WGBH Radio; The Callie Crossley Show

I'm Cally Crossley This is the Cali Crossley Show. Today we're talking about the long lasting effects of the Great Recession from the wealth gap to credit card debt. The latest poverty numbers show that last year more Americans were poor than ever before. On top of this we're now peering into a wealth gap that's the widest it's ever been between white and black Americans. Right now the typical white family has 20 times the wealth of the typical black family. And the pressures of this economic inequality are leading to debt today with the top 1 percent commanding one third of all wealth. The bottom 99 percent are using credit cards to keep up with the proverbial Joneses. This hour we'll explore these issues from the forces that are creating and sustaining economic inequities to a program right here in Boston. Helping people get out of debt. Up next Minding the wealth gap. First the news. From NPR News in Washington on Lakshmi Singh renewed hope about

Europe's ability to resolve its debt problems as spurring gains on Wall Street at last glance the Dow is up 270 points or 2.4 percent at eleven thousand three hundred fourteen. Earlier Greece said it was expecting another round of bailout loans to avoid default in mid-October and Germany Europe's largest economy says it will do whatever it can to help Greece and the Euro Zone gain a stronger footing in the U.S. New figures show the spring buying season boosted home prices in July but NPR's Joel Snyder reports there's still trouble ahead for the housing market. The Standard and Poor's Case-Shiller Index shows home prices increased in July for the fourth straight month and 17 of the 20 cities tracked. But economists are chalking up the increases to the peak buying season housing analyst Celia Chen of Moody's Analytics expects prices to deteriorate into early next year before bottoming out. The main constraining force on home prices right now is the large number of distressed homes that are out there and are available to for

sale this fall. Are generally discounted at a great deal and that this is like dragging down home prices. Jen says prices are down by about 4 percent from a year ago. Joel Snyder NPR News Washington. Consumer confidence remains weak and the Labor Department is out with another report that shows people spent less and earned less in 2010. It's an annual survey the government finds spending fell 2 percent last year. Premiums for the average employer provided family health care insurance policy topped $15000 this year that according to a new survey. As NPR's Julie Rovner explains this year's 9 percent hike in premiums dramatically outstrip increases in worker's wages. There actually was some good news in the annual survey of employer health coverage by the Kaiser Family Foundation and the health research and educational trust. It found that 2.3 million young adults who might well have otherwise been uninsured were added back

to their parents health plans in the last year. That's one of the few new benefits of last year's health law to take effect. But in case you're wondering no say analysts the big boost in premiums is not all the result of the health care law. Most of the hike is likely due to an anticipated economic recovery that failed to take place. There are already indications that next year premium increases will be smaller. Julie Rovner NPR News Washington. The Pakistani government reportedly is again warning the U.S. to stop accusing it of siding with Islamist militants. In an interview with Reuters prime minister Yousaf Raza Gilani also says any unilateral action taken by the US to track down militants of the Hakani Network on Pakistani soil would violate our sovereignty. You're listening to NPR News. Good afternoon I'm Kelly Crossley making ends meet is not a given these days for more and more Americans.

And now one out of seven Americans is living below the poverty line. One out of six is hungry. These days the food pantry lines include people who used to give food to the pantries but what's more the gap between the well-off and the struggling is growing wider fueled by racial inequalities. Our guest today say that the wealth gap is a cause for concern even for those of us doing OK. We're kicking off the hour with a look at income inequality wealth inequality and where racial inequalities fit in today's economic reality. I'm joined by Thomas Shapiro. He's the director of the Institute on assets and social policy at Bryant Brandeis University. He's also the pokers professor of law and social policy. Thomas Shapiro is also the author of several books. Among them is black wealth white wealth a new perspective on racial inequality. Thomas Shapiro thank you for joining us today. Thank you for having me it's a pleasure indeed. This is work you've been doing for many many years but I think probably what got the

attention of just general public those of us not doing this very detailed work was the Pew study that came out not long ago and it had a startling fact that people kept asking each other is that right that white families have 20 times the wealth of typical black families. OK. Can you explain that. Well first I think it is important to think about that indeed that is the accurate set of facts that that's the stylised facts that African-Americans own about 5 cents and wealth for every dollar of wealth that the typical or average white family owns. Now certainly there's a there's a lot in between and we're measuring averages to averages but it still tells us a lot in the work that I and others have done. The figures might change a little bit but that pattern. Of about five cents on the dollar to 10 cents on the dollar of wealth is is what sustained itself in the data for at least the past 25 years or so. By

