All content categorized with: Economic Disparities

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  • Bankruptcy in Black and White: The Effect of Race and Bankruptcy Code Exemptions on Wealth

    Bankruptcy law in the United States is race-neutral on its face but, in practice, race matters in bankruptcy outcomes. Our original research provides an empirical look at how the facially neutral laws that allow debtors to retain assets in bankruptcy cases result in disparate outcomes for Black and white debtors. Racial differences in asset retention in bankruptcy cases play a role in perpetuating wealth inequality between Black and white debtors. Existing bankruptcy data lacks individual-level characteristics such as race, which inhibits researchers’ ability to adequately assess biases or unintended consequences of laws and policies on subsets of the population. Thus, we construct a novel data set using bankruptcy data from Washington D.C. in 2011 and imputing race. The data demonstrates that facially race-neutral bankruptcy laws contribute to racially disparate outcomes by allowing white debtors to keep larger amounts of both personal and real property. First, exemption laws allow every bankruptcy filer to retain some personal property even if they do not repay their creditors in full. At the median, white filers in the District of Columbia claimed $10,150 in exemptions, relative to $8,359 for Black filers. In other words, the median white filer kept roughly $1,800 more of their property than Black filers, despite reporting similar overall personal property values. Second, exemption laws allow every bankruptcy filer to retain some (or all) equity in their home. Unlike personal property, where Black and white debtors enter bankruptcy with about the same amount of property, white debtors enter bankruptcy with more home equity than Black debtors ($585,000 compared with $251,600 at the median). Unsurprisingly, then, white debtors also leave bankruptcy with more home equity (e.g., the median Black filer retains roughly 80% less in home equity than white filers). Although bankruptcy laws do not inflate the value of white filers’ personal or real property values relative to Black debtors, our exemption rules contribute to white debtors leaving bankruptcy with greater wealth than Black debtors. By protecting certain assets like home equity, which are unevenly distributed in our sample across Black and white debtors, bankruptcy law appears to play a role in perpetuating wealth inequality. Even where assets are more evenly distributed, as personal property was in our sample, bankruptcy law leaves Black debtors with a less robust “fresh start” than white debtors.

  • How to Sue an Asue? Closing the Racial Wealth Gap Through the Transplantation of a Cultural Institution

    Asues, academically known as Rotating Savings and Credit Associations (or ROSCAs for short), are informal cultural institutions that are prominent in developing countries across the globe. Their utilization in those countries provide rural and ostracized communities with a means to save money and invest in the community simultaneously. Adoption of the asue into the United States could serve as the foundation by which to close the racial wealth gap. Notwithstanding the benefits, wholesale adoption of any asue model runs the risk of cultural rejection because the institution is foreign to the African American community. Drawing upon principles of cultural and legal transplantation, successful transplantation of cultural institutions is possible where parameters that provide contextual stability are put in place. Given that the most prominent drawback to ROSCAs is the risk of default and embezzlement, the contextual stabilizer to prevent cultural rejection should be one that secures the ROSCA from said default and nefarious members. Therefore, I propose that trust law can be that context stabilizer because it would provide legal recourse and mitigate the inherent risks involved in asue participation.

  • Lawyers as Social Engineers: How Lawyers Should Use Their Social Capital to Achieve Economic Justice

    The Michigan Business & Entrepreneurial Law Review (MBELR) has always strived to provide a platform for legal scholars, professionals, and students to publish business-related legal scholarship. Yet, little legal business scholarship focusing on the Black business community exists, despite the extraordinary impact that Black communities have in the U.S. business landscape. In a year of revolutionary social change, we are excited to feature in this special issue the work of Professor Dana Thompson, a Michigan Law alumna, in an effort to remedy this gap. Professor Thompson’s career, professional values, and day-to-day work demonstrate genuine, commanding, and inspiring commitment to social justice and community-based organizations.

  • Legal Aid’s Once and Future Role for Impacting the Criminalization of Poverty and the War on the Poor

    Recent media coverage and advocacy efforts on behalf of individuals subjected to criminal sanctions as a result of their poverty status has resulted in increased attention on this nation’s troubled history of oppression and control of the poor and people of color. At the federal, state, and local levels, a growing number of policies create criminal sanctions for poverty-related circumstances. These, in turn, result in collateral consequences that unfairly affect those who lack the means to afford their criminal justice experience (i.e., processing costs, fees, and fines), or affect their ability to access employment, housing, or other basic services. These policies also disproportionately affect people of color, and the origins of many of these policies share a twisted history in decades of racial oppression and discrimination. In many respects, these criminal sanctions and collateral consequences lay on the surface of deep-seated social and economic ills that have been neglected, festering over decades and breaking out now in events over the past two years from Ferguson to Baltimore. Challenging these entrenched social and economic inequities will be necessary in order to produce real change for communities struggling against the criminalization of poverty. Legal challenges must be coordinated with community-based social movements emerging in these communities in order to confront the barriers to opportunity and structures that perpetuate inequities. Legal Aid programs have a historical grounding in this type of community-based impact advocacy work and are uniquely positioned to work together with community groups to bring about meaningful change.

  • Keynote Remarks: How the Criminalization of Poverty has Become Normalized in American Culture and Why You Should Care

    The subject of my talk today is how the criminalization of poverty has become normalized in American culture and why you should care.

