Sunday, December 14, 2014

How Our Education System Impacts The Wealth Gap

"These are the times that try men's souls," said Thomas Paine.  I'm feeling quite disillusioned myself nowadays.  I read about how great America is doing on Yahoo and MSN and Forbes and...they all say the same thing in a nutshell: We're the place for money to be.  We're doing so much better than China and especially Europe.  What's Europe waiting for, right?  They should follow our lead immediately and fast track Q.E.  What a bunch of malarkey.

I will do what no other Financial Blogger has done anywhere on the Internet: Expose some hard but must hear truths about the state of America's biggest problem: The Wealth Gap.

race wealth gap

1) The Great Recession was caused by wealthy Whites and negatively impacted minorities (Blacks and Latinos especially) the most.

median-wealth-whites-us-nearly- written by Danielle Kurtzleben at Vox shows that from 2007 to 2013, Whites experienced a -26% change ($192,500 - $141,900) in median wealth versus a staggering -43% change in median wealth for Blacks ($19,200 - $11,000) and -42% change ($23,600 - $13,700) for Hispanics.  You know what else I noticed from these figures?  Unlike Blacks and Hispanics, White median wealth has been on the recovery since 2010 ($138K to $141K)!

2. Quantitive Easing was good for Whites and the few non-Whites who understood what was happening to asset prices.

How else can you explain the uptick in median wealth from 2010 to 2013 for Whites only?  Homes in some markets are almost close to their pre-Great Recession valuations.  Indeed, some markets have fully recovered.  Has anyone taken a look at the demographics of these real estate markets?  Who live there?  Having bought homes with subprime mortgages, Hispanics and Blacks had most of their wealth erased when the real estate bubble burst.  Obama's Make Home Affordable program did not rescue enough "brown" people from their underwater mortgages.  I understand the debate: let the free markets do what their supposed to do, weed out the weak.  Except...well, you know what happened.

On the same plane, the majority of Blacks and Latinos didn't ride the stock market tidal wave from 2008 to 2014.  I was lucky to understand basic investing and economic principles to see the tide recede in time to grab my surf board.  Indeed, I went from owning one house to owning three rental properties using capital gains from the stock market.

3.  Our educations system stinks for people of color and the hidden curriculum no one talks about is financial literacy.

Very few school districts understand the crisis that is the wealth gap and offer financial literacy classes to students from elementary through high school.  Oklahoma is doing something about it!  See: financial-literacy-high-school-courses-problem-unqualified-teachers/.  Unfortunately, financial literacy is hidden even to most teachers.  What are our outstanding universities doing to prepare teachers to present financial concepts in math, science, history, etc. in an integrated and embedded model?  Nothing!  Teacher education programs barely crank out qualified teachers.  See: I also have 14 years in the field as an educator (teacher and vice principal) and have worked at a Charter school and three comprehensive high schools.  I've visited schools outside of California as well.  That is why I can get away with saying that for people of color, our education system stinks.  Solutions?  Ask Arne Duncan.

4.  Deflationary gas prices are great for everyone and all will be well.  False!

Have the pundits and financial talking heads ever lived in the inner cities?  Falling gas prices do help boost consumer spending...IF you own a vehicle!  The findings Danielle Kurtzleben presented in her great piece state that they are independent of income.  People with the lowest income can't afford cars.  They buy monthly bus passes.  They commute to work on the city bus, one line if they're lucky, maybe more if they travel far.  The unfortunate reality of the lower class is that they didn't at all benefit in any way from Q.E., and now they're not benefiting from lower gasoline prices either.  I used to take the city bus to school, two lines.  I rode the city bus to junior college for one year until I was able to save for a used car.  This was back when car insurance was just starting to be mandated.  I have students at school who are truant constantly simply because they live too far to walk, there are no more school buses to pick them up (a CA reality...fleets have dwindled) and they can't afford a monthly bus pass.  Have school districts in CA adjusted their services in line with gas prices?  No!  Have cities or counties adjusted bus fares?  No!

Final Thoughts

I am requesting to you, my loyal readers, that you share this blog with friends at work, family, and anyone really who would benefit from a fresh perspective on financial literacy.  Tell them that you know a wealth distribution champion by the name of Carlos and that he blogs at commoncoremoney.blogspot.  Tell them that I am all about helping America with its wealth gap problem.  Tell them that he says what he says because it needs to be said and because he cares for his adoptive country.  Thank-you from the bottom of my heart.

Follow me on Twitter: @COsvaGomez. Thanks!     

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