October 3, 2022

One reason America’s wealth gap persists across generations: NPR

White adults are twice as likely to receive substantial financial support from parents or grandparents, a new poll finds. In contrast, black adults are more likely to give money to adults.

Tracy J for NPR. Lee


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Tracy J for NPR. Lee

White adults are twice as likely to receive substantial financial support from parents or grandparents, a new poll finds. In contrast, black adults are more likely to give money to adults.

Tracy J for NPR. Lee

Angela Sevaux and her husband of York, Pa. He is an insurance claims supervisor and he is in construction. However, her father-in-law’s recent inheritance changes her life. She gave them a retirement account, a life insurance policy, an annuity — and her husband and his brother inherited an old farmhouse in a secluded spot with a pond.

“We were able to buy the property – the other half – from his brother at a decent price,” says Chevaux.

She figures they paid about half of the appraised value.

A recent inheritance has allowed the Chevaux family of York, Pa., to pay off mortgage and student loan debt. That kind of generational transfer of wealth is more common among white families than others.

Via Angela Sevaux


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Via Angela Sevaux

A recent inheritance has allowed the Chevaux family of York, Pa., to pay off mortgage and student loan debt. That kind of generational transfer of wealth is more common among white families than others.

Via Angela Sevaux

They renovate the farmhouse to live in, sell their own home, and say goodbye to 11 more years of payments.

“We will be mortgage free [ages] 50 and 59!” she says with a laugh.

His father-in-law left the money market account to Chevaux’s 24-year-old son.

“He gave our son some money for college before he graduated,” she says. “So it allowed him to pay off his college loans.”

Her son is a financial advisor and plans to invest the rest of her inheritance to help her buy a house.

Family finances show one way in America A stark racial wealth gap Persisted—and expanded—from generation to generation. White adults are twice as likely as black and Latino families to receive substantial financial support from parents or other adults. That’s according to a new poll by NPR, the Robert Wood Johnson Foundation and the Harvard TH Chan School of Public Health.

Dorothy Brown, a tax law professor At Georgetown University, many white families want to talk about these transitional advantages.

“Because you have black Americans who do exactly what they’re told and don’t move forward,” he says. “How am I not doing better than I am? How am I not doing better than the guy in the cubicle next to me?” They scratch their heads. “

A new poll found 38% of white adults say they received at least $10,000 in gifts or loans from a parent or older relative. Only 14% of black adults receive similar gifts or loans. The share is 16% for Latinos and 19% for Native Americans.

Brown says the divide reflects generations of segregation and racism, particularly in housing policies. Racially restrictive covenants prohibited whites from selling or renting their homes to African Americans or other minority groups. Central Housing Administration policies supported such restrictions.

“If only your grandparents had it FHA insured homeIt was a result of them being white,” he says. “You don’t think about it, but it was there.”

The racial wealth gap is also evident on many questions in the poll.

“When people talk about the American dream, it’s here,” says Robert Blenden, a Harvard professor of health policy who worked on the poll.

Large numbers of black, Latino, and Native American adults say they want to move into better homes and expect their children to go to college, but they don’t have the money to pay for those things.

“These minority communities … have to borrow everything in a very precarious environment for that, and at least they don’t have anything to cover some of the costs,” Blendon says.

At stake, he says, is the ability to make choices that help families and future generations.

Black Americans are more likely to become wealthy

For African-Americans, in particular, tax expert Brown says, generational wealth transfers are actually more likely to go the other way — with children helping parents who suffered under Jim Crow.

Theodore Bailey and his wife, Audrey, live in Marana, Ariz. He is one of many college-educated black Americans who provide extensive financial support to family, research finds, contributing to the persistent racial wealth gap by reducing inheritance funds.

Via Theodore Bailey


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Via Theodore Bailey

Theodore Bailey and his wife, Audrey, live in Marana, Ariz. He is one of many college-educated black Americans who provide extensive financial support to family, research finds, contributing to the persistent racial wealth gap by reducing inheritance funds.

Via Theodore Bailey

It’s the story of 76-year-old Theodore Bailey, who remembers a difficult childhood in segregated Nashville.

“My father died when I was 3 years old,” he says. “My mother was a mother with four sons.”

His father died in World War II while he was serving as an army cook, leaving Bailey with a big break. As a war orphan he was able to go to college on the GI Bill and start a successful career as an engineer and missile designer. From the beginning, Bailey sent money to help her mother.

“I know she’s struggling, you know. At that time, I didn’t have much left, but I would send her what I could,” he says.

Now retired in Arizona, Bailey says she’s always helping the family. That includes supporting a brother who lost his job, sending grandchildren to college, and helping others along the way.

“Oh,” he says with a laugh, “there’s always cousins ​​and nephews and things that want to borrow money, and a lot of times they don’t pay it back.”

The family actively shows such support Decreases the wealth of college-educated black Americans. In this bad market, Bailey says, she needs to draw more from her IRA now than she wants to cover her own expenses.

He doesn’t know how much will be left for his children and grandchildren.

“I invested in them, put them through college and so on,” he says. “I hope they can take care of themselves.”