a quick comparison just so we have a sense of the scope. When we look at income inequality between Africa the median African-American and median white family the income gap is about 60 cents on the dollar. So in terms of resources we have always measured in the United States kind of economic inequality between races and ethnic groups by the income inequality and the closer we get to to 1 or 100 the further up the scale from 60 we go the celebrations we can have and as we slide downwards we begin to think about what was the cause of that. But now we think about that wealth gap between African-Americans and whites for example. We're no longer have a paradigm of thinking how do we get from 60 cents on a dollar to something we would think of as parity something close to a dollar to a dollar. Now the project becomes oh my gosh how did we end up and find ourselves in a situation where African-Americans have about five cents for every dollar that the average white family

has. Well let's go back a bit and underscore a few things if you just said because. You know I'm listening and people are listening and we're thinking. I know people they seem to be working and doing OK they're making a good salary. So your point that there's a difference between the typical black person making a good salary and typical white person making a good salary is 60 cents. As I understood you. But OK so that's one thing that's income. Why is that not wealth. What's the difference between income and wealth. Great question you know the difference between income as well and wealth is something that we we don't talk a lot about in the United States actually having a conversation about wealth especially family wealth is it is social taboo. Income is a stream of resources that we have coming in most mostly from work and a job it's the mean aeration what we're paid for our work or social security after retire or or whatever. Even the interest from stocks and bonds we count as income. So that's a stream that goes by and most American families use almost all of that stream

just to reproduce their daily existence to to buy their food to put clothes on their back to a shelter where they're paying a mortgage or they're paying rent. Wealth on the other hand we want to think of as a pool. It's a stock of stored resources that a family has accumulated by various means over a period of time and that family can draw upon that stock of stored resources are wealth which is primarily money in a savings account. Stocks and bonds business and by far the largest component of wealth for the average American family for middle income American families is their home equity. The value that the home has increased over time compared to what they bought it for. And that's the largest source of wealth so wealth is that stored pool of resources that families can draw upon. Primarily families draw upon that stored resources first for times of crisis emergency shock whether it's winter in the Northeast and the car

goes over a pothole and you've got to replace a tire or something in the car and you get a thousand dollars or so. But it's also a pool of resources that family primarily think about as they're moving ahead money. The kinds of resources that will allow them to put together a down payment to buy the first home or to buy a larger home or the start up money to start up capital for a business or the seed money for a retirement account thinking about how they can construct their lives after they want to stop their paid working days and. For most American families they also think about wealth as a launching pad for their children's aspirations. Getting their children to college helping to pay for college maybe launching them in life through a really nice wedding gift or some large appliances at their first marriage or to help stock that first house. So the wealth is very different in that way. It is both a say private safety net and for most families it's mobility

money or moving ahead money. I would imagine that most people don't. When you hear the word wealth they don't think of it as those kinds of resources that you've outlined they think of it is Donald Trump. That's that's in our minds what we think well. That is right. And there's a really good reason for that I think and that is most American families don't have very much wealth at all and it's only really relatively recently in American history I think actually with the stability of the American middle class post 1960s or so that wealth has really start to accumulate in the form of home equity and families then have the capacity to pass wealth along. And that's the other huge and very dramatic distinction I think about income and wealth. Between blacks and whites both about blacks and whites but also income and jobs in this is cited not something we pass along to children and is not something that was hindered by law and custom in the past. But

wealth has the capacity for us to open that window to the past and think about which families have the ability to accumulate land to buy a home to start a business to do well and to possibly pass it along to their children. And in this country there were usually not folks who weren't white. Quite Typically yes especially if we think about that largest component of wealth for American families homeownership. Well I can just say you know personally my father speaking quite often about the fact that there would have been no opportunity to purchase a home had he not been a G.I. because he had the G.I. Bill and what we know from history is that the found the sponsor of the G.I. bill initially wanted to withdraw it once he knew that it would apply to blacks. So he was just lucky as were many other black Yeah I think that that that passed. That's right. The fortune of being a being a soldier during World War 2 provided a lot of opportunities for returning veterans. But even within that

context I don't know the personal story but I don't know. I know we're going to. I know. There's a story in the aggregate. Yeah and that is that even those paternal African American GI eyes could not buy in many communities. Yes my father was quite bitter about that actually he was quite limited about where he could you know use his G.I. money which he felt by being a service person that he had earned as equal to anybody else. So let me ask this question because you touched on it a little bit. Your focus has been looking at this the racial inequities or inequalities that impact this gap. So we're in a time now where the economy is tough all over. As I've said so everybody is struggling that that middle class whatever wherever you are is going away. So how is it reflected today. What are we talking about today in terms of is it becoming more horrible. How can it be more horrible than 20 to one. What's happening there across the board and certainly with regard to the racial gap.

