IABG is committed to addressing the growing racial wealth gap by a advocating for policies that expand access to the tools all families need to build financially secure futures.
In the Fall of 1492, Christopher Columbus and European Colonists stepped foot onto North America to claim it on behalf of, “The Crown.” Resistance from the Native Americans was met with violence and subjugation. This would mark the beginning of the forced transfer of land, land assets, and power of Native Americans to the colonists.
The early beginnings of colonial America relied heavily on indentured servitude in which people were viewed as property to work on land for a set period of time before being let free. The early contingent of indentured servants were mostly European immigrants who were held to work under harsh circumstances for 7 years before being released and given 50 acres as payment. As Tobacco and sugar crops increased in colonial America plantation owner’s sought ways of increasing profit and looked to the slave trade. Plantation owners in Jamestown VA began buying hundreds of enslaved people under the guise of prosperity for the colony and increased profits for themselves. Plantation owners saw a large increase in profits by using enslaved people, dubbed “free labor”, over the previous white laborers, dubbed “unfree laborers.” This began the common practice of white plantation owners reaping 100% profit on crops while people who were enslaved were forced to work the land under dire circumstances for no compensation or assets. This shift began an economic disparity, tied to race, that has not been bridged since its inception.
Although met with early criticism and puritan backlash, Massachusetts created the Massachusetts Body of Liberties which crafted a set of regulations including a legal foothold for the expansion of slavery in the early colonies. Modern analysis of the Massachusetts Body of Liberties points to dozens of these created liberties that contradict other liberties and in some cases contradict the liberty it is referencing. In Liberty 91 of the MA Body of Liberties it is stated, “There shall never be any bond slavery, villeinage, or captivity amongst us unless it be lawful captives taken in just wars, and such strangers as willingly sell themselves or are sold to us.” Within Liberty 91 it both condemns slavery and then equates those who have sold themselves and those who are sold into slavery as similar circumstances although they are vastly different in practice. This collection of liberties was further used as legal justification for the use and expansion of enslavement in early colonies. These liberties were then subsequently adopted by Connecticut and Virginia in an effort to expand their enslavement based labor and further divide the racial economic status of early colonial America.
The 1662 Laws of Virginia legislated a major change in slave law that had longstanding implications. The Laws of Virginia shifted the legal definition of lineage from the father to the mother and declared, “that all children borne in this country shalbe held bond or free only according to the condition of the mother.” The effect of this law meant that all children born to a woman held in slavery were also legally considered an enslaved person and property of the slave master. Children born to an enslaved mother were no longer legally allowed to be free, sell goods, buy land, and build assets as free white children of the time further widening the racial economic divide.
Utilizing similar legal justification as seen in the Massachusetts Body of Liberties other early colonies begin adopting slave laws. After Connecticut and Virginia had adopted slave laws the plantation owners in other colonies began adopting similar legal frameworks to move from paid labor to enslavement based labor to maximize profits. In 1663 Maryland adopted slavery laws followed by New York and New Jersey in 1664. By 1700 both Pennsylvania and Rhode Island had adopted similar slave laws while the remaining colonies relied on enslavement based labor but did not have legal definitions or regulations.
As slavery had become further entrenched in the development of colonies laws continued to be created to further bury African immigrants into a life of slavery. The 1705 Virginia Slave Code created wide spread legal definitions of slavery that were more detrimental to dividing races then laws seen prior. The Virginia Slave Code stated that all non-Christian servants entering the Virginia Colony are to be considered an enslaved person and expanded the definition of people who were enslaved to all, “negro, mullato [partially black], and Indian slaves” to be considered property and ineligible for land and wages. The law went on to state that enslaved people were forbidden from assaulting white persons and from owning or bearing arms. Under this law white slave owners were not held liable for enslaved people that died during punishment as well as declared that people who were enslaved needed written consent from their masters to travel. The Virginia Slave Code is seen as one of the most oppressive and detrimental pieces of legislation for the people who experienced slavery in Virginia. These laws created heightened power differentials as well as prevented people who were enslaved from additional rights such as owning arms and defending themselves.
