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Closing the racial wealth gap

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American Indians, and other minority groups of color, are significantly less wealthy than white American citizens. According to a recent University of Michigan research report, the wealth gap between poor and rich in the United States continues to increase. Over the last 20 years, the average net worth of the top 2 percent of richest Americans doubled from about $1 million to more than $2 million. The poorest Americans, however, were worse off in 2005 than they were in 1984. The poorest 5 percent of Americans have a negative net worth of about $9,000, while in 1984, the average net worth for the poorest Americans was about negative $1,000, when controlling for inflation. Some say the increasing wealth gap is a threat to future social and political stability. The greater the gap in wealth, the more the balance of social, economic and political power gravitates toward the richest Americans and leaves the poorest Americans with fewer benefits from the economy or the political system.

According to the U.S. Census Bureau's American Community Survey, reported in 2005, the median household income for American Indians was $33,320 per year, while white Americans garner $49,453. (The median is when 50 percent of the people are above and 50 percent are below the given household income score.) The median household incomes for minorities of color are generally lower than whites. The per capita income for American Indians in 2005 was $16,216, while the per capita income for whites was $27,559 per year. Except for that of Asian Americans, per capita income among minority groups of color is significantly lower than that of whites. In recent years, about 56 percent of American Indians owned homes, while 72 percent of whites owned homes. Less than 50 percent of Latinos, blacks and Native Hawaiians own homes. Most wealth acquired by the middle class, about 60 percent, consists of homeowner assets. The home equity value and home ownership rates among American Indians are difficult to determine because of the trust status of Indian land. However, among blacks, home equity values are 35 percent less than white home values. One can speculate that not only do fewer American Indians own homes, but the equity of those homes, on average, is significantly lower than white home equity values. Poor Americans, and poor minorities, do not qualify for the best mortgage terms and often pay more interest and fees with less favorable mortgage rates, generally known as subprime loans. The current subprime loan credit crisis suggests that many poorer Americans and minorities of color are losing their recently financed or refinanced homes because they cannot meet their mortgage payments.

In October, about 150 academics, nonprofit organization leaders and community leaders gathered at The Ford Foundation in New York City to discuss ''Closing the Racial Wealth Gap.'' They propose a series of legislative programs that will enable minority and poor people to better acquire and grow wealth. In a market system, like the United States and increasingly much of the world, individuals, families and communities need to hold onto and acquire assets that can be invested or grown to increase in value and ultimately passed onto children and grandchildren. The conference proposed legislative actions in a variety of areas, including housing and home lending; land acquisition, retention and development; wages and employment; financial services; savings and investments; minority business ownership; and social insurance. Improving the capacities and opportunities of poor people and minorities to acquire and hold wealth is a step in the right direction.

Several American Indian organizations and representatives attended the ''Closing the Racial Wealth Gap'' conference to discuss opinions. Some American Indian participants expressed the view that tribal communities consider themselves as tribes or nations, with powers of land ownership and self-governance rather than as a racial group. Other Indian representatives commented that closing the wealth gap with white citizens may not be a primary goal for Native communities. American Indians may have to approach the wealth gap issue from their own values, interests and cultures. Wealth accumulation, for private holding, is not a central value for most traditional American Indian communities. However, in traditional times American Indian peoples appreciated wealth if it was acquired respectfully and was shared among tribal community members or within family kinship networks. Nowadays, the market system is the primary means for creating economic value, and tribal communities are subject to the laws and actions that govern markets and private property. Unwillingness to participate in or lack of access to market income has contributed to the impoverishment of American Indians.

While American Indians may not want to fully adopt the pursuit of wealth as is prominent in U.S. culture, we must now be prudent about wealth and inheritance. Wealth creates stability and supports both individual choices and freedom. If tribal citizens are economically secure and are growing private wealth, then they and the community are less dependent on federal aid. Economically secure individuals will promote stronger, more self-sufficient and more capable communities and governments. In traditional times, Indian people were wealthier and supported ceremonies and the less fortunate. During the early reservation periods, poverty significantly contributed to the decline of giveaways that once supported the ceremonies and distribution of goods within the communities. New market and wealth-building opportunities will help revive choices and enhance capabilities for individuals, families, communities and tribal governments to recover the means to support ceremonies, cultural events, self-government and build wealth that will support individuals and communities to the seventh generation. If done in our own ways, we could learn much from the new initiative on creating and building wealth among the currently disadvantaged.