Wealth in Chicago’s black and brown communities intentionally eroded by discriminatory policies, study finds

CHICAGO — Da’Sean Hillsman he was 17 when he became a father in the late 90s. By 2000, his mother had died, leaving him to make sure he and his siblings — two younger sisters and a disabled older brother who survived being shot in the head in his 20s — stayed together.

To do that, Hillsman said, he chose to support his family by selling drugs.

“No one would hire me,” said the now 45-year-old father of seven. “I became a new father. Three years later, my mother died. I had two children, three siblings and no job. What else can I do? Do you either get food stamps or rob? I chose… to take care of my family… to make sure my siblings were taken care of because I couldn’t afford them to be separated. This is something my mother would not have wanted. Dad was alive, but he wasn’t really there, so I was the man of the house. So I chose to make some money to keep them together.”

Hillsman said the “fast money” was plentiful, but he would eventually end up in federal prison, sentenced to 10 years. Before all of that, Hillsman was looking forward to attending Grambling State University. But life happened – and he encountered circumstances similar to those faced by many in the Chicago area without resources, means or wealth.

These issues were the focus of a recently released study, “The Color of Wealth in Chicago.” Produced by the Institute on Race, Power, and Political Economy at The New School in New York and funded and launched in partnership with The Chicago Community Trust, the study shows how race and ethnicity influence property rights, access to financial tools and resources, incarceration, medical or educational debt, and the COVID-19 pandemic.

Disparities between groups are stark. According to the study, data collected in 2022 showed that white families in Chicago have the highest median net worth ($210,000), while typical black families report no wealth ($0). US-born Mexican families in Chicago have 19% ($40,500) of the wealth of a typical white family, while foreign-born Mexican families have 3% ($6,000) and Puerto Rican families have 11% ($24,000).

In terms of median asset value, black families have $20,000, foreign-born Mexican families have $26,000, and white families have $325,500.

The study also found that black families had the lowest estimated rate of homeownership, at 34 percent, while white families had the highest at 72 percent, reflecting the city’s historical discrimination against people of color through redlining , racial covenants, lack of current or savings accounts. , and payday lending, where unsecured loans with high interest rates are used as emergency financing that keeps borrowers in a long-term debt cycle.

US-born Mexican families, black families, and Puerto Rican families (29 percent, 30 percent, and 21 percent, respectively) were more likely to have medical debt than white families (18 percent). White families with a history of incarceration still had a higher median household income ($75,600) than black families without incarceration ($38,000).

Community leaders said that while the statistics are hard to digest, they are not surprising. Andrea Sáenz, president and CEO of the Chicago Community Trust hopes that bringing the data to light will allow people to address the issues holding back so many Chicago families. Similar racial wealth disparities have been seen in large metropolitan areas such as Boston, Miami, Los Angeles and Washington, DC, as evidenced by work the institute has done in recent years.

Kathleen St. Louis Caliento, president and CEO of Cara Collective Chicago, a nonprofit that helps people maintain gainful employment, knows what it’s like to live paycheck to paycheck. Her parents did too. She said there is mental and emotional instability that comes with this. Caliento says getting people an income doesn’t solve all of their problems, especially when you consider the fact that many black people are in debt, late on payments and victims of predatory lending.

“This report talks about the access that wealth gives you, the access it talks about is education, health — all social determinants that are inextricably linked,” she said. “I think highlighting the importance of wealth helps people really understand the systemic barriers that exist, especially for people of color who can’t access these resources.”

Hillsman, senior manager of coaching and retention at Cara, has been with the collective for 12 years, helping youth and former incarcerated people. After his involvement in the prison system, he saw how those with felonies were headed for the “bottom of the barrel” jobs, believing they were not candidates for better jobs.

“When I got out, even though I did all this training while incarcerated, I always felt like I had this big X on my back,” he said.

But his competitive personality would not allow that X to dictate who he was or should be. He tells his clients the same thing. “Yes, I’ve made mistakes, but I want people to start giving black and brown a chance, because we’re not all bad. We have a voice, we have skills to make this world a better place,” he said.

Darrick Hamilton, founding director of the Institute on Race, Power and Political Economy and lead researcher on the study, said wealth is the most important measure of financial security, a means by which people have agency, to be self-determined. Hamilton labels it an economy of human rights—one in which political, civil, and social rights combine with economic rights to enable a person to be genuinely free.

