through much of the 20th century, working families, even those working at the bottom of the salary ladder, could afford a portion of what they call the American Dream. A conscientious working family could achieve the American Dream in 1973 by taking on a few extra hours at work, saving carefully, and so on. Today, the typical working-class family living on two minimum wage incomes earns less than half of what is necessary to achieve the American Dream. The inability to buy into the American Dream, especially buying a home, has significant consequences for wealth attainment.
Homeownership is one of the most important elements of the American Dream because it is so central to the definition of the American Dream and because it is one of the most common forms of wealth. Disparities in rates of homeownership are a powerful illustration of differential access to the American Dream. African Americans face discrimination with regard to access housing. Discrimination includes red-lining –refusing to show or sell homes in predominately white neighborhoods to African Americans –refusing to rent or sell to African Americans, and unfair mortgage practices. The primary victims of housing discrimination in the Untied States are racial minorities and especially Hispanics and African Americans. African Americans face discrimination in lending practices as well, especially when they are looking to borrow money for mortgages. As a result of predatory mortgage practices, African Americans lose upwards of $25 billion annually. Borrowers of color are more likely to get a higher rate, subprime home loans –even with the same qualifications as white borrowers.