Land Grants or land patents were issued to early European colonists giving them legal permission to begin establishing colonies along the northeastern coast of what would become the United States. These land grants were given, exclusively, to European colonists and thereby allowed them free access to land and land related assets. In early colonial days access to land meant access to producing food and self-sufficiency. By barring all non-European colonists from acquiring free land a power hierarchy was seeded that would continue to develop throughout the founding of this country.
The first enslaved African people were brought to Jamestown in 1619 in what began the history of slavery in the United States. Almost 170 years later, The Constitutional Convention of 1787 further formalized slavery by galvanizing it into laws and the constitution. Some of the new laws included the 3/5th Compromise which deemed people who were enslaved as part person and part property. As enslaved people, African Americans were unable to earn wages or any compensation for their labor and therefore were barred from building assets. It is estimated that if people who experienced slavery were to have earned wages there would be an additional 4 trillion dollars in the black community today.
The Northwest Ordinance of 1787 was initially created in good faith towards Native populations. This ordinance stated that the US could not take land without the consent of Native American leadership. The initial prospect of this ordinance faded as European settlers arrived and needed places to plant root. This ultimately led to the forced signing of 400+ treaties stripping land and assets of the land to colonial settlers.
Established that any, “free white persons” of “good character” living in the U.S. for 2 years was eligible for citizenship. This time frame later changed to 5 years and eventually 14 years to merit, “good character.” This act also stated that all Native Americans, Free Blacks, and any woman whose fathers had not been U.S. Citizens as ineligible for citizenship.
Created in March of 1824 the Bureau of Indian Affairs was seen as a governing body for issues related to Native Americans. This Bureau placed all remaining Native American assets under government jurisdiction and therefore was used at the disposal of the government, not Native American communities. The Bureau created policies for land and governing Native Americans although these policies were said to have rarely benefited Native peoples.
Signed by President Andrew Jackson, this authorized the removal of Native Americans to predetermined federal lands west of the Mississippi. Initially branded as voluntary, this became a forced relocation of Native American people to unused land in the west. This forced tens of thousands of Native Americas to move westward in an event that is now called the, “Trail of Tears.” Once moved, the resources and benefits of the vacated land were now owned by the state.
Tensions increased as voting rights were only allowed to free white land owning men with land valued at least at $134 or above. Thomas Wilson Dorr mounted a rebellion to open voting rights to free white men regardless of land value. Dorr initially supported and advocated for voting rights for free black men as well but changed his position after pressure from established white immigrants.
As a result of winning the Mexican American War of 1846, the U.S. acquired vast amounts of land in the Treaty of Guadalupe Hidalgo. This treaty stated that Mexico had conceded the areas of modern day Texas, Colorado, Nevada, Arizona, California, and New Mexico to the U.S. This land acquisition would later be used in the 1849 Gold Rush and given away to free men to reap profits from the gold and land values. This free access to gold and land would dramatically increase the financial gains of the men who received this land and more importantly those who did not receive this were at a severe disadvantage, i.e woman, people who were enslaved, and recent immigrants.
With the absence of the federal government, miners were able to, “strike a claim” by outlining land with wooden stakes and extracting large amounts of gold. All land, and resources within, not designated by the government was considered free to claim by citizens. By 1850 a quarter of California’s population were foreign miners looking to find gold and economic security. That same year the California Legislature created a Foreign Miner’s Tax that required all non-citizen miners to pay $20/month ($500 today) for access to the land. That tax was later changed to $2/month ($80 today) but increased specific regulations for Chinese miners. This anti-foreigner legislation was mirrored by public sentiment and extensive violence was experienced by foreign and Native American miners. These taxes and violence were engineered to disrupt non-citizens economic development while simultaneously promoting free-white men towards economic gains.
“An Act respecting fugitives from justice, and persons escaping from the service of their masters” The Fugitive Slave Clause was added to the constitution further galvanizing slavery in our nation. Issues began to arise with the implementation of the rule and slave masters regarded the act as ineffectual. As part of the 5 Bill Compromises of 1850, this law required that all escaped enslaved people to be returned to the state and person who owned them. This ultimately led to the creation of the Underground Railroad. Between the American Revolution and the Civil War over 100,000 enslaved men and women were able to escape while only 330 were ever returned to their slave holders. The laws themselves were created to further legitimize slavery and deter people who were enslaved from attempting escape. The 330 enslaved people that weren’t able to make it to Canadian freedom were returned to their slave holders to return to free labor often under more harsh circumstances. This slave law would remain in effect until the creating of the Thirteenth Amendment of the constitution in 1864 abolishing all forms of slavery other than as punishment.