“You have to design and manage and implement policies in such a way that people of color are included, Indigenous people are included, because without that intentionality, the reasons we have this wealth inequality is a political economy that is built to rule out,” he said. said. “We know that the bootstrap narrative has never been true for any group. Our mainstream believes that simply getting a college degree, finding a partner, and staying out of trouble is not only a path to social mobility, but to the security of wealth.

“Now, undoubtedly, education in two-family households and non-incarceration is associated with better outcomes,” Hamilton said. “But when it comes to wealth, the payoff of those activities to people of color is not a big gradient. The disparities persist and extend to the upper layers. And here’s another point that can be shocking: Black families who have done all those “right things” typically have less wealth than white families who are in the lowest strata of our society, namely without a degree of college.”

The Color of Wealth in Chicago study also polled people about potential policy proposals to address structural economic disparities. The data show that public support for local and federal interventions would have a significant impact on racial wealth inequities. Wealth-building options such as guaranteed income plans, a Medicare-for-all program and baby bonds, which are government-issued trust accounts for newborns, won support from a majority of respondents, including families at or above average net worth.

The study’s co-authors say such policies, used in conjunction with meaningful redistributive measures that increase access to sustainable homeownership, can foster equitable entrepreneurial environments and build a prevention-based justice system, moving the needle on inequity.

“There’s always this feeling that people in the corporate arena, people in government, and even those of us in the nonprofit arena, are using data to make decisions,” said Karen Freeman-Wilson, president and CEO of the Chicago Urban League and former mayor. Gary’s. “We need to use this data to make decisions about where to deploy resources; that is my hope from this report.”

Hamilton says the wealth disparities we see today are not natural. They are the result of government intervention, just like the precedent that was set with the federal government providing financial aid to affected households during the pandemic, promoting economic security and providing resources for people to thrive.

“We know policies that can generate wealth,” he said. “We did it for whites, we created a middle class where a good portion was able to generate wealth and pass it down from generation to generation. That group did not appear by itself. Chicago is steeped in history and ways of sowing capital and then providing a property infrastructure to allow that capital to accumulate. So we know how to do that. What’s problematic is that we’ve excluded certain people.”

Ross McDonald, aka South Shore native Ro$$ Mac, has been educating his community about financial literacy for years through his Maconomics platform, and provides tools and actionables to put that education into practice, such as investing in stocks, life insurance, venture capital and real estate. In early July, high school graduate Whitney Young organized a weekend of wealth in Chicago. A former hedge fund employee, McDonald said he began educating the community when he discovered the firm was promoting a portfolio of cash advance loan sites preying on black and unbanked people with limited or no access to services and financial products.

“When you look at where we’re at, there’s no ifs, ands or buts about it; everything is done systematically, on purpose,” McDonald said. By helping people interrogate their relationship with money, assisting them with budgeting and educating them on ways to build wealth through investing and improving credit, among other things, McDonald is doing her part to reverse the statistics found in the study.

“Distrust comes for good reasons, whether it’s Jim Crow or the Freedman’s Bank, but how do we get past it,” he said, “because to get generational wealth, you have to overcome generational trauma.”

Hillsman, a native West Sider turned South Sider, said “The Color of Wealth in Chicago” study saddened him because he said he fell victim to the same barriers as other Chicagoans. While incarcerated, he learned from his fellow inmates by participating in the programs offered inside.

When he got out, a friend took him to the Cara Collective. “I always wanted to do something to make sure I had legal money,” he said. “I always tell people that slow money is still money. With slow money, you have to learn how to manage and budget.”

Hamilton wants to get the information into the hands of people who will agitate, advocate and promote pathways to a different future. He knows it sounds pie in the sky, but he said this is how the paradigm shift can be charted. “What is clear from the report is that there is no group behavior change that will be able to change this phenomenon, except for political organization,” he said.

Hillsman just bought his first building, a two-bedroom in Washington Park. He plans to buy more buildings as investment properties and is considering going public in the future, all in an effort to accumulate wealth.

“We all want to be able to relax a little and have a nice bank account. This is building 1,” he said. “I will definitely try to get building 2, 3, 4, 5, 6 and beyond. It’s a family building, something my mother always wanted.”