ISSUES THEN AND NOW

Wealth Generation

Inequities in income and financial status between minority and Caucasian individuals have already been described in some detail. The sources of these inequities vary from pay fairness, to employer fairness and educational disparity. Whatever the root causes, there are a great deal of additional factors which inhibit the financial parity of different ethnic and income groups. These factors inhibit individual’s abilities to generate, maintain, and properly utilize their money and financial attributes.

  • The inequity in wealth generation begins at the income level, but there are other factors regarding wealth generation
  • Jobs that provide wealth building benefits were more available to Caucasian employees than racial and ethnic minorities.
  • Housing appreciation rate, a critical aspect in a household’s ability to generate wealth, is 37.2% in the lowest opportunity communities and 81.3% in the highest.
  • African Americans are five times more likely to be denied conventional mortgages than Caucasians, and Latinos two-and-a-half times more likely to be denied.
  • In terms of banking, the racial gap seems to fall with African Americans and Latinos on one side, and Caucasian and Asian Americans on the other.
  • Quality of banks, number of branches and accessibility vary widely between predominantly African American and Latino community versus Caucasian and Asian American communities.
  • The lack of full service bank braches in low income areas creates a reliance on costly pseudo versions of banks, including high interest payday loans, check cashing stores, and currency exchanges, as well as the use of pawn shops.
  • Home ownership is ideal because it allows for wealth generation, but if renting, federal guidelines suggest that no more than 30% of personal income should be spent on rent.
  • In 1999, more African American renters spent more than 50% of their income on rent than non-African American renters.

 
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In collaboration with the Center for Urban Research and Learning, Loyola University Chicago