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America's Racial Wealth Gap Grows to the Largest on Record

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White American Wealth 20 Times That of Blacks

By Charlene Crowell, NNPA Columnist –

In the 25 years since the federal government began publishing demographic data on wealth, the worst disparities emerged for 2009. A newly-released analysis by the Pew Research Center found that the median wealth of white households is 20 times that of Blacks, and 18 times that of Latinos – a gap that nearly doubled in size for these same three racial groups more than 20 years ago.

Further, when Pew compared wealth gaps for 2005 to those of 2009, the clear conclusion was that the combination of the housing market bubble and the subsequent recession were the underlying causes for these record disparities. In 2005, just before the housing bubble burst, white median net worth was $134,992. Comparable figures for Latinos and Blacks were respectively $18, 359 and $12,124.

By 2009, all three groups lost wealth; but Black median net worth was less than half of that recorded for 2005: $5,677; Latinos families were only slightly better at $6,325. Yet for white households, the median net worth decreased to $113,149.

According to Pew, household wealth is determined by subtracting all debts owed from the accumulated sum of all assets, including real estate, cars, savings and checking accounts, retirement accounts, stocks, etc.

Since the report was released, much of the extensive news coverage has omitted a key finding. From 2005 to 2009 the number of families with either zero or negative worth grew dramatically as well. For Black families, the percentage grew from 29 percent to 35 percent; for Latino families, the negative wealth grew from 23 percent to 31 percent. Yet for white families, negative wealth went from 11 percent to15 percent.

More plainly stated, African-Americans are becoming poorer at a faster rate than any other race or ethnic group in the country. Our forefathers may have worn the shackles of slavery. But this generation is wearing shackles of a different kind: poverty and debt.

According to the Bureau of Labor Statistics (BLS), America’s Black unemployment level is double that of white America. After comparing unemployment data to that of Core Logic, a private research firm, among the nation’s top states for underwater mortgages – states with homeowners owing more than their house is now worth – the top five of those states also have the nation’s highest unemployment: Nevada (12.4 percent), California (11.8 percent), Florida (10.6 percent), and Michigan (10.5 percent).

If these trends are allowed to continue, America’s ‘haves’ and ‘have nots’ will move even further towards the two separate Americas first warned by the Kerner Commission Report in the 1960s. Named for then-Illinois’ Governor Otto Kerner, the report told a tale of two Americas were emerging– one Black and the other white. In 2011, the divide is not just about race but wealth as well.

All of America should feel uncomfortable about the growing concentration of poverty in Black and brown communities, who together represent 28 percent of the nation’s population.

It is time for leaders – public and private – to stand up and insist that our nation create new and sustainable jobs with incomes that lift this country’s poor into self-sufficiency and hopefully one day – sustainable prosperity.

Charlene Crowell is the Center for Responsible Lending’s communications manager for state policy and outreach. She can be reached at: Charlene.crowell@responsiblelending.org

The Black Middle-Class Remains Unemployed

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By Wendell Hutson, Special to the NNPA from The Chicago Crusader –

Not since the Great Depression has the U.S. economy been so bad that millions of people have been out of work for two years or more. And even though the economy is showing some improvement, economists have forecasted a long recovery and noted that the Black middle-class remains one of the core groups still unable to find employment. Moleska Smith is among the long-term unemployed. Before she lost her $90,000 a year marketing job at a Chicago bank in 2009 she said life was good for her.

She was able to pay her mortgage on time for her south suburban home, monthly tuition payments to her daughter’s private high school were paid on time and she was able to travel and build up her emergency fund for the unexpected. That has all changed now that she has exhausted her 99-weeks of unemployment benefits. “Never in a million years did I think I would be unemployed this long. I am determined to find new employment regardless of how long it takes,” Smith told the Crusader. “God has been good to me. He makes sure all my needs are met.” An alumnus of Columbia College, Smith said one reason why it has taken her so long to find new employment within her industry is because of outsourcing and downsizing that continues to take place at companies big and small.

“Marketing is a tough industry to stay in because a lot of employers are farming out their marketing needs to save money,” explained Smith. “It is cheaper to pay an outside agency than to pay an employee a salary, health benefits and taxes.” For now, Smith said she plans to continue working as a self-employed marketing consultant. “I have had to re-invent myself and sit down to evaluate if marketing is still a feasible career. While I love working in the marketing industry, I love it more when I can pay my bills on time.”

