First of a two-part report.
Here's a startling figure: The typical white family has 20 times the wealth of the median black family. That's the largest gap in 25 years. The recession widened the racial wealth gap, but experts say it's also due to deeply ingrained differences in things such as inheritance, home ownership, taxes and even expectations.
Take the example of two California women, Dametra Williams and Stephanie Upp, who aren't that different in many ways. Both were raised by single mothers who struggled financially. Both worked hard to get where they are today.
But how they describe basically the same thing about how they got to where they are today differs.
Williams is 40, black and a single mother of one. She just started her own business.
"It's funny, the American dream is sort of steeped in this myth of work hard, be self-sufficient and push yourself forward, pull yourself up by your bootstraps, that kind of thing. But much of the wealth in this country was not built on that, in no way, fashion or form," Williams says.
Upp, 43, is white, a mother of two and a part-time consultant.
"I think about the little things, like when I went to college. When I graduated, my mom had enough resources to give me her car so that I had a car to get to work so that I could earn money that I could then save to help put me into the next position," Upp says. "I could then save more money and have opportunities. So it wasn't like we had a lot, but there was enough. I didn't do it all by myself."
And that's the difference. Study after study shows that white families are more likely than blacks and Hispanics to enjoy certain economic advantages — even when their incomes are similar. Often it's the subtle things: help from Mom and Dad with a down payment on a home or college tuition, or a tax break on money passed from one generation to the next.
Tom Shapiro of Brandeis University has tracked hundreds of families for almost 30 years and says the gap perpetuates itself.
"The larger the amount of financial wealth a family starts with, the more financial wealth it accumulated over that period of time," he says.
In other words, it's easier to get richer if you already are. Since blacks and Hispanics are less likely to have much wealth to begin with, they're less likely to have money to invest in the stepping stones to success — a small business, college or home.
Stephanie Upp: 'A Richer Life'
Upp, her husband Ben Corson and their two children live in a small bungalow in Oakland. This family is well on its way to achieving the American dream. Corson works in software. Upp consults for nonprofits.
Upp credits her success, in part, to something that happened a long time ago. When her parents divorced, her mother insisted on keeping their home in suburban Kansas. They didn't have much money, but they had stability and good schools, where college was a given and expectations were high.
"In my mind, there wasn't a question that I would have a richer life than I grew up with both financially and then also in terms of experience," Upp says.
College led to graduate school, then a career, then Corson. They started a family, and when they wanted to buy their first house, they got an unexpected boost.
"We were able to have a down payment for this house, thanks to my great-aunt," says Corson. "So that definitely helped us."
His great-aunt left the couple $60,000 in her will.
Shapiro says inheritance is a big factor when it comes to the racial wealth gap. White families are four times more likely than blacks to inherit. When they do, the median inheritance is 10 times greater.
Now, Upp and Corson plan to leverage their house into a new and bigger one, which will mean better public schools.
Stephanie says they aren't rich by any means, but they have options.
Their 6-year-old daughter, Clare, reads a poem from the Dr. Seuss book Oh! The Places You'll Go that is painted on the wall above her bed: "You have brains in your head, you have feet in your shoes, you can steer yourself any direction you choose."
Experts say choices and expectations can make all the difference.
Dametra Williams: Making Things Work
"When you don't have enough money to make any mistakes, the bottom line is you just don't, there's no room," Williams says.
Today, Williams thinks she finally has choices. Her home health care business in Berkeley is getting off the ground. She beams when her 18-year-old daughter, Yvonne, talks about getting into Mount Holyoke for college.
"I applied to so many [schools]," Yvonne says.
Williams says Yvonne applied to about 23 or 24 schools. "And she was offered admission and scholarships to about 18 of them, so I'm very, very proud," she says.
But it's been a tough journey. Only 12 years ago, Williams and her daughter were poor and homeless. She says that in her family, growing up in Texas, education wasn't a priority and college wasn't in the cards.
"My plan was to work and start my family," she says.
Unlike Upp's mother, Williams' didn't own a home. That's not uncommon among black and Hispanic families. In fact, about a third have no assets at all or are in debt, according to a recent study by the Pew Research Center. That's double the rate for white families. This means no home equity to draw upon and no mortgage interest deduction to ease the cost of housing. Williams knew when she left home at 17, she was on her own.
"There was no cushion for me to go back to, so the reality for me was either make things work [or] be homeless," she says. "I remember my grandmother telling us we could do anything we wanted to do." But, she adds, she doesn't remember getting advice on how to do it.
Like inheritance, financial know-how is key to closing the racial wealth gap, says Stuart Butler of the Heritage Foundation. He says families that don't expect to climb the economic ladder often don't acquire the skills to do so. After decades of discrimination, he adds, blacks especially can be discouraged about their prospects.
"If somebody thinks they will not succeed, there's a high probability that they won't succeed. Because if they don't expect to go to college, if they don't expect to be affluent, they start doing things with that in mind," he says.
'A Formula For It'
At the urging of a school counselor, Williams attended the University of California at Berkeley, but she says she dropped out when she realized she didn't have the right skills. Instead, she started a family. When she and Yvonne's father split, though, her one income as a youth counselor wasn't enough. Williams and her daughter wound up homeless, then in public housing.
"It was really hard," Williams says.
But here's where her story takes a turn. Williams was poor but smart. With the help of a housing authority savings program she eventually returned to college and got her degree.
She also got Yvonne into private schools through a special program for inner-city youth. A San Francisco nonprofit called EARN helped her save money for tutors and a business. Today, she thinks she might be breaking the cycle that have kept so many others in poverty.
"Families of color in particular are becoming much more knowledgeable and much more aware of how to create wealth here in America," she says. "I think there is a formula for it, and it's not work hard and do well. Most poor people work really hard."
Williams says she's still trying to figure out the formula and working hard to catch up. But, she thinks that Yvonne at least is going into the world with the head start she never had.