  • The Ohio Model for Combatting Debtors’ Prisons

    In 2013, the ACLU of Ohio released a report titled The Outskirts of Hope: How Ohio’s Debtors’ Prisons Are Ruining Lives and Costing Communities. The report exposed the blatantly unconstitutional practice in courts across Ohio of jailing people who were too poor to pay their court fines and fees, and along with our ongoing advocacy efforts, resulted in sweeping change across the state. This Essay looks at the destruction modern debtors’ prisons have on individuals, families, and communities and overviews the research, advocacy, and communications tools the ACLU of Ohio has used to successfully combat debtors’ prisons. The goal is to give an overview of the “Ohio Model” for combatting debtors’ prisons and to relay practical advice on launching similar campaigns in other states.

  • Keynote Remarks

    In communities across America today, from Ferguson, Missouri, to Flint, Michigan, too many people—especially young people and people of color—live trapped by the weight of poverty and injustice. They suffer the disparate impact of policies driven by, at best, benign neglect, and at worst, deliberate indifference. And they see how discrimination stacks the deck against them. So today, as we discuss the inequality that pervades our criminal justice system—a defining civil rights challenge of the 21st century—we must also acknowledge the broader inequalities we face in other segments of society. Because discrimination in so many areas—from the classroom, to the workforce, to the marketplace—perpetuates the inequality we see in our justice system. And for those already living paycheck-to-paycheck, a single incident—whether an arrest by the police or a fine by the court—can set off a downward spiral. It can lead to a cycle of profound problems that ruin lives and tear apart families. Problems like losing your health care, your job, your children, or your home. As someone who focuses on civil rights work and criminal justice reform, I see these problems every day. But today in America, I also see a country on the cusp of change. Across a wide range of political perspectives, policymakers and advocates have come together to bridge divides and support meaningful criminal justice reform. And I’m proud to say that this administration—and this Department of Justice—has made criminal justice reform a top priority. We believe that our country needs, and deserves, a criminal justice system that more effectively protects our communities, more fairly treats our people, and more prudently spends our resources. And we believe that no matter how deeply rooted and long-standing the injustices that underlie inequality in our criminal justice system—with clear thinking, hard work and collaboration—we can make real progress.

  • Breastfeeding on a Nickel and a Dime: Why the Affordable Care Act’s Nursing Mothers Amendment Won’t Help Low-Wage Workers

    As part of the Patient Protection and Affordable Care Act of 2010 (also known as “Obamacare”), Congress passed a new law requiring employers to provide accommodation to working mothers who want to express breast milk while at work. This accommodation requirement is a step forward from the preceding legal regime, under which federal courts consistently found that “lactation discrimination” did not constitute sex discrimination. But this Article predicts that the new law will nevertheless fall short of guaranteeing all women the ability to work while breastfeeding. The generality of the Act’s brief provisions, along with the broad discretion it assigns to employers to determine the details of the accommodation provided, make it likely that class- and race-inflected attitudes towards both breastfeeding and women’s roles will influence employer (and possibly judicial) decisions in this area. Examining psychological studies of popular attitudes towards breastfeeding, as well as the history of women’s relationships to work, this Article concludes that both are likely to negatively affect low-income women seeking accommodation under the Act, perhaps especially those who are African-American. In short, the new law could lead to a two-tiered system of breastfeeding access, encouraging employers to grant generous accommodations to economically privileged women and increasing the social pressure on low-income women to breastfeed, without meaningfully improving the latter group’s ability to do so.

  • Litigating against an Epidemic: HIV/AIDS and the Promise of Socioeconomic Rights in South Africa

    With one of the highest incidence rates in the world, the HIV/AIDS epidemic has taken a large toll on South Africa. Despite medical advances that have made the disease more manageable, many South Africans still do not have access to the medicines needed to control the disease. At the same time, the Constitution of South Africa grants individuals far-reaching socioeconomic rights, including the right to access health care. This Comment explores the intersection of the socioeconomic rights and the HIV/AIDS crisis. Although the Constitutional Court has developed a deferential approach to enforcing socioeconomic rights, substantial room remains to litigate on behalf of those afected by HIV/AIDS. Building off the judgment in the Treatment Action Campaign case, this Comment argues that further litigation should be used to hold the government to the standards of the Constitution and to mitigate the impact of the epidemic.

  • Race, Educational Loans & Bankruptcy

    This Article reports new data from the 2007 Consumer Bankruptcy Project revealing that college graduates and specifically White graduates are less likely to file for bankruptcy than their counterparts without a college degree. Although these observations suggest that a college degree helps graduates to weather the setbacks that sometimes lead to financial hardship as measured by bankruptcy, they also indicate that a college degree may not help everyone equally. African American college graduates are equally likely to file for bankruptcy as African Americans without a college degree. Thus, a college education may not confer the same protective benefit against financial hardship for African Americans that it does for their White counterparts. These observations draw attention to the tension between two federal policies with respect to educational attainment: educational lending policy that encourages Americans to take on debt to finance their educations and bankruptcy policy that makes discharge of educational debt practically impossible. Given preexisting wealth, educational loan borrowing, and post-graduate income data concerning African Americans, these data suggest that African Americans may experience Congress's restrictive educational loan discharge policy more acutely than Whites. Indeed, African Americans are more likely to borrow money for college, earn less after graduation, and yet are bound by the same duty to repay educational loans. Ultimately, these educational loan policies may reveal who, as a practical matter, should and who should not be going to college. More troubling is that this division seems to track socioeconomic and racial lines. Accordingly, this Article considers whether these findings should persuade Congress to reformulate its policy on the discharge of educational loans in bankruptcy or alternatively, to change the manner in which it supports educational attainment.