How the GI Bill Left Out African Americans

Veterans Day is always an occasion among progressives to talk up the GI Bill. And, indeed, that 1944 legislation was truly remarkable, helping millions of returning veterans go to college and buy homes in the great postwar suburban land rush. 

Unfortunately, we often forget the darker side of this story -- which is how African-American veterans were denied many of the benefits of the GI Bill. 

Why is this part of the story important to remember? Because it helps explain the ongoing challenges of African-Americans to build wealth and achieve intergenerational mobility. 

Economic success in America is often seen as a reflection  of what kind of family a person was born into, how hard they work, and what kinds of opportunites exist in the economy. Of course, though, the story goes much deeper than that. How well a person's parents were positioned financially tends to reflect the well-being of the family they grew up in and, in turn, how their parents and grandparents did.

In paticular, family wealth can take generations to build -- and confers advantages that grow over time. If your great-grandparents bought a home, chances are that your grandparents inherited at least some wealth from them. Which maybe means that your parents didn't have to take out loans to go to college and got a helping hand with a down payment for a house early in life in a neighborhood with top schools. Which means that you got a great public education instead of a lousy one, allowing you to get into a good college and set yourself up to confer advantages on your own kids. And so on.

Research shows there are all sorts of positive outcomes associated with households owning assets. And for that reason, the huge racial wealth gap in America should be deeply alarming -- especially given how that gap has actually grown in the past five years due to an epidemic of foreclosures in communities of color, many of which were systematically targeted by predatory lenders, including respected banks like Wells Fargo. 

There are lots of reasons that whites have so much more wealth than nonwhites. How the GI Bill played out is one of those reasons. Whites were able to use the government guaranteed housing loans that were a pillar of the bill to buy homes in the fast growing suburbs. Those homes subsequently rose greatly in value in coming decades, creating vast new household wealth for whites during the postwar era. 

But black veterans weren't able to make use of the housing provisions of the GI Bill for the most part. Banks generally wouldn't make loans for mortgages in black neighborhoods, and African-Americans were excluded from the suburbs by a combination of deed covenants and informal racism. 

In short, the GI Bill helped fostered a long-term boom in white wealth but did almost nothing to help blacks to build wealth. We are still living with the effects of that exclusion today -- and will be for a long time to come. 

The one big upside of the GI Bill is that it did pay for many black veterans to go to college and graduate school. While these veterans were often only able to choose among overcrowded black colleges, the influx of subsidized black students forced many white universities to open their doors to nonwhites, helping begin the great integration of higher education. 

Today, the U.S. is grappling with how to help hundreds of thousands of veterans who have served in Iraq and Afghanistan, a great many of whom are black and Latino. We need to remember that the choices we make today in regard to these folks will reverberate for generations to come.