These are certainly very tough times even even before the official designation of this great recession in December I think of seven many families who are going through a lot of economic crises and unemployment are already started to go up. There has been and the Pew report documents this and I do think I want to I want to highlight it in a way because it puts on the table both the racial and ethnic component of this as well as the way in which there has been wealth stripping across the entire society for for most American families. People are losing the reservoir of people are losing their reservoir so even in the Pew study which marked 2:07 in 2007 2009 there was a net loss of wealth in the white community. And actually it was it was a marked loss of wealth the loss of wealth in a percentage or ratio terms in the African-American community however was greater. So actually

before the the Great Recession the figure in the Pew study of 5 cents on a dollar was actually closer to a dime on the dollar. So the great recession while it is impacted just about everybody except those in the top 1 or 5 percent and we know that very clearly they have been doing very well thank you and we all wish we were there but we're not the last has hit the more vulnerable families and communities even more harshly. Is the middle class no more for anybody at this point. The middle class is was very fragile before the Great Recession. And I think it is even more fragile. I think the the the middle class has had two pillars that it's been built upon. One is the income and the job killer. And that obviously has become more vulnerable as we see people moving more often now than in the past in and out of the economy even when they have decent paying middle class even upper middle class income ranges their incomes are more vulnerable in that

it's no longer a steady stream. It tends to be more interrupted. The second pillar is the wealth pillar. And it's that pillar that is even become more vulnerable and more fragile since the Great Recession especially in the African-American middle class community where that wealth pillar to begin with was was very very small. So what does it mean then to be African-American and to not have wealth now I mean how does that work. Give us some examples. Well it worked. I think it works in the following way. I think it explains a lot of a lot of movement around social mobility about the ability or inability of families to have the aspirations of themselves and their children met their ability or it challenges to pass that status along to their children. For example the. The Pew study talked about the aggregate of the overall figure of 5 cents on a dollar in some of the work I've done. One of the things we

want to do is we want to say OK let's look at a best case scenario let's look at case that only compare is a white middle class and an African-American middle class where incomes in fact are roughly equal where job or professional status is also roughly equal where education is also roughly equal looking at college graduates for example. The economic theory I think would tell us that when those achievements and those merits are equal where those family has earned middle class status by college degrees by professional or highly skilled work and they're earning a pretty good income that the wealth gap should largely disappear. Well the data tell us a very different story the story that the data tell us is that yes those achievements make a considerable leap forward for African-American middle middle class families. The ratio is no longer five cents on a dollar but it bumps all the way up to 25 cents

on the dollar. So education is clearly important. Homeownership is important. Good jobs and good incomes are obviously very very important. But. That glass is not even half full yet. We have to think about. We now have to explain seventy five cents on a dollar difference between equally achieving equally meritorious middle class African-American and white families. So the way we think about Africa the middle class needs to be segmented I think by looking at how people got into the middle class how fragile their their future might look in that middle class and very specifically the race and ethnicity. You're listening to eighty nine point seven WGBH an online at WGBH dot org I'm Kelly Crossley and we're talking about wealth in America from economic disparities to racial disparities to how we save and spend our money. I'm joined by Thomas Shapiro he's the director of the Institute on assets and social policy at Brandeis University.

He's also the pokers professor of law and social policy professor. We found something from somebody else that may help all of us crystallize in our minds the differences between in this case he's discussing the difference between rich and wealthy and that's comedian Chris Rock who is also also sometimes a satirist about these issues. And here's a clip from one of his comedy routines when he's breaking down exactly what you've been saying but in a way that I think people can understand. There are no wealthy. People in. America. We got some records we don't got no. Well. People go. Oh. What's the difference. Here's the dippers Jack is Riggs the white man is signs his check. Is wealthy. Not to have the rest. Of talking. About. Well. OK. Will set us. Free. OK. Because. Well. It's empowering. Well.

Can uplift communities from pop for pink. OK a white man gets wealthy people's Walmart's. A brother gets rich he buys some. You'll be OK. Cut the power. Grid. I'm talking about while while this past hour provide generation to generation you can't get rid of. Rats. What a crazy some of the drugs that. Richard was right. What medical second super quick the next one to get good old. COMMERCIAL. Thomas Shapiro is a little bit different in the way you tell it but I think it makes the point. Well I think Professor rock should be should be accused of plagiarizing my work. OK. I only wish I could be as much a strategic communicator as he is because we're both dealing from the same set of facts. I thought that that brought it together. So now that we understand that the income inequality the wealth gap the racial overtones how that how we

to deal with this. Are people listening to say oh he's just some kind of socialist and he just wants everybody to have an equal distribution of income. It's deeper than that though how or how or if those if there are those of us who are feeling like we're OK. Even if where we're not wealthy is it how you describe how we look at this because people are falling into poverty. Again I think it's a very it's a very nuanced and a very it's a very great question because I think in fact in a time like this where so many families are being squeezed and working multiple jobs are trying to work multiple jobs and can't find them and making sacrifices all over the place we have to understand that the standard of living is under attack in the United States not just for middle class families but for low and moderate income families as well and even upper middle class families. So

