The Racial Wealth Gap: A history of inequity

Black farmers find it much harder to obtain loans, and the government ultimately concedes that racial discrimination in the lending program persisted for decades. 1940: Racially restrictive covenants, a new device for preventing Black people from moving into many neighborhoods, proliferate.

Policies and practices that have disadvantaged Black Americans generation after generation help explain the country's racial wealth gap. A look at measures that left Black citizens behind over the years:

1862: The U.S. government establishes a pension system for Civil War veterans and their dependents, the nation’s first general disability and pension system. Black veterans find it much harder to obtain benefits; one study finds Black claimants were twice as likely to have their applications queried. The U.S. enacts the Morrill Act, which distributes government resources to establish land-grant colleges to teach agriculture and the mechanical arts. Many of the schools exclude Black people, and the early benefits of the law flow overwhelmingly to whites.

1865: Southern states begin enacting so-called Black Codes, including a range of rules restricting the freedom of emancipated Black people. The laws oblige Black people to have labor contracts or risk imprisonment for vagrancy, and exclude them from working in some skilled trades. Union General William Tecumseh Sherman issues Field Order No. 15 to reallocate land seized from Confederates to people who had been enslaved. The order becomes known as “40 acres and a mule.” President Andrew Johnson quickly repeals it, and much of the land is returned to its previous owners.

The U.S. government creates the Freedmen’s Bureau, which is particularly active in establishing public schools for people who had been enslaved. 1866: The U.S. enacts the Southern Homestead Act, which gives away small parcels of government land and is intended in part to help people who had been enslaved establish themselves as independent farmers. In the decade before the law is repealed, between 80% and 96% of the land the government distributes goes to white people; historians estimate that 4,000 to 8,000 Black families benefited.

1870: The American Medical Association refuses to seat Black delegates at its annual meeting. In the decades that follow, other professions also restrict access to Black people, making it difficult for them to work in those fields. 1877: Southern states begin enacting “Jim Crow” laws, which formalize racial segregation. The laws restrict civil liberties and limit job opportunities for Black people as employers relegate Black workers to lower-skilled roles.

1881: Prudential, one of the nation’s largest insurers, announces that life insurance policies of Black people will be worth one-third less than policies for white people, despite having identical premiums. Companies continue applying race-conscious insurance terms for decades, part of a pattern of discrimination in the financial industry that makes it harder for Black people to secure mortgages and other loans. 1887: The Hatch Act provides federal funds for agricultural research at land grant colleges. Because most Southern universities excluded Black people, the subsidies there went largely to sustain white farming. Even after Black colleges are founded, they generally do not benefit from this funding.

1890: The Second Morrill Act requires states that do not admit Black people to their land-grant colleges to create separate, equal schools for Black students. Those new institutions would be notoriously underfunded. 1895: The American Federation of Labor allows new affiliates to exclude Black people from their membership, reversing its position that local unions should not discriminate on the basis of color. As unions gain power in the workplace, the exclusion of Black workers means they are left further behind.

1896: The U.S. Supreme Court rules in Plessy v Ferguson that racial segregation is permissible. The court’s decision cements racial segregation in public education. In many places, this results in underfunded and inferior schools for Black children. 1908: Henry Ford releases the Model T, the car that gave rise to the modern assembly line and an explosion of high-wage jobs for workers. Ford limits Black workers to more difficult and lower-paid positions. Other carmakers refuse to hire Black workers altogether.

1912: President Woodrow Wilson allows segregation in the federal civil service, which had been one of the few avenues for Black people to progress to more senior jobs. Black managers find themselves demoted or fired, knocking many out of the middle class. 1914: The Smith-Lever Act creates partnerships known as extension services between the U.S. Department of Agriculture and land-grant colleges, which send agents around the country to show farmers new technology and teach them about government benefits. The services are racially segregated, and Black farmers reap far fewer of the benefits.

1917: The Supreme Court unanimously rules that race-based zoning laws in Louisville, Kentucky, violate the U.S. Constitution. The decision invalidates a local law that prohibited Black people from living on mostly white city blocks. 1921: A race massacre in Tulsa, Oklahoma, leaves thousands of Black residents without homes and levels what had been a relatively prosperous Black neighborhood.

1922: The National Association of Real Estate Brokers publishes a textbook for real estate agents warning that “the purchase of property by certain racial types is very likely to diminish the value of other property.” As late as 1950, the association’s code of ethics says realtors should not introduce to a neighborhood “members of any race or nationality … whose presence will clearly be detrimental to property values in the neighborhood.” 1933: The U.S. government creates the Home Owners Loan Corporation, which refinances more than 1 million residential mortgages during the Great Depression. The agency’s policy is to issue loans only if they furthered residential segregation, the U.S. Commission on Civil Rights would later say.

1934: The U.S. government creates the Federal Housing Administration to protect mortgage lenders. The agency’s manual for underwriting instructs that “if a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same racial classes.” 1937: The Bankhead-Jones Farm Tenant Act authorizes the government to make long-term, low-interest loans to tenant farmers, sharecroppers and farm laborers for the purchase of land and equipment. Black farmers find it much harder to obtain loans, and the government ultimately concedes that racial discrimination in the lending program persisted for decades.

1940: Racially restrictive covenants, a new device for preventing Black people from moving into many neighborhoods, proliferate. The covenants are enforceable agreements that prohibited land from being occupied by non-whites. By 1940, the government says 80% of Los Angeles and Chicago have such restrictions. 1944: The government approves the GI Bill, offering veterans returning from World War II free college education and home loans without the need for a down payment. The benefits largely bypass Black veterans, who frequently lived in states where they were excluded from the main university systems and are prohibited from living in many of the nation’s expanding suburbs.

1947: Sales begin at Levittown, a development of new homes in New York’s Long Island that is widely viewed as the first modern U.S. suburb. The builder refuses to sell homes to non-whites, and the Federal Housing Administration includes covenants that prohibited the land from being resold to minorities. 1948: The Supreme Court rules that state courts cannot enforce racially restrictive covenants that had been used to keep Black people out of many neighborhoods.

1949: The U.S. government approves the Federal Housing Act, giving local governments money to redevelop neighborhoods they deem blighted. “Urban Renewal,” as the program comes to be known, displaces hundreds of thousands of families during the next two decades. In many places, Black families are moved at disproportionately high rates, to make way for political and business initiatives like highways and commercial developments. 1956: President Dwight Eisenhower signs the Federal-Aid Highway Act, enabling the construction of 41,000 miles of interstate highway over 10 years, displacing an estimated 1 million Americans. Political and business leaders view it as a powerful tool for clearing blighted neighborhoods; in many cities, highways are routed through Black neighborhoods, displacing thousands, and depressing property values for those who stay.

1968: A new federal Fair Housing Law prohibits discrimination by builders, lenders and real estate brokers. 1999: The U.S. government settles the Pigford case, a class action lawsuit that alleged lending discrimination against Black farmers by the U.S. Department of Agriculture, ultimately paying more than $1 billion. In 2010, the government authorizes an additional payment that brings the total settlement to about $2.3 billion.

2008: The Great Recession and a collapse in the U.S. housing market dramatically lower the value of many people’s most valuable assets. Surveys taken after the recession showed white households recover that wealth more quickly than Black households, which continue losing wealth for several more years. 2019: A study examining the long-term wealth disparity between Black and white Americans shows the amount of wealth held by a typical Black American is a small fraction of each dollar held by a white American.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)