Age is what Charles Porter cited as his reason for being unemployed for over two years. “While employers are not saying it, age also works against the unemployed and contributes to why so many people have exhausted their unemployment benefits and still remain jobless,” Porter, 56, a former electrical engineer, said.

Porter now works for temporary agencies to support his family. “One temp agency told me I should consider dying my hair to improve my chances of getting hired,” he said. “I guess no one wants to hire a grandfather.” Illinois’ unemployment rate for June matched the national rate of 9.2 percent and has been equal to or below the national rate for nine consecutive months, according to the Illinois Department of Employment Security. And Illinois has also reported declines in 15 of the past 17 months but has added thousands of manufacturing and construction jobs. “Illinois has added more than 10,000 manufacturing jobs and nearly 9,000 jobs in the construction sector over this time last year, including strong growth over the past month,” said Jay Rowell, director of the IDES. “While uneven movements are an expected part of an economic recovery, Illinois is building on the steady progress that has been made.” Education is often seen as a plus for anyone looking for a job but Deshawna Olgesby, 36, said it could also serve as a deterrent when applying for entry-level jobs.

“I have a bachelor’s in communications and a master’s in counseling and when I go to apply for entry-level jobs at department stores and fast-food restaurants I am always turned down,” she said. “Managers have told me when applying that I was over qualified and they feared I would leave within a year.” For the past seven years, Olgesby had worked as a family counselor for a West Side non-profit organization but due to a dip in state funding she was laid off and has not found a new job. Greg Rivara, a spokesman for IDES, said candidates should improve their interviewing skills so they can better explain to employers why they should take a chance on hiring them.

“This has to also be conveyed in cover letters too. I don’t want to tell a person to take off their education on their resume but that’s also a possibility if they think it is hindering their search,” he said. And unlike Smith and Porter, who collected unemployment benefits for nearly two years, thanks to Congress extending benefits, Rivara said that cushion is no longer available. “If someone had applied for benefits in June they would not be eligible to receive an extension after their standard 26 weeks of state benefits expire. They would have had to apply for benefits in May or before to be eligible,” Rivara said. “All federal extensions expire January 2012.” Unemployment compensation is funded by unemployment insurance, which is paid for by employers and not taxpayers, according to Rivara. And the maximum payment someone could receive is $531 a week, depending on such things as their marital status, earnings while employed and dependents, such as a child or unemployed spouse.

Another aspect to the long-term unemployed especially for Blacks, who have traditionally worked white-collar jobs, such as secretaries or office managers, is the ability to transition into new industries. Manufacturing and construction, which are considered blue-collar jobs, have dominated the job growth in Illinois the past two years, according to IDES records. And transitioning into one of these jobs is not an easy thing to do, said Antonio Wheeler, 46, who knows first-hand. For 12 years he worked as an office manager for a real estate company. He was laid off in 2007 and has yet to find new employment. “I was paid to manage 10 employees and perform clerical duties in the office,” he said. “Now I find most of the job leads I discover are for blue collar jobs.” Wheeler, who is single with no children, still maintains a one bedroom apartment in the North Lawndale community on the West Side and still drives his 2008 Ford Explorer despite not making any monthly payments since last year.

“You don’t want to know how I am making it,’ he added. “Let’s just say that I am doing what is required to survive.”

CRL Research: Bank Payday Loans Lead to Long-term Indebtedness

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By Charlene Crowell –

(NNPA) As the Consumer Financial Protection Bureau begins operations, the Center for Responsible Lending (CRL) is releasing new findings on the growth and effects of a new short-term and high-cost loan product. Big Bank Payday Loans, a new CRL research brief, details how mainstream banks have entered the triple-digit interest rate payday loan market with a product that on average virtually guarantees repayment within 10 days. Yet for consumers, these loans lead to 175 days of indebtedness for the average borrower – twice as long as the maximum length of time the Federal Deposit Insurance Corporation has advised.

With many banks allowing up to half of a customer’s monthly direct deposit income, or up to $750, an average 44 percent of a bank payday customer’s next deposit is used to repay bank payday loans. For older borrowers already living on fixed incomes, the average bank payday loan repayment from a Social Security check was 43 percent. Senior customers are also 2.6 times more likely to have used a bank payday loan than bank customers as a whole.

Even without bank payday loans, more than 13 million older adults are considered economically insecure, living on $21,800 per year or less. One-fifth of older households have annual incomes below $50,000 but report spending more than 40 percent of their income on debt payments.

Senior women whose lower lifetime earnings result in diminished pension benefits are at acute financial risk – as are African-American seniors with on average only one-sixth of the wealth of older whites.