I do we do need to recognize the the context and the difficulty that we have of having a conversation like this where people are not doing well. I still would really underscore though that thinking about the racial wealth gap is much broader and much deeper than just a question of what's on the table of what's in equality today. I think when we look at. The wealth of African-American and white families it allows us to open up a window to the past when my co-author Dr. Melvin Oliver and I first got brain stimulating each other around around this project. One of our initial goals one of our initial promises to ourselves was that we had grown very frustrated with the conversation in the United States around for a man of action. It seemed to be a conversation that was going in circles on the one side you had folks saying the past might have been really horrible but it has no

bearing on the present much less on the future. And another side talking about the past really does push itself forward in ways we don't know how to understand or think about yet. And we thought and I think we are right. If I can be allowed to say that that looking at the wealth of families was a way to very concretely and the very evidence based way begin to understand what is passed forward from the past what the potentialities that were activated or that were not allowed to be activated in past generations put structures and limits on the present day and even stretches itself out into the future. So it's part I think of a much larger larger and broader conversation that we should be having in the United States no matter what the economic climate is at any time. Secondly for me. Somebody once said that racial equality was the last unfinished project of American democracy. And of course not of course that was

W E B Dubois a long time ago and I was always struck by that because I think very firmly and I'm very very firmly convinced that we still need to have a reconciliation with with our own past before we can really move forward as a full blown full blossom democratic society and putting the racial wealth gap on the table. Is is another way of us being allowed to. To frame that kind of issue about where we're going as a society. So I understood while I understand the challenges of people being in very difficult and troubling times it's still not a time to shelve or to put on the backburner the great issues of American democracy. And I refer you to a study that just came out by the end International Monetary Fund and which they stated quite frankly that the widening income inequality was just bad for economic growth. So in other words.

These gaps really impact all of us wherever we are on the spectrum that it just brings down what can happen for our society as a whole as we try to climb out of. People keep saying the recession is over. I'm not feeling it yet but whatever this is post recession ongoing recession whatever that it has an impact for all of us it's not just those people who are one in seven in property. I think that's absolutely true you know. I have a phrase that I'm afraid is going to be true and the phrase is that today shock becomes tomorrow's structure. And to me that that means that I think we're really in the midst of a much greater transformation where instead of 4 percent unemployment being defined as the norm for the economy. We're now being in a position where you know 9 percent would look great. 8 percent would be fantastic 7 percent would get anybody elected. And I think the same thing with with poverty. The latest Census Bureau figures are that 40 million

Americans fall below the official government poverty line which I as a researcher understand is woefully low and the figure probably is a lot higher. But nonetheless it's a historic high for American society. The unemployment the poverty rate is up around the fourteen point three percent level. And it really would be a lot a lot higher if we had more if the government had a more accurate measure of poverty that we were allowed to to use. So as I think we move forward. Total equality is never going to exist in any society and I'm not even sure it's the goal it's the direction though we want to be on the road that's moving towards more equality. And I especially think that and all of the literature tells us all the research tells us this is quite accurate. There is a threshold of inequality where that inequality becomes extremely dysfunctional for the society in that it starts to promulgated

all kinds of social problems and social disorders that we really don't want to see in our communities and end up have to having to pay for both in hospitals in policing in correctional institutions in remedial education and none of y'all are going to escape from that is what none of us escape from that so just for example very quickly we used to in the social sciences the one of the prominent theories around health disparities and crimes for example used to be theories that linked it to poverty. I think we now have a much better understanding that as inequality grows in a society not just poverty but inequality grows in a society we start to see more health disparities. We start to see larger and broader crime rates especially property crimes crimes against persons as well. So it becomes very dysfunctional for the society and we've passed that threshold in the United States.

