Calculating the ‘bonus’ of whiteness in America

Is it possible to put a dollar value on white privilege?

That’s what local author Tracie McMillan seeks to do in her latest book, “The White Bonus,” where she tries to quantify the wealth five households benefit from exclusively because of their race.

The book weaves together research and narratives from white families around the U.S. and her own personal history. It even includes a section where she tries to calculate what she calls the white bonus for each of her subjects. McMillan’s is nearly $372,000, despite being on the edge of poverty for much of her career.

In our conversation, McMillan describes the white bonus as difficult — “maybe impossible” — to quantify. “But if we wait until we have the perfect number, we will never have this conversation,” she said.

The bonus has been particularly evident in Detroit due to decades of housing discrimination . White people took advantage of racial covenants that kept their neighborhoods white, then fled the city in droves to seek higher property values and greater stability in the suburbs.

We spoke with McMillan about the history of housing in Detroit, the lingering presence of the white bonus and what people can do to counteract it.

This interview has been edited for length and clarity.

Outlier Media: Why do people consider homeownership such an essential part of creating wealth for oneself and their family, and by extension, the white bonus?

Tracie McMillan: I think one really big reason we in the U.S. focus so much on homeownership is that we don’t we don’t have any other social safety net at this point. There’s really no other easy route to stability if you’re a middle-class person, besides property ownership. You can invest in the stock market, sure, but you could lose it at any time, and then you would have nothing.

I invested in a piece of real estate in Detroit. And the reason I did that is I feel like I wouldn’t have enough money to live if I completely lost it in the stock market. So even if my finances go down, I still have a house. I still have a place where I could live. I’m also able to take out a home equity loan or sell the house and invest somewhere else. When you own a house, there’s a lot more steps between you and being on the street.

Let’s get into the history a bit. How big of a role did racial covenants and other forms of housing discrimination play in exacerbating a racial wealth gap? Does their impact still linger today?

I think it can be really tempting to say, “Oh, a racial covenant didn’t really affect me. It wasn’t that big of a deal for somebody my age. That’s all a thing of the past.”

But I think about the white bonus as compounding interest.

Racial covenants were declared unenforceable by the Supreme Court in 1948 . That’s right during the push toward homeownership through the GI Bill and Federal Housing Administration loans that created the white middle class of the 20th century. And up until 1948, people could put provisions into their housing deeds requiring that the people who owned it were going to be white. That means all the additional financial benefits of homeownership accrue to that family and their descendants.

The covenants created this idea that your future stability depends on your property values, and you want to protect your property values from the influence of Black people, which is obviously a reflection of white racism.

I’ve found going through my family’s history that a banker grandfather of mine had a house with a racial covenant. And that’s really the only source of inheritable wealth that came directly to me.

There’s also this temptation to talk about racial covenants as the (prime) example of housing discrimination. But the more I looked at this, the more clear it was that this mundane sort of daily housing discrimination, the stuff that has a downstream effect of implicit bias, is also incredibly important.

It seems like housing discrimination over the decades has gotten subtler and subtler. There was the effect of redlining policies in the Federal Housing Administration’s lending practices that you talk about in the book. Then there was just general disinvestment in urban areas and the depreciation of homes. And now there’s a lot of talk about discrimination in appraisals .

How problematic do you think housing discrimination remains today?

Something that surprised me while writing this book was how housing and even employment discrimination were essential to the calculations of the white bonus. I came into this project thinking about racial covenants, thinking about racial violence from organized groups like the Klan and the Black Legion. But discrimination on the interpersonal level is really prevalent.

The story from “The White Bonus” that really taught that to me was about Jared and Merrin in Vallejo, California. This is a young professional couple in their 30s. In their search for a home, they get to the point of putting in an offer, and the Realtor says to write the owner a letter about who you are, why you want the house and to put in a cute picture. And these so-called love letters build in opportunities for racial discrimination.