This act took land from 42 Native American Tribes and redistributed the land to white homesteaders. The Act stated that white farmers would receive free land if they could first farm it for 5 years. This legislation is often cited as an early asset building program but when viewed from the perspective of the Native Americans who lost land under this act it is more akin to asset reduction. Over the next 40 years tribal lands would continue to reduce from 138 million acres to roughly 48 million acres.
This act created the first peacetime tax on all US citizens. There was a 2% tax on all household incomes over $4,000 (meaning only ~10% paid taxes). This peacetime tax allowed international trade tariffs to be lowered to increase raw material trade to the US while maintaining revenue.
By the summer of 1921 parts of Tulsa Oklahoma had begun to reach prominence and the black community and black businesses began to prosper despite segregation confining the community and their assets. This upward progress was viewed as a threat by the white establishment and sparked the Tulsa Race Riot. This riot led to the complete destruction of black businesses and homes in Tulsa effectively halting any upward movement by the black community. At the riot’s end, upwards of 10,000 blacks were left homeless, more than 25 city blocks of the black community were burned down including the only black hospital, and conservative estimates stated that 39 African American individuals were killed. This event directly targeted areas of economic prosperity in the black community in an effort to halt the upward mobility of African Americans in Oklahoma. Sadly, the incidents in Tulsa were not unique during the early 20th Century. Incidents similar to the Tulsa Riots had taken place years prior such as the Wilmington Insurrection and events would occur after including the Rosewood Massacre in Florida. Incidents in which black economic engines are targeted and black land and businesses were seized became the principal actions for creating and maintaining systems of oppression.
FDR’s New Deal created the Federal Home Loan Bank Board and the Home Owners’ Loan Corporation (HOLC) which worked to refinance home mortgages and avoid foreclosures for individuals. Redlining refers to actual red lines drawn on 239 city maps created by HOLC outlining neighborhoods of color where assets and services were to be denied. These maps, called “residential security maps” were adopted by other sectors including health care, banking, retail / supermarkets, and insurance providers which systematically lead to barring neighborhoods of color from accessing vital assets available to other neighborhoods. Key examples of Redlining included high earning people of color being denied loans that were subsequently offered to very low income whites of the same city. Redlining is hailed as one of the most substantial contributors to the current iterations of the racial wealth gap.
In the summer of 1935 President Roosevelt signed the Social Security Act into law to address poverty, economic security of aging populations, unemployment, and benefits for “widows and fatherless children.” The original outset for this legislation was to bring stabilization and security to populations that were particularly vulnerable however some groups were excluded from accessing these benefits. Farmworkers and maids were excluded at the onset of the act resulting in 65% of African American workers (and 27% of white workers) being excluded from benefits accessing benefits. Unmarried woman and minority groups were not permitted to access benefits and instead received a barrier to rising out of poverty.
Also known as the Wages and Hours Bill, this legislation introduced regulations on the hours of a work week, a minimum wage, overtime benefits, and child labor laws. Although these regulations were introduced to protect rights of workers certain workers were exempt from this law. In the early 1920’s and 1930’s a large portion of farm workers were recent immigrants from Mexico and South America attempting to establish themselves in America. An amendment to this act was introduced in 1978 which included expanding provisions of minimum wage but these protections applied to workers on large farms only. Existing child labor laws were also exempt under the FLSA Act of 1938. Under this act youth as young as 12 years of age can work on farms compared to the minimum work age of 16 for other labor sectors. Even after the 1978 amendment farm workers were still exempt from receiving overtime benefits, a practice which persists today. Mexican Immigrant populations were unable to receive the same benefits as other labor sectors and were therefor at a disadvantage for building financial security and securing assets.