One last question just to be clear your focus is and the way that your your your books are titled Black Well white wealth seems to be along a black white paradigm. But does this also this gap impact other racial groups. Yeah absolutely. Hispanic Americans in particular the Hispanic data mirrors somewhat closely the data for African-Americans. And it's it's data we report in the research briefs that we do and I report in my writing that there there are some sort of methodological problems in some of the data that we use around. The reliability of some of the data on Hispanic families in the United States so it tends to get a little less play and we even for those same set of sort of academic methodological reasons. Don't talk about very much the low the Vietnamese gap the

Korean gap. It's natural. We just don't sort of have enough information to be able to make those kinds of statements that I would feel and other researchers would feel comfortable making. Do you have a sense that more of us whether or not were impacted at all even. We have some vague notion that this is going on even if it's outside of our personal realm of experience are more of us aware that lots of folks are suffering. Oh I think absolutely that's the case especially with the great recession. I would say that prior to the Great Recession especially in the 1980s 1990s and up into the 2000s the dominant understanding of poverty and even inequality in the United States was an understanding that said there was something somewhere wrong in that individual. There was some characteristic they could work harder. They should have dropped out of school. They shouldn't have gotten pregnant they should've gotten

somebody pregnant they shouldn't have the child they should have gotten divorced. A multitude of culturally based reasons that went back to the individual. So the redress was to remedy those those character defects or failings and in some way and certainly there is a part of explaining poverty and inequality that has a cultural component. However I think now that we are in the context of the great recession. Looking at systemic causes looking at policy looking at institutions and looking at structures help us understand much more greatly that indeed it's the lack of opportunities it's the taking away of achievement. It's the not rewarding the achievement that people actually have merited. That is a much larger driver of poverty and people's inability to get out of poverty. The unemployment rate fourteen point three percent is not

because people don't want to work. We announce a job outside the studio tomorrow for a technician where not many qualifications are needed. You and your listeners know there will be a line around the block an hour before this building opens. Thank you very much Professor Shapiro for enlightening us today about all of these issues we've been talking about the wealth gap today we've been looking at it through the lens of racial disparities with Thomas Shapiro. He's the director of the Institute on assets and social policy at Brandeis University. He's also the pokers professor of law and social policy. Up next we continue the conversation with a look at how Americans underestimate the gap between the haves and have nots. Stay with us. We're back after this break. This program is made possible thanks to you. And Boston University's executive

MBA program Business Week's top ranked program in New England. Information session Thursday October 6th at 6:00 p.m.. More information online at B you dot edu slash executive MBA. And frontline. The man behind the mosque untangles the media hysteria raw emotion and politics around the proposed Islamic community center near Ground Zero. Watch Frontline tonight at 9:00 on WGBH too. Mark Bowden tells us how the configure worm penetrated the operating systems of millions of computers worldwide linking them together into a powerful super computer that can be remotely controlled by configures creators. Bowden is the author of Worm The First Digital World War. He also wrote Blackhawk Down. Join us this afternoon at two on eighty nine point seven.

You count on WGBH for things like It's MORNING EDITION from NPR News. Welcome once again to a cat. Up next oh no. And when you make a charitable gift annuity you can also count on WGBH for annual income. To learn more. Call the WGBH office of planned giving that 800 to 2 of 7 1 2 2 or visit us online at WGBH dot org slash planned giving. The latest local news headlines are as close as your smartphone with the new WGBH a single tap. Date with headlines from business to arts and culture just a free download away at the App Store or learn more. Backed up with GBH dot org. Welcome back to the Calla Crossley Show. If you're just joining us we're talking about poverty in America. We're talking about how our wealth gap and income gap and how people spend

money that they have and don't have. Joining me on the line to talk about how we underestimate wealth inequality is Michael Norton a professor at Harvard Business School. Michael Norton thanks for joining us. Thanks for having me. Now you did an interesting study to find out what Americans your average person thought was the actual level of inequality wealth inequality. So give us the bottom line of what the what the real actual gap is and then tell us what Americans thought it was. So it looks like from the latest data that are available that at this point in the United States if you think about Americans in terms of quintiles from the wealthiest 20 percent of people all the way down to the poorest 20 percent of people right now it appears as though the top 20 percent of Americans have about 85 percent of the wealth in the bottom 40 percent of Americans. Taken together have close to zero. They have something like point two or point three percent of the wealth the enormous

disparity from top to bottom in the United States right now. Our first goal when we did this study was to simply ask people what do you think the current disparity is. So we have this standard of what it looks like. And we asked people I want you to estimate the percent that each of those quintiles has to see if people understood that it was 85 percent of the top and almost nothing at the bottom. What we found was that people were really drastically off in their estimate so people thought the top 20 percent had about 60 percent of the wealth they thought the bottom 20 percent had about 10 percent of the wealth when in fact they have none. And when in fact the top 20 percent have close to 85 percent. So when you told them what was the response. So we when we tell people that they're usually quite surprised. I think everyone knows that there is wealth inequality and probably some level is optimal in fact when we ask people would you like it to be perfectly equal. Most Americans say no. So it isn't as though Americans want a totally flat society they're comfortable with wealth