Although state and federal laws protect Social Security benefits from garnishment by debt collectors or payday lending to military families, problems still persist. For example, if a bank acts as its own debt collector, or a military family takes out back-to-back loans, the door to long-term indebtedness for both borrowers still opens.

The irony to these lending abuses are occurring against a financial backdrop of nearly $6 trillion in lost American household wealth since 2006, an unemployment rate hovering north of nine percent, and nearly half of Americans currently lacking the financial capacity to cope with an unforeseen but costly emergency.

Add to those troubling statistics, a $10 fee for every $100 borrowed and automatic repayment to the banks with an opportunity to add more fees if accounts become overdrawn and people of all ages just become poorer with payday loans. Youthful vigor might enable younger borrowers to take a second or temporary job to end the payday debt trap. But as a country do we want our young people growing up to believe that 400 percent loan interest is the best that they can expect?

Or what’s an older person to do? Do we really want to become a country that allows lenders to tarnish what ought to be golden years for older Americans?

Now that a federal consumer watchdog agency – the Consumer Financial Protection Bureau is available to work with state officials to end financial abuse, a lot of work awaits. In the meantime, CRL is calling for federal regulators to:

Use immediate supervisory and enforcement authority to stop the banks it supervises from making payday loans; Impose a moratorium on payday loans offered by banks under its supervision while data collection on the impact of this product on consumers is further refined – particularly its impact on communities of color; and Limit high-cost, short-term single payment loans to 90 days’ indebtedness or six loans per year – whichever is less.

We’ll soon see if anyone is listening.

Charlene Crowell is the Center for Responsible Lending’s communications manager for state policy and outreach. She can be reached at: Charlene.crowell@responsiblelending.org.

Lottery Ticket Honors Black Woman Who Died of Breast Cancer

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By Wendell Hutson, Special to the NNPA from The Chicago Crusader –

On July 11 Illinois made history when Governor Pat Quinn signed legislation that created the first scratch off lottery ticket named after a person and in this case someone Black. Quinn said he signed Senate Bill 1279, which renamed the “Ticket for the Cure” lottery ticket to the “Carolyn Adams Ticket for the Cure,” because it provides funding for breast cancer research. “Access to quality healthcare is a basic right, and Illinoisans – particularly those who are fighting cancer – should not be denied coverage for participating in trials that might save their lives,” he said. “It is important that Illinois takes the lead in increasing women’s access to new science that can save lives.” Adams, who grew up in the Roseland community on the far South Side, was the superintendent of the Illinois Lottery from 2003 until her death at age 44 from breast cancer in 2007.

The bill also extends the legislation until December 31, 2016. Had the governor not signed the bill the ticket would have been discontinued at the end of the year. According to the Illinois Department of Public Health, more than 8,700 Illinois women were diagnosed with breast cancer in 2010, and more than 1,700 died as a result. The bill was sponsored by state Sens. Mattie Hunter and Jacqueline Y. Collins, state Reps. Constance Howard and Mary Flowers. “It was important to get this legislation passed and signed because it honors a very positive African American woman,” explained Hunter.

“This woman was committed to fighting breast cancer even during her own personal bout with it.” Hunter admits that when she was working on the original legislation in 2005 with the assistance of Adams, she did not know Adams herself was battling breast cancer. “She would leave around noon for lunch but was really going to Northwestern Hospital for treatment,” recalls Hunter.

“And even though she would show up to work the next day a little weak, I never suspected she had cancer.”

Since its inception the Ticket for Cure has generated $8.5 million, according to Susan Hofer, a spokeswoman for the Illinois Lottery. The Illinois Lottery grossed $2.2 billion in sales in 2010, a slight increase from 2009 when it grossed $2.1 billion, according to state records. And, in 2009 it paid $1.2 billion in winnings and $1.27 billion last year. Much of the lottery revenue over the last two years came from sales generated in predominately Black communities on the South and West sides, based on a Crusader analysis of state records. The 60619 ZIP code, which include the Greater Grand Crossing and Chatham communities, grossed $27.7 million in 2009 and $28.7 million in 2010. And the 60628 ZIP codes, which include the Roseland and West Pullman communities, grossed $21.4 million in 2009 and $21.7 million in 2010. Other ZIP codes whose residents are predominately Black, according to the U.S. Census Bureau, were popular included 60639 ZIP code had total sales of $20.1 million in 2009 and $20.9 million in 2010; 60617 did $19.2 million in 2009 and $19. 5 million in 2010; 60651, did $19.7 million and $20.8 million; 60647 did $18.3 million and $19.5 million; 60634 did $17.7 million and $18.9 million; 60609 $16. 3 million and $16.5 million; and 60636 did $15.6 million and $16.3 million.

