Why do White Americans have on average 13 times more wealth than African Americans? There have been government policies after the Civil War that have led to this disparity. Bread for the World has documented some of these policies. Here is their Policy #7 contributing to the gap.
Minding the Gap: Policy #7 The G.I. Bill of 1944
This was enacted to help World War II veterans adjust to civilian life by providing low-cost home mortgages, low-interest business loans, tuition assistance, and unemployment insurance. Unfortunately, black veterans were excluded from many of these benefits.
What was the G.I. bill?
The G.I. Bill, formally known as the Servicemen’s Readjustment Act of 1944, provided military veterans returning from World War II with many benefits,1 including low-cost mortgages, high school or vocational education, college tuition and living expenses, unemployment insurance, and low-interest loans for veterans to start businesses. Although the G.I. Bill was considered a success, African American veterans were denied many of its benefits. This has contributed to many of the ongoing challenges in the African American community, including earning enough to support a family, putting food on the table, and saving for the future.
The difference between the G.I. Bill and some of the earlier policies we have seen is that the G.I. Bill did not explicitly exclude African American veterans. Rather, the legislation, by failing to take into account the effects of existing discriminatory laws and policies, significantly reduced the degree to which African American veterans were able to share in its benefits. The racial disparities in the benefits provided under the G.I. Bill could most likely have been reduced if it had specifically included provisions that all veterans were eligible to participate fully and equitably. In the absence of such provisions, discriminatory laws applied to African American veterans, the same as to other African Americans. For example, the G.I. Bill provided low-cost government-backed loans. But in the 1940s, African Americans remained ineligible for federally-backed loans under the Fair Housing Act, and banks would generally refuse to make mortgage loans in “Grade D” (primarily African American) neighborhoods. See policies 3 and 4. In addition, African Americans were effectively excluded from the suburbs by a combination of deed covenants and informal racism.
The ability of (white) veterans to use government-guaranteed mortgage loans was a pillar of the G.I. Bill. It enabled many to buy homes in the country’s fast-growing suburbs. The values of these homes also increased significantly over the next few decades. This created vast new household wealth for whites during the postwar era—laying a foundation for the American middle class. Other discriminatory laws and practices also had the effect of reducing or eliminating benefits for African Americans under the G.I. Bill. Among the most significant were the Jim Crow segregation laws. The G.I. Bill contained provisions for unemployment insurance and benefits to help pay for higher education, but Jim Crow laws prevented their fair implementation.
The Veterans Administration (VA), whose purpose is to represent and serve the interests of military veterans, did not do so in the case of African American veterans. Instead, the agency participated in discrimination. For example, the VA helped prevent black veterans from obtaining unemployment benefits. Black veterans were often offered substantially lower wages than their white counterparts for the same work. But when these veterans took complaints about job and wage discrimination to the VA, the VA would terminate the unemployment insurance of those who were appealing to it, rather than investigating the discrimination. This made it nearly impossible for black veterans to refuse to work for unfair wages. At the same time, VA attorneys testified on behalf of many white military veterans to help them regain the same job, at the same pay, as they had before going off to war.
Segregated educational institutions also prevented veterans from receiving benefits they were due under the G.I. Bill. From 1940 until as recently as 1980, it was much more difficult for black veterans to get a higher education than it was for white veterans. This was true nationwide, but particularly in the south. In the 1940s, white colleges in both the north and south were largely closed to blacks. African American veterans’ main options were Historically Black College or Universities (HBCUs). But all these schools were extremely overcrowded, with many applicants on waitlists. Black colleges were forced to deny admission altogether to nearly 20,000 black veterans.
In addition to Jim Crow discrimination at the universities, the VA also discriminated against African American veterans seeking higher education. When applying for tuition benefits under the G.I. Bill, black veterans were often steered toward vocational training instead of university courses. In some cases, VA job counselors explicitly told black applicants that they needed no further education.
A 1947 study found that of the 1,700 veterans employed by the VA, only seven were African American, despite the fact that one-third of all southern veterans at the time were African American. Perhaps a more diverse VA would have adopted more inclusive policies and fought for the rights of all veterans.
How did unequal benefits under the G.I. Bill contribute to the racial hunger, income, and wealth gaps?
The G.I. Bill is credited with creating the American middle class by opening homeownership and higher education to millions of World War II veterans. Today’s middle class would be larger and much more diverse—and the racial wealth gap would be narrower—if veterans regardless of race had benefited from the legislation. The rate of food insecurity among African Americans would most likely be significantly lower, since an inclusive G.I. Bill would have enabled the World War II generation to buy homes, develop businesses, and earn college degrees.
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