inequality they're just a bit surprised at how extreme it is right now. And are they surprised because it's an American notion that things are more equal that as you said we always the rich will always be among us as the poor will be. But in America that's just a little closer. I think that's right and I think Americans have a strong belief in rags to riches story. The idea that you know you can move all the way from the bottom to all the way from the top but when it feels like the bottom 40 percent have almost nothing in the top 20 percent have everything kind of in many peoples minds violates that notion of we can all move around there's income there's wealth mobility and that it feels like things are fixed. Well my first guest just gave some good reasons why that's not true. But how are we so often are understanding and believe that that is possible. You know I'm not I'm not sure I mean I think that we can see examples of people going from rags to riches quite often so we hear about self-made individuals

and including if you think about someone like Bill Gates or someone like Barack Obama or someone like Steve Jobs many people become go from having nothing to having a great deal and having power but that doesn't mean that on average that happens very often in America. And in fact if you look at the data on social mobility so do people who start poor end up wealthy. In fact it's extremely low as well. So these days we're hearing it seems to me almost every moment about class warfare attacking the rich for having you know work tar or inherited or whatever they did they have the money and we're you know there are people who don't want them to have it and that's just not American. Does some of that come out of this. Obviously as your study found out misunderstanding that the gap was actually smaller than they thought it was. Or is this is just also an American belief similar to the rags and riches.

I think so. So one of the other things that we found in our study was that so you can imagine when we asked people what do you think United States looks like right now that for example rich people would hold very different beliefs than poor people or liberals would hold very different beliefs than conservatives that they would actually see their country as different right now and that might predict their policy preferences. But in fact what we find is that liberals conservatives rich and poor tend to agree both on what they think the country looks like right now which is erroneous but they agree in their perception. They also agree on what they think it should look like. So all of those groups think things should be more equal than they think they are which in fact is already more equal than they are. So there's consensus across these different groups. The issue is that when it comes down to specific policies about raising taxes on this group or raising the minimum wage for this group that's when we start to see political differences the purge even though there are people now because of your study you understand that there the gap is much bigger than we thought and that it's not going to go away or be reduced unless something happens.

Right. That's right I think we have course have a strong. Biased toward and me to all I think all people do are built this way that the status quo is probably good and so what. However things are right now we're very worried that if we change things from the status quo that at some unexpected event might happen. If you think about for example letting tax cuts expire that's a very interesting thing because because if tax cuts had a ending date on them you think people would be happy with letting them expire and going back to the way the world was at that time but instead we become accustomed to the world having those tax cuts in place and then it feels like going back is a big change in policy that many people become upset about. So we've adjusted to a new norm in other words. That's right and as soon as we do whatever that new norm is any policy that violate that norm people on both sides of the political aisle can get very upset. Now you know it used to be that you looked around the world from the advantage of an American perspective and you could see countries that were there were huge Get it was clear

there were huge gaps so some people referred to it as the Latin American ization of America to lose the middle class because there was no middle class and some of these countries. But here I think it's because people don't see it as much. My first guest said people are becoming coming to understand that structural policies create the gap. But at the same time I think a lot of people can go about their lives every day and really not see any evidence of the gap. Would you agree. I think that you're absolutely right so so we know that people tend to compare themselves most often with the people around them. And of course the people around them are often people who have the same level of income. So most Americans don't see very poor people and they really don't see very rich people they might see them on TV you know celebrities and things like that. But in general you look around in your your environment and you say how does my car compared to my neighbors cars. And you say well I guess my car is OK compared to theirs. I guess we live in a fairly equal society.

Another enormous contributor I think to that mistake is consumer credit. Right so if you and I both have cars I don't know if you own your car outright or if you are $30000 in debt on your car in which case our wealth is very very different. To me it looks like we both have the famine of wealth because we both have a car. And the more that we use other people's possessions in our possession to infer that things are equal. We're not seeing people underlying debt underneath that we saw this of course in the housing crisis as well. It blinds us to the fact that there may be more inequality than there is. Now is this a particularly American phenomenon. In other words are there places in the world where first of all the gap is not as wide and people are not trying to exist on their credit cards to make themselves equal to their neighbors. There are places in the world that have less extreme wealth gap the United States we do in fact as you said we look like some Latin American countries that are in South American countries that are known for having a large wealth inequality become trees

that have less wealth inequality are the ones that people would generate so there are countries like Sweden for example that have a flatter structure there as well. We've actually done our same survey in Australia. So we asked Australians What do you think the current level of wealth inequality is in Australia and compared that to the actual level in Australia and again we see people drastically underestimating the level there as well and one of the things that we're doing now is trying to do the same survey in many countries to get a sense of where perceptions are right and where that rock. Well we look forward to that because this is very eye opening I have to say. Thank you so much for speaking with us today. Thank you. I'm Kalee crossing we're talking about money in America this hour who has it who doesn't how do we spend it. I've been speaking with Michael Norton a professor at Harvard Business School. We'll continue the conversation after the break with a look at initiatives right here in Boston. The moving from debts to assets program. Keep your dial on eighty nine point seven. WGBH. WGBH programs exist because of you. And the castle group celebrating its

