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Sunday, July 27, 2003

By Steve Levin, Post-Gazette Staff Writer

In August, Leslie Hayes took a deep breath, signed her name and handed over $4,000 for the down payment on her first home.

For Hayes, 30, a single mother with four children, the North Side home was the biggest lump-sum payment of her life, except for a credit card she once paid off.

The reward, the start of accumulated wealth through equity in the house, gave her a sense of accomplishment and well-being. It also made Hayes, who is black, an exception.

Research has shown that while blacks are earning more than ever -- median household wealth increased 321 percent between 1989 and 1998, from $3,680 to $15,500 -- many lack the experience or knowledge of how to save.

Hayes, a trust operations manager for a local bank, said that while growing up in East Liberty and Homewood, her parents taught her that "if I wanted [something], I had to work for it. It wasn't free.

"If you're not taught to look at long-term goals, then if you have money left after your pay your bills, you'll go and buy something new," she said. "I always tried to save some money, even if it was just $25 out of each paycheck."

As wealth grows, so does political and social influence and access to better housing, neighborhoods and education, according to Northwestern University economics professor Joseph G. Altonji.

Yet 32 percent of black Americans say they do not save, compared with 23 percent of all Americans. In fact, 24 percent of blacks say they spend more than their income, compared with 14 percent of all Americans. Proportionally, fewer blacks than any other Americans are wealthy. And with black unemployment approaching 12 percent, immediate prospects for improvement aren't hopeful.

"Certainly," said Marc Morial, president of the National Urban League, "when there's more unemployed people, there's less money in the family and it creates a range of economic and social problems."

In Pittsburgh, Allegheny County and the seven-county southwestern Pennsylvania region, 2000 census figures show that white family median income was nearly twice that of black families. Nationally, the figure was closer to 42 percent.

In the United States, the accumulation of assets promoted by such programs as 401(k) tax incentives and home mortgage interest deductions are more available to middle- and upper-income households. In addition, lower-income families have disincentives to saving, such as personal asset limits on welfare and food stamps programs.

Melvin Oliver, a Pittsburgh native who now is vice president for asset building and community development with the Ford Foundation, co-authored "Black Wealth/White Wealth, a New Perspective on Racial Inequality." In it, he and Brandeis University professor Thomas Shapiro wrote that wealth is not something people accrue only in their own lifetime.

Oliver points out that while blacks were enduring 200 years of slavery in the United States, 19th-century westward expansion allowed whites to claim homesteads and establish the beginning of wealth.

In his travels through the country, Stephen Brobeck, executive director of the Consumer Federation of America, a nonprofit advocacy association of 300 consumer groups, said he saw pessimism as one of the biggest barriers among the low-income to saving.

"Most people did not think they could save even $1,000," he said. "If you don't have hope, there aren't adequate incentives to better your situation."

One of the most successful asset-building programs has been Individual Development Accounts, which match, dollar-for-dollar up to certain levels, money saved by the poor. First proposed in 1991, programs have been enacted by 40 states, including Pennsylvania.

As of March, the more than 3,500 active savers in the state's Family Savings Account Program had saved in excess of $1.5 million.

Required "financial literacy" classes that touch on budgeting, spending and saving are part of most programs. Participants sign agreements to save monthly. There are limits, too, on how much can be matched, a maximum of $2,000 during the two-year program, and how it can be spent.

At North Hills Community Outreach, for example, of the current 36 savers in the program, 13 are saving to buy homes, 10 to make home repairs, nine to purchase cars, three for their children's or their own education and one to start a business. Half are single parents.

"Any time when you see one person in that cycle of poverty either go to college or even get a job or save and own their own home, that is something the next generation is likely to follow," said Faye Morgan, the center's executive director. "You have to have a model to shoot for."

Leslie Hayes participated in the savings program at ACTION-Housing, inc. in Pittsburgh; $50 from each of her twice monthly paychecks was directly deposited into a savings account. While Hayes had the advantage of parents who modeled savings behavior, along with a college education she helped pay for, saving, at times, was difficult.

"My motto is, 'That little bit of money, it's a lot,' " she said. Now she's teaching her two oldest children, Leslie, 9, and Nia, 8, what she learned. The girls earn money for good report cards.

"I tell them all the time, 'When you get your money, put it up,' " Hayes said.