Pew Stokes Racial Tensions While Median Wealth Stagnates

Yesterday the Pew Research Center released analysis based on new Fed data that shows that median black net worth is less than it was thirty years ago.  Median net worth for whites has grown an average of about 1% over that time period.*  One percent is a really bad rate of return.  The top 1% have seen their wealth skyrocket, so middle class (median) households have either been spending down their wealth or else investing in really lousy investments compared to richer American households.

Pew wealthGap2Pew’s headline is that the gap between black and white households has risen, but that is an unnecessarily divisive way to look at the data.  As you can see from the chart, there has not been much change in the relative fortunes of middle class blacks and middle class whites.  The big story is the skyrocketing gap between middle class Americans and rich Americans during this time period.

The gap between races is unjust and important, but focusing on that might be counterproductive for helping reduce it because it is small potatoes compared to the unjust gap between the rich and the median (and poorer folks) and it stokes racial resentment that divides the masses.  Middle class people of all races will gain from policies that benefit the middle class (and poorer folks).  Unfortunately, many whites (perhaps like my relative mentioned earlier) are focused upon preventing efforts to help black people rather than focusing on efforts to help everyone who is below the median.  Whites now mistakenly think that anti-white racism is a bigger problem than anti-black racism!  And they mostly think that whites and blacks are in a zero sum game in which a gain for blacks can only come at the expense of whites and vice versa.  The racial gap isn’t the gap that middle class whites should be focusing on.  As the charts above show, middle class fortunes for all races generally run in tandem.  Unfortunately, the Pew graph does not show data for the rise in the wealth of the top 1%, but it would make the above change in the racial gap look like nothing.

[UPDATE 12/14 – Added a bit more explanation below.]

The big reason why the racial gap has increased in the past three decades doesn’t have anything to do with race.  Increasing inequality is the main problem.  When inequality rises evenly, the gap between poor people and the middle class will rise.  Because blacks are poorer than whites, rising inequality will tend to increase the gap between blacks and whites.  That is the big story that Pew ignores.  The problem is an increasing gap between classes of all races. Focusing on racial gaps risks exacerbating the kind of racial divisions that have often prevented populist solidarity in American history.  Middle class Americans have enormous political power and when they focus on racial divisions, they are less likely to join together to seek economic policies that strengthen the middle class (and below).

The economic gap between the races in America is an important justice issue, but it is more politically productive to focus on economic justice rather than racial justice when seeking economic goals because that will broaden the political coalition.   And the middle class is the most politically popular class in America, which is why Medianism is all about helping people in the middle… and below.  Helping the middle class is much more politically tenable than helping the poor.  Nearly half of Americans don’t particularly like the poor and think they have too much help already.  One of the reasons that Obamacare is unpopular is that it is seen as a program to help poor people.  Most middle-class people already had health insurance and see most of the benefits going to those other people (the kind of people are are also getting Obamaphones).

Programs that help both the middle class and the poor actually spend more money helping the poor because they are more politically popular.  Public education is aimed at helping the middle class, but for most of American history, public education has been the biggest anti-poverty spending program in America.  Medicare and Social Security are also aimed at helping the middle class, but they are both spend more on poor people than the programs that Americans traditionally call ‘welfare programs’.  Medicaid is the largest spending program that is sometimes called ‘welfare’, and one reason it is relatively popular is because much of its spending helps people who spend most of their lives in the middle class.  That helps make it more popular than programs that are more targeted at the poor.  About a third of Medicaid pays for long-term care in nursing homes and most of those old folks used to be middle class.  Medicaid also pays for about half of all births in America and you can’t cover half of all new mothers without covering a lot of people who see themselves as members of the middle class.

Because these programs all help reduce inequality, they all help reduce the racial gap.  Nobody thinks of them as anti-racism programs, but they are.

*My numbers are ‘real,’ meaning they are adjusted for inflation.

Posted in Discrimination, Inequality, Medianism

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