So much so that in 2020, right after we start to have this next round of racial reckoning post-George Floyd, the National Association of Realtors issued a call to Realtors to say don’t do love letters because it encourages discrimination. This is a practice that is so common that the Wall Street Journal has a how-to guide on writing a good love letter.

Things like this are probably a much bigger driver of disparity than racial covenants, which maintained wealth for white families. This kind of housing discrimination creates new opportunities for white families. White people are getting an advantage for being white because doors are being opened. You’re being looked at as a good investment, somebody who’s likely to be able to pay and being welcomed in, as opposed to being greeted with suspicion.

We’ve only had about 50 years (since the Fair Housing Act) of it being illegal to discriminate. And it certainly hasn’t ended it. There are lawsuits all the time over this stuff. You brought up the example of appraisals. The story in Baltimore of Nathan Connolly and his wife . We’re talking about tens of thousands if not hundreds of thousands of dollars of difference in wealth based on whether you’re a Black or white family selling your house. That’s such a profoundly important difference.

There’s a well-established past of housing discrimination in Detroit. We haven’t even talked about so-called slum clearance and the demolition of Black Bottom . How does Detroit compare to other places?

The loss of Black wealth through housing has played a huge role in Detroit.

White flight completely decimated home values and tax revenues through divestment from the city. A few decades later, you see subprime mortgages, which were absolutely targeted by race. You had one major bank in Michigan calling them “ghetto loans” and marketing them to Black churches. Then you see Detroit’s housing market implode in the post-subprime crisis, followed by a tax foreclosure crisis where the city is unfairly assessing and then taking people’s homes. That’s about racism.

All this allowed white people to come in, buy cheap and gain wealth. The only reason I have financial stability now is because I bought a house where my mortgage is under $100,000. And the house right now is worth probably close to a quarter of a million. That would not have been possible if racism hadn’t put everything on super-sale. There’s no other major city in the country where I could have bought housing for that cheap. I can’t buy a parking spot in Brooklyn for what I paid for that house.

You’ve identified a clear problem in the historical record and other problems persisting today. Nonwhite Americans are pushing to correct discrimination, past and present, through measures like reparations . But what should we do to counteract the white bonus?

You’ve got to start with wherever you actually have some power to implement change.

If you’re involved in a neighborhood association, particularly in a diverse community, think about how and whether you’re being welcoming to families of lower incomes across both class and race lines. Don’t be the person who says, “I don’t want affordable housing in my neighborhood.”

Neighborhood associations have very positive connotations in this town, but they’ve also been really powerful vehicles for racism and classism for a long time. I have seen developers make friends with a neighborhood association’s president, and then the association comes out in support of the developer.

Do you actually care about equity if what you’re doing is inviting market rate housing? You don’t need to help the market do that. What you need to do is help ensure that the people who traditionally have been marginalized are getting access to the same things we are.

As you said, people will claim they didn’t directly benefit from racial covenants and argue that the white bonus is overstated. What’s been the reception to the book so far, particularly from white people?

The book just came out, so it’s still early. I will say the feedback I’m getting from media outlets is that there’s real discomfort with the idea of quantifying this. And to a degree, they have a point: I did not do social science. There’s no economist that would sign off on the numbers I have in the book. I just felt like it was really important to start trying to have this conversation and talk about it as a concrete thing that shapes our lives, instead of pretending like it’s some sort of “phantom privilege” that you just end up arguing about indefinitely.

The conversation around white privilege is so slippery. We’re always arguing about whether there is privilege. And the advantage of referring to the white bonus as a concrete, material thing is that you can at least grab onto it and start talking about scale. Let’s just talk about what the advantage looks like and try to assign a dollar amount to it.

Social scientists and scholars say this is really hard, maybe impossible, to measure. You would need an interdisciplinary team of scholars working for years to come up with a definitive number. But if we wait until we have the perfect number, we will never have this conversation. And I don’t think we have enough time to wait for a perfect number.

Calculating the ‘bonus’ of whiteness in America · Outlier Media