Fighting Against Financial Inequality

Last week, Homewise sent a cohort to the Prosperity Summit, a conference of hundreds of organizations who all work to help families build financial assets and closing the wealth gap. We came back energized about our roles in tackling the wealth gap, which is truly a crisis of justice. Federal Reserve data tell us that the typical white household owns 13 times the wealth of a black household and 10 times the wealth of a Latino household. The Asset Funders Network reports that single women own just 32 cents for each dollar owned by single white men. Single black and Latino women own just 1 cent on that dollar.

There are a lot more horrifying statistics like this, and they are not accidents. They are the result of hundreds of years of purposeful policies that blocked people of color and single women from the institutions that generate wealth: homeownership, education, business ownership, union jobs with benefits and protections, retirement programs, even Social Security. Not to mention, policies that literally take assets from people of color: slavery, forced displacement, internment, mass incarceration and a tax code so upside down, it makes you dizzy.

Homeownership is a perfect example of this sad history. It turns out that homeownership is one of the most important ways families build wealth. We heard from Professor Tom Shapiro from Brandeis University (that’s in Massachusetts. We had to look it up) who has studied the wealth gap his entire career and found that the single biggest factor explaining the gap between the white families and black families he studied was “years of homeownership.” But historic ownership opportunities like the Homestead Act, the GI Bill, and Federal Housing Administration (FHA) loan program all specifically excluded people of color. FHA used to publish color-coded maps to show lenders which neighborhoods it deemed too risky for loans. These areas were (spoiler alert) minority neighborhoods. They were coded red, hence the term “redlining”. Redlining is technically illegal now but as Rashad Robinson from Color of Change put it, “Racism is a shapeshifter”. Redlining morphed into subprime loans, which were made to minority borrowers at a far higher rate than to similar white borrowers.

Pull this thread of history and see how financial security unravels for so many families… if your great gramma was locked out of homeownership, how could she build wealth to pass on to your gramma? And then how would gramma buy a home and build wealth to pass on to your mom? And if mom was locked out, who is going to help you, and what are you going to pass on to your kids? Homewise wants to interrupt this cycle by making it easier for people to buy a home and build assets, even if they don’t have a fat savings account at the Bank of Mom and Dad.

The day after Election Day 2016, we happened to have a staff meeting and the mood was glum. Politics notwithstanding, witnessing such a divisive and nasty election and reconciling to the fact that millions of our countrymen voted for a man who purposefully and viciously fomented racial division, had us all feeling sad and hopeless. Our boss, Mike, had the unenviable task of rallying the troops.

He said “I think that so much of what we’re seeing — violence and racism and division and anger — comes from inequality. It comes from people who feel powerless. And I don’t know how to fix all of the things that cause inequality. But I do know how to do homeownership. And I know that homeownership can help close the gap and give people power in their own lives.  I have to believe that will help.”

What do you know how to do?

Can you teach?

Lead?

Create?

Can you keep the books, build a bridge, fix a car, write a poem?

Whatever you know how to do, there is a way to turn that into power and to direct that power to the fight against inequality. For our part, we’ll keep doing homeownership, because that’s what we know how to do.