15th year delivering public relations social media and events management results that drive business locally nationally and internationally. You can find more information at the castle G.R. P dot com. And Boston Private Bank and Trust Company committed to helping successful individuals and businesses accumulate. Preserve and grow their wealth. You can learn more at Boston private bank dot com. I'm Marco Werman This winemaker in Kosovo has begun sending a shard UNAIDS and Rieslings to America. He already has some loyal U.S. customers most of them Kosovar immigrants and they have a good night in France and of course our drinking go wine together. Little vineyards with big plans we tour Kosovo's Wine Country next time on the world. Coming up at 3:00 here on eighty nine point seven WGBH.

Bayless sure is known worldwide as a buddy. The Jewish grandmother with her own Internet cooking show. Feed me buddy. For today and enjoy. Join the WGBH News Club with a gift of one hundred twenty dollars and eighty nine point seven will say thanks. With two tickets to the third annual beyond the kitchen event October 23rd at WGBH in Brighton join Bobby and sample traditional Jewish recipes as prepared by 15 of Boston's top chefs. Visit WGBH dot org slash box office the latest local news headlines are as close as your smartphone with the new WGBH app with a single tap you can dig deeper into the news of the day from business to arts and culture. Just a free download away at the App Store or at WGBH dot org. I'm Cally Crossley. If you're just tuning in we're talking about money in America this hour from the wealth gap to racial disparities to how we save and spend. We wrap up the

show with Joel Schwartz and Nia Imani. Joel Schwartz is a director of a program launched by the Greater Boston interfaith initiative. It's called moving from debts to assets. Imani is a recent graduate of this program. Thank you both for joining us today. Thank you. Joe let me start with you five year program as we just heard my last guest say credit card debt is a real problem here in this country and that's one of the focuses of your program. How did you see the need for it in. And is there an increasing need today you know going back seven years ago actually. Chibi Oh Greater Boston Interfaith Organization was holding a series of small group meetings to determine what were the issues that people wanted to work on because GBI all works on a whole range of issues from housing to education and workplace conditions etc.. And what was coming up.

Over and over and over again and this is certainly not surprising as people were saying my credit cards are out of control. You know I want to save money but I just can't find a way to do that. We need help. So that led to to our designing and launching the moving from that the assets program is a greater need now because the economy seems to be in the toilet and it is so much greater ever since the economy went into crisis in 2007. And and so the program has been we're now up to seven hundred twenty graduates with with the graduation of Nias class just three weeks ago. And. And we're also her class was number 36. And yet the demand is greater and greater and greater. And we're working really hard to be able to expand the program to meet that need but frankly the need is overwhelming. You graduate as we've said congratulations and this is a four

step program. I know two parts of it include going to class and being committed and that's maybe tough for a lot of people but you did it well. Everybody wants to know how did you get in trouble in the first place. Well like I had shared with Joe and some of the people in class was not really knowing that much about money. If that makes any sense to you being really responsible. I was I was the baby of the family so there was a lot of things that was given to me and even when I got married my husband's decease now he he did everything. So I just didn't want to think about those particular responsibilities. And when he passed away I still was responsible you know I paid the bills but I struggled because there were things that I wanted and I had talked about. When it came to me wanting something I would buy it and then I would think you'd stress about the bills later.

Just and that went on for years and years just struggling just things that I had created on my own. So when I came to the SS to debt to asset class I started to listening to what the instructors were talking about and it made a lot of sense to put money aside and write your money now that's the first thing I did they said right of money down so you can have clarity around what you were doing with your money. And so I started writing it down and I was like I was buying this and I was buying that and they really were not things that I needed it was things that I wanted. And that's how I saw how I got myself in in a mess because I was not being responsible. And it was difficult. But I you know I would make decisions whether I needed something or not if I would go in but I wanted to buy something as I do you really need this do you really want can you afford this. And I would say no.

