the assault on the black middle class

Homeownership has been a crucial building block of middle-class wealth ever since Jefferson promoted land-tenure laws that favored freeholders and Lincoln signed the Homestead Act. Today, housing represents nearly two-thirds of all middle-class wealth. That reliance on real property always underscored the racial chasm, first in the agricultural era, when blacks were slaves and then sharecroppers rather than landowners, and then later when decades of lending bias created a massive racial disparity in homeownership rates. Before the housing boom, in the early 1990s, 69 percent of whites owned homes compared to just 44 percent of blacks and 42 percent of Latinos.

By 2004, the housing boom had improved those numbers. Fully three-quarters of white families owned homes, as did nearly half of both black and Latino families. As the homeownership picture improved, so too did the wealth picture, though at a glacial rate. The racial disparity in net worth is among the most astounding statistics in modern economics. For every dollar of wealth the median white family held back in 2002, similar black families had just 7 cents, while Latinos had just 9 cents. By 2007, black families had a dime for every dollar of white family wealth, and Hispanics, 12 cents. This was progress, if glacial.

Then came the bust. The housing boom proved to be just another trapdoor in a centuries-long game of Chutes and Ladders for black and brown strivers. By 2007, the black homeownership rate had plunged nearly three points, to 47 percent, a larger drop than among any other group, and is probably lower today. Worse, the damage is concentrated in what were once sturdy black middle-class neighborhoods. in 21st-century America–a society that boasts equality under the law, African American CEOs, and Barack Obama–the black middle-class story is widely understood as a congratulatory tale of uniquely American success. As Obama declared in his first words as president-elect, “If there is anyone out there who still doubts that America is a place where all things are possible … tonight is your answer.”

Perhaps. It’s clear that at all stages of life–from education to workplace to life expectancy–success still tracks closely with race. And the massive black underclass–nearly a quarter of all black households live in poverty, according to the Census Bureau–is proof of lasting structural inequality. But to truly understand the relationship between race and opportunity in modern America, you must take a real look at the seemingly vibrant black bourgeoisie.

Doing so means fundamentally changing the way we measure class. For years, scholars have primarily turned to one of three measures to identify the middle class: occupation, income, and educational achievement. If you’re a professional or a manager, if your income falls in the middle 60 percent of the national bell curve, or if you’ve graduated college, you fit into one or another researcher’s definition. And by any of those three measures, my mother’s generation posted remarkable gains for people of color.

In 1960, as my mom was entering high school, around 750,000 blacks had middle-class jobs. By 1995, nearly 7 million blacks had such jobs. That’s a growth of more than seven fold in one adult lifetime. And the explosion of college-educated blacks is equally impressive. As my mom was finishing college in 1967, just 4 percent of blacks over the age of 25 had matched her achievement; in 2007, 18.5 percent had done so.

Latinos born in the United States went from making up just 3 percent of middle-income adults in 1970 to 13 percent in 2006–the largest increase among any race or ethnic group. They also saw a 17 percent spike on the Pew Hispanic Center’s income index, compared to just 6 percent for whites. The American middle-class may still be awfully white, but it’s sure gotten some color in my mother’s lifetime.

There are, of course, significant qualifiers to all of this. Most important, the gap between black and white rates of achievement in all three areas–occupation, income, and education–has not improved nearly as much as the absolute number of blacks meeting the given standard. But the conventional measures of middle-class status share a much more damning flaw. They all fail to consider the more nuanced characteristics of middle-class life that most everyday families would identify as their most prized treasures: long-term security, social stability, and the ability to pass both on to your kids in greater portions than you’ve enjoyed them.

These things aren’t measured just by how much money you make or by what degree and job title you hold; they’re measured by how much wealth you can draw upon when times get tough or an opportunity comes around, and how much you can pass along to give your kids a head start. The upper middle class helps its children with everything from college tuitions to down payments. That wealth cushion is built on financial savings and investments for some. For most, it’s equity in a home.

***

The idea of viewing economic progress through the lens of wealth rather than income emerged in the mid-1980s. It allows researchers to calculate what’s been called the “asset poverty line”–or being able to maintain a standard of living above the federal poverty level for at least three months without income. When you lose a job or get hit with a huge hospital bill or, well, get socked by a foreclosure, can you cushion the blow while getting a fresh start? Do you have strong enough bootstraps to pull yourself back up, as it were?

The answers are sobering. One in five families that were middle class in 2004 couldn’t make it three months on assets alone, according to a Corporation for Economic Development analysis of Census data. In other words, when you look at wealth, the income-based poverty rate doubles. And that was before the housing bubble burst.

If you then apply a racial lens to these asset-based measures, the disparities are awesome. Roughly 40 percent of both blacks and Latinos lived below the asset poverty line in 2004. As pioneering sociologist Thomas Shapiro sums it up in a 2006 paper, “Two families with similar incomes but widely disparate wealth most likely do not share similar life trajectories.”

The 2001 recession proves the point. Everybody gained some ground in the roaring 1990s, but not everybody took the subsequent slowdown the same. While the median white household emerged in 2002 with a modest 2 percent increase in net worth, according to the Pew Hispanic Center, Latinos lost more than 25 percent of their wealth between 1999 and 2001. People of color, Shapiro explains, burned through their meager assets and piled on extra debt to make it through the early-century tough times. Many likely got expensive, sub-prime refinances like the one my mom and Earl took out.