Land & Racial Injustice – Part 5: Reaping What Was Sowed

This is the fifth piece in an ongoing series that examines the role that control of land has played in racial injustice throughout Black history in the United States:

Part 1: Slaveholders and Land Monopoly (1619 to 1865)
Part 2: 40 Acres and a Ghoul (1865 to 1910)
Part 3: Homeownership: White Subsidy, Black Exclusion (1910 to 1970)
Part 4: The Invisible Hand of the Housing Market (1970 to Today)
Part 5: Reaping What Was Sowed 👈 (you are here)

As we have detailed over the past four articles in this series, century after century of racist policy and practice have helped to erect barriers to Black land ownership, enabling the extraction of Black productivity into the hands of White landowners, leaving behind a yawning chasm of racial inequality. In this article we detail the current state of various socioeconomic indicators as they relate to the benefits bestowed by ownership of land and access to high-opportunity locations.

Today, Black households have a mere fraction of the wealth held by and the opportunities available to White families, a reality largely driven by disparities in property ownership. Black children grow-up in markedly-different neighborhoods than their White peers, with heavy consequences for social mobility. Lastly, Black individuals earn a greater share of their income from labor than their White counterparts, and spend a great portion of it on their rent, sending it straight back into White hands.

Homeownership and the Racial Wealth Gap
Given our discussion thus far, it should be no surprise that the median white household has wealth of $189,000, nearly eight times the $24,000 owned by the typical Black household. Crucially, the majority of this $165,000 gap is driven by differences in property ownership: the typical White household holds $51,000 more equity in their primary residence, and $83,000 more in other real estate investments than their Black counterparts. Much of the remaining gap consists of managed assets and retirement accounts, which will also contain a healthy share of financialized claims on real estate. White Americans are nearly two times more likely to own their own homes, and years of homeownership explain the largest part of the racial wealth gap. Clearly, disparities in property ownership are a crucial component of America’s racial wealth gap.

Locational Inequality

Black Americans’ unequal access to the benefits generated by land also show up in measures of locational inequality. In a system that Brookings has called “separate and unequal” Black families are much more likely to live in neighborhoods beset by disadvantage: lower-quality institutions (such as school and social support organizations), under-investment in infrastructure, and concentrated poverty. Sociologist Patrick Sharkey explains how predictive childhood location is of future outcomes in life: “Experiencing high neighborhood poverty throughout childhood strongly increases the risk of falling down the income ladder.” Among individuals born between 1985 and 2000, two-thirds of Black children grew up in the poorest-fifth of neighborhoods, compared to only 6% of White children. These statistics were unchanged from their parents’, indicating that locational disadvantage is persistent over generations. Black students are seven times more likely than Whites to attend high-poverty schools.

“Parental wealth can also determine neighborhood and, by extension, peers, environment, and physical safety; networks; aspirations for education and careers; food security and insecurity; and many other determinants” – Kathryn A. Edwards & Jonathan W. Welburn in  Investigating the U.S. Racial Wealth Gap.

Earned and Unearned Income

Another legacy of the history we have outlined above is that Black and White families differ both in the amount and types of income flowing into their households. Data from the Survey of Consumer Finances reveals that median household income for White families was $81,000 in 2021, nearly double the $46,000 earned by the typical Black household. Further, as we reveal in the figure below, White households derive far more of their income from pre-existing wealth, whereas Black households earn more of their income through hard work. Specifically, earned income (from wages, salaries or self-employment) made up three-quarters of Black household income in 2021 compared to only 58% for White households. Conversely, 14% of White income is passive (including dividends, interest & rents) and 12% comes from asset appreciation (in the value of stocks, bonds & real estate), compared to only 3% and 4% respectively for Black households.

Spending and the Rent Burden

Past racism also influences the expenses faced by White & Black households. Unsurprisingly, Black households are less likely to own their homes, meaning that more of their hard-earned income is being eaten-away as rent. Nationwide, six in ten Black households continue to rent their home, more than twice the rate for White families (three in ten). Even among renter households, Blacks were more rent-burdened, with 30% spending more than half of their income on rent, compared to only 22% for White households. Research from Los Angeles demonstrates the way in which rent payments cause wealth to be extracted out of Black neighborhoods, flowing out to enrich White inhabited suburbs. Land continues to serve as the key mechanism by which Black wealth is extracted into the hands of White landowners.

Where Do We Go From Here?
As we look forward towards solutions to these injustices, let us be clear that these disparities simply will not resolve on their own. While the history surveyed thus far should thoroughly reject the premise that Black Americans have failed to work as hard as their White slaveowners, sharecroppers and landlords, let us consider what would happen if Black Americans were to respond to calls to “pull yourselves up by the bootstraps” with even higher effort in study, work and savings. Rising Black incomes would cause rents to rise in the neighborhoods around them, eroding progress towards closing the wealth gap. Black households seeking to become homeowners will frequently find themselves buying from a White seller, with Whites over-represented among owners of the banks that would lend them a mortgage. This is the ‘Kafka trap’ that American history has laid for Black inhabitants by depriving them of ownership of a fair share of the land.

“Given the inertia of past and current disparities, it is unclear how the racial wealth gap could ever close over a meaningful time horizon in the absence of new governmental policies that directly target the wealth gap”– Kathryn A. Edwards & Jonathan W. Welburn in Investigating the U.S. Racial Wealth Gap.

We have observed that inequalities in both location and land-ownership definitively reproduce themselves across generations, and we have no reason to believe that they will resolve on their own. Thus, it is clear that deliberate policy changes are needed to rebalance the scales, and that this remedy must ensure that all Americans can at the very least enjoy an equal share of the value of natural resources like land.

A Vision of Land Rent Reconstruction

Access to land and location are deeply embedded in the heart of American racial injustice, so the remedy necessarily entails capturing and sharing the rich bounty of this nation’s land. As an immediate goal, this project must seek to expand the share of land rents which flow into the hands of Black families, backed by the more comprehensive final vision of a nation where ill-gotten land wealth is redistributed, ensuring that every single American family enjoys their fair share of the value embodied in her most precious resource: land.