With much of our nation tied up in the WWII war effort the nation suffered a farm and labor short fall. U.S. Farmers needed increased labor to supply the nation with food and aid in repair & upkeep of railroad lines. Mexican President Camacho and U.S. President Roosevelt entered into an international agreement to create the Bracero Program where between an estimated 2.5 and 5 million Mexican men entered the United States to engage in short term farm and labor work. 26 states utilized Bracero labor with particularly high usage in California, New Mexico, Arizona, Texas, and Arkansas. By 1941 Texas alone had a labor deficit of over 200,000 workers lost to the war effort. Early in the implementation of the Bracero Program major issues began to arise. The contracts (often not translated) were signed by the Braceros and promised good working conditions a minimum wage but little was done to ensure these obligations were met. Working conditions increasingly became unsafe, housing was substandard, minimum wages were side stepped or denied to increase farm profits, workers were transferred long distances and lost contact with their families and widespread disputes began to become commonplace. Former Bracero Isauro Reyes recounts his time working on southern farms and using a 6-inch digging hoe (which was later banned), "Ay, what an exhausting job.… In the evenings I would unbend myself and see my face flabby with fat and my hands swollen because all the blood had rushed downward.” If a worker was identified as working without a contract they were taken to the Mexican border, given work documents, and returned to the Bracero program as part of a policy that U.S governmental publications called, “drying out the wetbacks” [sic]. By the official end of the Bracero program in 1964 scores of workers had their wages stolen or denied altogether. These lost wages amount to countless hours of free agricultural labor where profits were gained by farm owners at the expense and hardship of immigrant labor.
Anti-Japanese sentiment had been steadily building in the United States and in 1941 the Attacks on Pearl Harbor and the 1942 the Niihau Incident sparked Japanese Internment in the US. Executive Order 9066 was issued by President Franklin D. Roosevelt to authorize the Secretary of War to deport Japanese Americans to internment camps for fear they would side with the Axis Powers of World War II. American citizens of German and Italian decent were also housed in internment camps during their usage. Well over 70,000 Japanese Americans were held, without charge, in internment camps equating to significant losses in earnings, loss of businesses and loss of homes. The Commission on Wartime Relocation and Internment of Civilians estimate the total property loss of internment victims at $1.3 billion dollars and a net income loss of $2.7 billion dollars.
Created as a means of supporting returning WWII veterans, the then dubbed “GI Bill” aimed at providing preferential hiring policies, secondary education financial support, financial support while job searching, and very low interest home loans to returning veterans. These low interest home loans lead to cultural shift towards the suburbs and GI benefits being accessed by 42% of returning veterans. The Federal Housing Authority was in charge of issuing the loans and utilized the “redlined” lending strategies used years earlier. These lending policies lead to systematic disparities in GI Bill access for African American and Native American returning veterans. Modern research into the GI Bill lending policies shows that only between .1 to 2% of those FHA housing loans went to non-whites regardless of their military statuses.
As usage of the G.I. Bill program was hitting a new height the United States was going through a surge in new industries and highway systems. The Highway Act of 1956 paved the way for the expansion of suburbs throughout the United States and spurred on the expansion of Levittown, a suburb of Long Island New York. Levittown gained historical significance for creating G.I. Bill sponsored housing developments and then barred black veterans and black home buyers from entering the community. Levittown began putting up the prefabricated G.I. houses in late 1951 and immediately created clauses to only sell property to Caucasian home buyers. The official Levittown exclusion clause reads, “The tenant agrees not to permit the premises to be used or occupied by any person other than members of the Caucasian race. But the employment and maintenance of other than Caucasian domestic servants shall be permitted.” Assets and wealth are largely tied to homeownership and in the case of Levittown black and brown people were denied access to building these assets. After years of pressuring, demonstrating, and legal battles the first black family moved into Levittown in the fall of 1957. The Meyer family was met with extreme hostility and nighty angry mobs gathering outside their house pressuring them to leave the all-white suburb. The case of Levittown stands as an example of federal assistance being denied to people of color and in particular servicemen and veterans who had fought bravely to protect the American public, regardless of color. The black and brown service men returned from the European front to be met with a new battle at home; a battle for equal access to the American Dream.
