Work hard, save your money, buy a home — and you, too, can achieve the American Dream.
If you word doubly hard, you may be a “rags to riches” success story along the lines of college-dropout Steve Jobs.
Except there’s a problem. Our supposedly classless, post-racial society of ever-increasing opportunity is beset with discrimination and barriers to upward mobility.
And if you don't recognize a problem, how can you begin to solve it?
The latest examples of the disappearing American Dream come via the U.S. Justice Department and The PEW Charitable Trusts.
On Thursday, the U.S. Justice Department announced that Wells Fargo Bank has agreed to pay $175 million to bury allegations that it widely discriminated against African-American and Latinos in its mortgages.
The country’s largest lender for home mortgages, Wells Fargo was accused of steering Blacks and Latinos into high-interest subprime mortgages or charging them higher fees and rates for prime mortgages. (In an affidavit in a 2009 lawsuit in Baltimore, a Wells Fargo loan officer said that Blacks were often called “mud people” and sub-prime lending was referred to as “ghetto loans.” The New York Times reported that the Baltimore lawsuit was one of several settled under Thursday’s deal.)
Thursday’s announcement did not specifically mention Milwaukee. It is well known, however, that the city’s Black neighborhoods were disproportionately affected when the housing bubble burst, with that bubble caused in large part by sub-prime mortgages.
Nor is the city’s African-American community a newcomer to discriminatory mortgage and housing practices.
In 1995, the city garnered the dubious distinction of having the highest rate of mortgage loan denials to Blacks of any U.S. city. That same year, American Family Insurance settled a Milwaukee housing discrimination suit which, among other things, alleged that the company told agents not to sell to Black people.
UPWARD MOBILITY LIMITED
Earlier in the week, a report by PEW Charitable Trusts documented that upward mobility in the United States is severely limited —especially for African Americans.
Overall, only 4 percent of Americans whose parents were in the bottom fifth in income ever made it top the top fifth, according to its July 9 report, “Pursuing the American Dream: Economic Mobility Across Generations.”
“The rags-to-riches story is more often found in Hollywood than in reality,” said Erin Currier, head of the trust’s Economic Mobility Project.
While most children have a higher income than their parents, the increase is not necessarily enough to move them up the income ladder, the report found. Those born either at the top or the bottom tend to stay there.
The report also documents disturbing gaps in economic mobility based on race.
Unlike whites, African Americans are not likely to make more money than their parents. What’s more, they are disproportionately at the bottom of the economic ladder to begin with.
Some 65 percent Blacks were raised in families at the bottom fifth, based on income. For whites, the figure was only 11 percent. (The study divided households into five groups, from those with the least income and wealth to those with the highest.)
Meanwhile, the number of Black families in the top 40 percent of wealth and income is so small that “estimates cannot be calculated with statistical certainty,” the report said.
The report, unfortunately, was not groundbreaking news. It’s long been recognized that Americans have less economic mobility than Canadians or people in much of Western Europe.
“It’s becoming conventional wisdom that the U.S. does not have as much mobility as most other advanced countries,” Isabel V. Sawhill, an economist at the Brookings Institution, told the New York Times earlier this year. “I don’t think you’ll find too many people who will argue with that.”
Even Britain, the subject of many a TV series documenting rigid class snobbery, fares better than the United States. One study found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults, compared to only 30 percent in Britain.
But enough of boring statistics and multi-page reports. If you want to have some fun while learning more about the economic gap in this country, watch former labor secretary Robert Reich’s YouTube video on “The Truth About the Economy.”
Reich boils it all down to two minutes and fifteen seconds, complete with stick-figure cartoons to help explain the numbers.
The video will take less time than watching tonight’s television news. And it will be both more informative and more fun.
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This blog is cross-posted at the Milwaukee Journal Sentinel Purple Wisconsin project.