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The Racial Wealth Gap is a Civil Liberties Issue

A black woman signs a cashier's cheque.
The fact that the racial and economic oppression of Black Americans are two sides of the same coin is something we too often are reminded of.
A black woman signs a cashier's cheque.
Rakim Brooks,
Senior Campaign Strategist & Systemic Equality Campaign Manager,
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March 11, 2021

As far back as the 1930s, the ACLU affirmed that economic justice was essential to achieving racial justice. In its 1931 Black Justice report, the organization’s first on the civil liberties of Black Americans, the ACLU reported that more than 3,555 Negroes had been lynched since 1882, averaging 74 per year or more than one per week. According to the forward, written by Broadus Mitchell of Maryland, Black Justice’s purpose was to answer “Why these gross discriminations against the Negro?” Mitchell replied to that crucial question with remarkable clarity: “The Negro has been oppressed because he has a low standard of living and little economic independence. And the other way around, he is economically servile because he has been oppressed.”

Whether or not he knew it, Mitchell was making an important constitutional observation: The Constitution’s promises of liberty and equality are linked. In 2003, in Lawrence v. Texas, the Supreme Court held that equal protection and “substantive guarantee of liberty are linked in important respects.” Subsequently, Justice Kennedy, author of the Lawrence opinion, explained that the government has a “legitimate interest … in ensuring all people have equal opportunity regardless of their race.” While we have historically thought of equality in the narrow terms of equal protection and due process, we take Mitchell’s forward as a call to consider how our present definition of rights, and actions to defend those rights, are tied to past discrimination, especially economic discrimination.

Though much has changed since the publication of Black Justice, the economic position of Black Americans relative to white Americans remains precarious at best. When President Lincoln signed the Emancipation Proclamation in 1863, former slaves owned 0.5 percent of the nation’s wealth. Over 150 years later, the descendants of those slaves own just 1 percent of the nation’s total wealth. In other words, even emancipation, civil rights, increases to education, and improved employment have not substantially advanced Black people’s democratic participation in our economic system. The power of inherited wealth is in fact so pronounced that economists Darrick Hamilton and Sandy Darity concluded intergenerational transfers “account for more of the racial wealth gap than any other demographic and socioeconomic indicators.”

That would be bad enough, but racial discrimination persists to worsen the situation — and this is the key: Discrimination persists in part because Black people’s subordinate economic position left them with little ability to resist. Ongoing labor market discrimination by the government, unions, and private employers, topped off by housing segregation, forces most Black Americans into unstable jobs with poor wages and a lack of essential retirement benefits. And for those who can pull together enough to try and acquire a home, Black Americans often find themselves in a “Jim Crow credit market” for mortgages. That market provides whites with lower interest rates and longer repayment periods, while giving Black people just the opposite though their economic situation is more vulnerable. To quote Shakespeare, “what’s past is prologue” in the case of race, wealth, and power in America.

In the aftermath of the subprime housing crisis, the ACLU returned to its roots, making a firmer case for the relationship between equal protection and economic justice. The crisis, which resulted from targeted discrimination and then the financialization of that discrimination, wiped out 53 percent of Black wealth, compared to 16 percent of white wealth, permanently devastating Black communities. As of 2016, only 40 percent of Black families owned homes, compared with 70 percent of white households. This was intolerable to us, and threatened our constitutional order by further imperiling the equal status of Black Americans.

The ACLU’s Racial Justice Program has fought to hold Wall Street accountable in groundbreaking cases like Adkins v. Morgan Stanley for fueling predatory lending in communities of color and, with our Smart Justice campaign, challenged the unconstitutional incarceration of people too poor to pay fines and fees they owe local courts. Our amicus brief in Timbs v. Indiana detailed how the reliance on fines and fees for government revenue creates powerful incentives to impose excessive financial penalties, with disastrous consequences on people who cannot pay. Single mothers of color were jailed for up to 57 days and separated from their children because they could not pay exorbitant fines to the courts of Lexington County, South Carolina. Hundreds of thousands of people are harmed by North Carolina’s revocation of driver’s licenses simply for inability to pay court debt. The list goes on. Our Smart Justice campaign is also actively challenging the criminalization of private debt, which again is targeted at low-income communities of color who rely on subprime loans because of their lack of access to mainstream finance.

Systemic Equality augments those efforts and takes the ACLU to the next level in its fight against the economic, legally enshrined repression suffered by Black Americans. We are tackling the roots of the problem by breaking down systems designed to discriminate against Black, Indigenous, and other people of color.

Student Debt. America’s system of education finance has driven the cost of higher education higher beyond imagination. And Black families, which were historically denied housing wealth, take on the greatest burden in this system, perpetuating our nation’s history of redlining and housing discrimination. This system is racist and predatory, so we are calling for the Biden administration to forgive $50,000 of student debt per borrower. If we achieve this result, the racial wealth gap will be reduced by 22 percent.

Postal Banking. As of 2017, 47 percent of Black Americans were un- or under-banked, compared with just 33 percent of white Americans, and so often find themselves trapped by usurious debt that depletes their ability to build wealth. The U.S. Post Office can offer a solution. Currently, 59 percent of ZIP codes have one or no bank branches, but there is a brick-and-mortar post office in every single ZIP code across this country. By providing low-cost services like check cashing, money transfers, and bill pay, the Post Office can save all un- and under-banked Americans (roughly 25 percent) nearly $3,000 a year and the median Black family over $86,000 in their lifetime. As important, it can undermine the Jim Crow credit markets that exist in majority Black neighborhoods.

Child Tax Credit. Every day in America, 1,683 children are born into poverty. If that child is Black, she has a 30 percent chance of being poor, more than three times that of a white child. Because she is poor, she will be at risk of toxic stress that will stunt her development, creating opportunity gaps that can last a lifetime. And all because her family lacked the resources to make ends meet in communities burdened by high unemployment and subprime credit options.

Enhancing the Child Tax Credit as proposed in the coronavirus relief bill would reduce child poverty by 40 percent and lift over 50 percent of Black children out of poverty. It would be the first time in our nation’s history that fewer than 10 percent of Black children in America grow up poor. The ACLU is committed to enacting the credit in 2021 and making the credit permanent later this year.

The fact that the racial and economic oppression of Black Americans are two sides of the same coin is something we too often are reminded of. The March on Washington in 1963, for instance, was a march for jobs and freedom precisely because lead organizer A. Phillip Randolph fervently believed that civil rights could never be achieved if the economic injustice resulting from discrimination were not addressed. We at the ACLU will never forget this link. The discrimination that stunted Black economic and political progress lives with us today in the racial wealth gap. And so, as we engage in this multi-year campaign for Systemic Equality, the racial wealth gap will be front and center.

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