Beginning as early as the late 1940’s, Tribal Termination was a term given to the perspective of the United States towards remaining Native American Tribes. Beginning with the House Concurrent Resolution 108, this policy sought to break down the current Native American sovereign tribes and begin assimilating them into “mainstream” American schools and jobs. This policy was accomplished through four major legislative moves; The Menominee Termination Act, the Klamath Termination Act, The Western Oregon Indian Termination Act, and the California Rancheria Termination Act. The combined effect of these laws meant the US no longer recognized these as sovereign tribes and took full control of the land reservations. This policy decreased the independence of Native Tribes and for the first time made Native Americans subject to taxes in 1968. This meant that Native Tribes were now subject to paying taxes on land, goods, and services that was once held by them. These acts further decentralized control of assets and power from within Native American Tribes to within the Federal Government.
“[ . . .] we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation.” In the summer of 1963 Rev. Dr. Martin Luther King Jr. joined with over 200,000 peaceful demonstrators to bring attention to the disparities in economic and social justice faced by people of color. Racial discrimination, segregation laws, low black employment, toxic and discriminatory lending practices, housing inequality, lack of political representation, and institutional economic barriers had long been plaguing communities of color prompting the large demonstration. The goals of the march as indicated head organizer A. Phillip Randolph and shared by Dr. King were centered on a civil rights bill, desegregation of schools, federal works programs, and increased voter recognition and protections. The results of the march lead to President John F. Kennedy and Vice President Lyndon B Johnson meeting with Dr. King and other civil rights leaders to outline provisions for the future Civil Rights Act. The large scale of the protest brought the issue of social and economic fairness to the forefront of the nation. The March on Washington for Jobs and Freedom represented a tidal shift in discussing inequality in the United States in a way it had never been openly discussed before. Tensions again would rise and the threat of violence increased for people of color in neighborhoods across the country but the protections afforded by a potential Civil Rights Bill rallied communities to press on despite the oppositions hostility.
The Civil Rights Movement through the late 50s and 60s represented one of the largest social movements towards racial equity in our nation’s history. The Civil Rights Act of 1964 was signed into law in the summer of 1964 and outlawed racial and ethnic discrimination with particular attention to school, workplace, and voter discrimination. With racial and ethnic discrimination banned, minority groups began seeing increased social assets and social capital as they were given increased access to education, higher employment, and political power. Black employees of textile mills went from 5% in 1963 to over 33% by 1980 in South Carolina and this increased access to employment was seen across southern states. This increase in minority millworkers lead to more black families sending children to higher education and marked a significant shift towards asset accumulation. An important feature of this rise in minority asset accumulation is that it did not come at a cost to other groups. After the Civil Rights Act of 1964 white employment and white graduation rates did not decrease as more minority groups entered the work force and graduated from college.
Early into his presidency, President Richard Nixon signed the Comprehensive Drug Abuse Prevention and Control Act of 1970 into law which marked the beginning of the, “War on Drugs.” Although created under the Nixon presidency, the full effect of the “War on Drugs” was felt under President Ronald Reagan. A key platform of his second campaign, President Reagan called for a more militarized approach to fighting the “crack epidemic” and pushed for severe prison penalties for sales and possession of crack cocaine. The efforts by the president resulted in an additional $1.7 billion set aside for enforcing the effort. A mandatory minimum sentencing act was introduced with a ratio of 1:100 powder cocaine to crack cocaine. This sentencing disparity disproportionately affects crack cocaine users which at the time were largely belonging to minority groups and living in an urban setting.
Signed by then President Ronald Regan, the Economic Recovery Tax Act of 1981 was hailed as the centerpiece of “Reganomoics.” This act decreased taxes on higher earners from the current rate of 70% to 50% with the net result being 400,000 total US residents claiming millionaire status. All earning groups did not feel this same economic benefit under the Economic Recovery Tax Act of 1981. By 1984 the number of African Americans experiencing poverty had been dramatically increasing while the poverty rate for Caucasian Americans remained unchanged.