And that's a totally different mindset than you had going absolutely. It was like in the past it was like I don't want to say many many I don't have enough to say. And you know that's not important. And there was also a lot of shame around the things that I had to. And so I decided that and order for me to feel more secure in my life around finances that I needed to start taking a look at them and I did that in class and I had some wonderful instructors. Joel as I said there's a four parts to this and the class is is central to it but you have other parts of this as well. So in addition to the class there is the support group that is peer led led by somebody who's trained in the group and we bring in speakers on a whole range of topics and that's pretty exciting. There are three sessions with individual financial counselors spread out over time and there's a $500 cash grant as well to help people to that they can use according to the plan they work out with their counselor and to pay down high interest debt or save for a

specific purpose in the future. Give me an example of one of the worst cases you've seen coming to class. I mean because it's I would imagine it takes a lot to get yourself to the point where realizing I am really in trouble and maybe this program can help me. You know you're absolutely right. We just had in June a celebration or a fifth anniversary of this program we had 500 people come together at at one of the Haitian churches that have been a center for this program. And one of our speakers was a graduate who is somebody who graduated four years ago and she talked about how at the start of the program before that she started she had $30000 in credit card debt. She had $40000 in student loans which is not surprising these days but but and didn't know how to pay for them all and she was she was worried well. From what she had learned in the program four years ago she was able to apply and actually took a skun an email from her yesterday and her

final payment on that $30000 of credit card debt. She said she's making it now it's of the last fifty four dollars she's writing a check for and that is she is debt free and she's also along the way paid off that $40000 in student loans so she is debt free now as a result. But it took a lot of hard work on her part. There are any number of financial get out of debt programs around if one looks. But what makes us quite so successful. Well I think a couple of things I'll just tell you sort of the centerpiece of the program that may sound unusual in the 5th class session I'm not the teacher counselor I hire the teachers accounts I'm the director of the program but I attend most of the meetings and during the fifth session I get in front of the group and say I want to ask you one question and that is what is the single most important thing you've learned so far in this program now. Remember they've only been through four classes in one counseling session they haven't been there long. But what people say is extraordinary sometimes. One woman spoke up in one

group and what she said is. That I have a future. That is what she learned in those four sessions that I have a future and then a second woman said something in a in another group and she said I am not alone. And I think those two lessons are at the core of what we teach that yes you have a future and you need to plan for it. And secondly you need to. You are not alone and you can ask for help from people around you and that's why we stress the stress of having a peer support group so people understand the resources to help them or not just from one person or another expert but there are all around you. The other thing that's really different is we touch many communities ethnic groups and communities. The other group. Over the programs there are some wonderful programs out there but that other programs haven't touch for example. We I my understanding is we are the only program by the way we run

this program in six languages so we're going into many immigrant communities. Seventy percent of our. Graduates are immigrant groups so these these are people that there may be a lot of programs but these your program may be the only one that can touch them then because of what you're making in the Haitian community where the only program in the in the Muslim community that is part of that's our fourth group in the Muslim community and we're going to be doing more in that too including one in Somalia of all Somali women. Oh back to you. You have a future you're not alone that had to be important. And now as a graduate What does the future hold for you. Well I'm I say money. I have one good example is that when I was taking that class I was putting a little bit of money away and I would. Put $5 if I had it that's what was told to us and if you have more so that if I had a extra 20 I

would put it away. In doing that process I had an emergency and I had emergency fund and I never had an emergency fund so I was able to take part of that money and use it I had to. The hot water heater in my home had it. So I was able to use that money to get a new hot water heater and I had money left over and that was that was really wonderful for me. What would you say to other people listening about who are drowning and feeling very feeling lost really at this moment like they are they can't figure out how to get out. I would say that you can get out and you can get out of debt. You can learn how to be responsible and manage your money. You would it's not overnight though. No it's not overnight because when me I'm still working on it it's like I wasn't cured of this. I have to I write my money down I would say people to people write your money down. Also if they can join an organization like this or some other type of organization that they should. Because

it allows them to be accountable you know and that's why I like the support group piece because you know I'm They're not leaving me alone because left to my own thoughts and everything I would to I would talk myself into getting back into debt whereas I go into a group and they're making me I'm making them accountable and they're making me accountable we care about each other's future and we motivate and we inspire each other so I think it's really important that you do have a support group and not try to stick it out. Well I would say that in this economy to be anywhere close to debt free is pretty good right. Thank you both for talking to us today that offers hope to a lot of people I think who may not see a way out. We're talking about poverty in America from the wealth gap to racial and inequities to debt. I've been speaking with Joel Schwartz and Imani Joel Schwartz is the director of a program launched by the Greater Boston interfaith initiative. It's called moving from debt to assets. The money is a recent graduate of this program. Thanks again. You can keep on top of the Calla Crossley Show at WGBH dot org slash Kelly

Crossley follow us on Twitter I've become a fan of the Kelly Crossley Show on Facebook today show was engineer by Alan Mann It's produced by Chelsea Myers will Rose live and Abbey Ruzicka This is the Calla Crossley Show a production of WGBH Boston Public Radio.