And more lottery vendors did not add up to more sales either. The 60619 ZIP code, which grossed the highest sales in the state, had 48 lottery vendors in 2009 and 46 in 2010. But the 60647 ZIP code had 61 vendors in 2009 and 64 in 2010 but grossed less in sales than other ZIP codes where there are fewer vendors, such as 60639, which has 51 and 60651, which has 38. The Illinois Lottery was founded in 1974 with the goal of raising additional money to fund public schools. State records show that in 2009 and 2010 the Illinois Lottery paid $625 million into the Common School Fund, which is a state fund used to help finance public schools.

Unlike other lottery tickets where a portion goes to the Common School Fund, 100 percent of the proceeds from the Carolyn Adams Ticket go to fund breast cancer research. Money from the ticket is distributed is then goes to the Illinois Department of Public Health, which provide grants to private and non-profit organizations to fund research on breast cancer and to provide other services for breast cancer victims.

Race a Factor in Pennsylvania Public School Funding?

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By Mignon Brooks, Special to the NNPA from The Philadelphia Tribune –

Most government and school officials agree that Philadelphia and various other schools in Pennsylvania lack funding and resources, but not all agree that it’s based on race.

In a recent report titled “The Myth of Racial Disparities in Public School Financing,” by Jason Richwine, of The Heritage Fund, public school education spending is shown to be similar among all racial and ethnic groups. Yet, when the Center for American Progress performed a state by state analysis, Raegen Miller and Diane Epstein reported clear evidence of racial and ethnic disparities nationally and throughout the districts. “We found in some states there is an inequity,” Miller said. “In Pennsylvania there is work to be done.”

Miller said there are problems with the funding system, the legislative process, and reform. Also, he said, there are issues with the school level expenditures. The inexperienced teachers are mostly going to high poverty areas and are being paid in unbalanced proportions.

“Teacher compensation reform should be based on experience, subject areas, effectiveness, toughness with assignments, and mentoring new teachers,” Miller added.

Miller said states such as New Jersey, Massachusetts and Indiana are doing better in closing the gap in high poverty areas, where people of color mostly attend public schools. New York and Illinois were cited in the brief as states where there are other funding issues as well. The Title I law requirements are being broken. Title I was only supposed to be used if the state and local resources were comparable, and to be provided as a supplement.

Congressman Chaka Fattah has been leading the way to reform public school funding and restore the original intent of Title I funds. He disagrees with the Heritage Foundation and anyone else who believes racial disparities in education are a myth.

“In the entire history in the United States there has been a racial disparity in terms of educational opportunity that persists,” Fattah said. “In the entire history of the United States poor children have had less educational opportunity. Because of the pernicious (nature) of race and poverty, children of color are more likely to be impoverished. They are put in disadvantaged circumstances through this duality.”

But Tim Eller, spokesman for the Pennsylvania Department of Education, said, “school funding in Pennsylvania is not based on race at all.”

According to the Pennsylvania Basic Education Formula, the 2011–12 budget is $5,354,629,000. This is $239,290,000 more than the 2010-11 funding. Instead of race, this formula breaks down funding calculations by the amount each school district received in 2010-11. The student-focused funding supplement will be distributed by a base amount per student in each district, an English language learner supplement, the poverty level in each district, and district size.

A Philadelphia School District spokesman said that it’s clear that Pennsylvania has school funding problems. In a report issued by the commonwealth in November of 2007, “Casting Out the Resources Needed to Meet Pennsylvania’s Goals,” 474 districts out of 500 were shown to lack adequate funding. The District spokesman said Philadelphia schools would have a shortfall of $629 million this year, which is higher than the shortfall they had last year.

Even with the lack of funding, Fattah has introduced the Student Bill of Rights HR 1295 to this and other Congresses. This act requires states to report any remediate disparities between high-performing and low-performing schools. He also created The Fiscal Fairness Act 1294. This act strengthens Title I requirements and makes sure Title I is not used to subsidize inequitable spending within school districts.

“From the anecdotes from anyone who’s visited schools in poor neighborhoods and rich neighborhoods or the hard facts covered by the Center for American Progress, Education Trust, Marguerite Roza, or Data of Civil Rights Data Collection, it is clear we are investing less in some children’s intellectual potential than others,” Fattah said.

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