Presented as the second great tax restructuring of Regan’s presidency, this act again lowered the top tax rate from its rate of 50% to 28% for top earners and simultaneously lowered corporate tax rates from 50% to 35%. This act is also the only taxation legislation to lower top tier rates and raise rates on lower earners from 11% to 15%. This act had a significant stalling effect for low income earners building assets. Those making the least income were hit with a tax increase while those doing economically better were given tax relief. In 1986 31.1% of those under the poverty line were African American, 27.7% were Hispanic and 10% were Caucasian. This tax increase on low earners meant less economic mobility for people of color attempting to leave poverty.
Signed by President Ronald Regan, this act granted reparations to any living Japanese American who had been interned during the Internment period of World War II. This policy outlined that all surviving victims of Japanese Internment Policies of the 1940’s would receive $20,000 as reparations for acts committed against them by the US military.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, also known as the Welfare Act of 1996, was a major initiative of the Clinton Administration in which welfare programs were restructured with an emphasis on moving participants towards the workforce. This restructuring included introduction of the Temporary Assistance for Needy Families (TANF) as well as increased funding for Job Opportunity and Basic Skills Training (JOBS) program. Minority and low income families were given access to job training programs in addition to public benefits to greater increase assistance towards entering the middle class. The net effect of welfare reform is producing mixed results of effectiveness. PWORA placed an emphasis on reducing caseloads which lead to a dramatic shift from 14.4 million people receiving benefits in 1994 to 5.4 million in 2001. This shift was originally viewed as a success but little is known as to the wellbeing of individuals who were exited from caseloads. Welfare Reform created new regulations on benefits to noncitizens and immigrants. Immigrants who enter the U.S. are met with a 5 year ban from accessing welfare benefits. This denial of benefits can represent an additional barrier as new families attempt to establish themselves and build assets in this country.
In the early 50’s and 60’s the United States Department of Agriculture (USDA) left the farm loan determinations to be carried out on local levels. These local loan determinations were often made by as few as three people in some towns offering areas of bias to appear. From the 50’s onward, the USDA denied farm based loans and federally available farm assistance to African American farmers even if their repayment was on time and they had no outstanding red flags. These instances continued until Timothy Pigford and 13,300 other black farmers filed a class action lawsuit against the USDA (Dan Glickman, Secretary of Agriculture. The USDA ultimately settled with the farmers for $1billion in 1999.
In late 2007 the housing market began to enter a steep nose dive as many low quality, subprime, mortgages began to default on their payments around the same time. The Lax housing regulations that existed allowed lenders to target minority communities with high interest loans. Lenders began targeting these neighborhoods with more than twice the rate of subprime mortgages for the overall population. This crisis lead to a large amount of housing foreclosures and sparked a subsequent recession known now as The Great Recession of the late 2000s. In this crisis Latino households lost about 66% of household wealth while African American Families lost about 50%. Between July 2007 and August 2009, seven million homes went into foreclosure; these homes were primarily owned by low income and middle income families.
The 2009 federal budget proposal included $1.1 billion for low income home ownership programs and $15 billion towards tenant-based Housing Choice Vouchers. These allocations made it harder for low income families to gain resources towards home ownership and instead were guided towards temporary renting. This redirection of services maintains that low income families are still not getting access to homeownership which is a chief protective factor in anti-poverty measures.
One of the new features of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, was the addition of an asset limit to receive benefits. In addition to the previously detailed ills Welfare reform meant that those receiving benefits were now barred from building savings to get off their continued use. Recent immigrants and families of color recovering from policies of the past are met with a new institutional barrier. Asset Limits work directly against the central purpose of welfare programs -- allowing a pathway out of poverty. Some states have limits as low as $1000 for Medicaid Health benefits or $2000 for food assistance. Many of these limits have not been adjusted for inflation since 1996. Families having even $1 over these limits have their applications denied or are terminated from services. In July of 2013 with the assistance of the Illinois Asset building Group (IABG) and other statewide partners Illinois became the thirteenth state to remove asset limits for recipients for TANF. The passage of HB2262 meant that all asset limits across the state of Illinois for benefits were now to be disregarded. The majority of states across the U.S. still maintain this barrier for welfare recipients. There is mounting pressure to remove the limits, set them to a livable range, or at least raise them to keep with inflation. Significant policy work is needed to address asset limits nationwide.
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