Despite increases in Black business ownership, elected office, and university enrollment, a new study indicates that the wealth disparity between U.S. Blacks and Whites has been widening.
The alarming report, whose findings prove the economic racial divide has not lessened since Jim Crow, is the result of a study by The Center for American Progress, a nonpartisan think tank. Titled “Systematic Inequality: How America’s Structural Racism Helped Create the Black-White Wealth Gap,” the study cites elements of systemic U.S. racism such as slavery, racial segregation, housing discrimination and criminal justice biases as helping to create and perpetuate persistent wealth disparities.
The study found that the average Black household has a net worth of only one-tenth of its White counterpart, the gap has not narrowed since the financial meltdown of 2007-2008, and as African-Americans near retirement age, the gap actually widens between them and middle-aged and senior Whites.
Other major findings in the study report:
· In 2016, the median wealth for Black families was $17,600 compared to $171,000 for White households (and $20,700 for Hispanic families).
· In 1998, Blacks aged 32 to 47 were worth 24% of equally aged Whites.
· As the two groups age and advance in their respective careers, the gap widens. Today, U.S. Blacks aged 50 to 65 have a net worth equal to 10 percent of their White counterparts.
· In terms of higher education, Black college graduates are worth 70% of their White counterparts.
The study attributes some of the blame to decades of “red-lining” and other forms of banking discrimination; vastly higher rates of Black incarceration and probation and higher credit card, automobile and student loan debt loads among Blacks.
“Institutional racism brought us here as a country,” said study co-author Christian Weller. “The economic downturn of 2007-2008 only served to exacerbate the problem. There was a steep decline in Black wealth following the Great Recession – a result of African-Americans being targets of predatory lending as well as having more wealth tied up in home equity. In addition, we also know that African-Americans are less likely to have jobs that offer retirement accounts, they are less likely to be homeowners, and even when they become homeowners, they have about half as much home equity as Whites.”
The center includes in the study report a list of policy suggestions aimed at reducing the disparities, such as increased access to higher education and employment and more avenues to both build savings and reduced debt.
Underemployment, lack of home ownership, judicial injustice and insufficient educational opportunities are intertwined and correlated, study co-author Danyelle Solomon noted.
“We think an all-of-the-above approach that includes targeted strategies to help African-Americans build savings, reduce debt and better access quality employment is needed to close the wealth gap,” said Solomon. “We propose adopting a ‘targeted universalism’ framework, which was developed by John A. Powell at the University of California, Berkeley. Targeted universalism is an equity framework that promotes developing policies with the needs of the most marginalized in mind. Universal policies can help, but they will only go so far if they aren’t developed in a manner that specifically addresses the barriers that hold marginalized communities back. Failure to take bold directed action will allow the gap to persist.”
Jesse Colombo, an analyst at Clarity Financial and a Forbes magazine contributor, told Diverse that “much “ of the disparity “has to do with the Fed-inflated bubble in U.S. household wealth, which disproportionately benefits big stock, bond and housing owners, who tend to be White and Asian. Average debt is affected by lower income levels, lower ownership of those aforementioned soaring assets, lower college graduation rates, etc.”
Institute spokesperson Angela Hanks pointed out that not even equal incomes would be a cure-all.
“Income is just one factor that determines wealth, and our analysis shows that even higher-income Black households lag behind their White counterparts in terms of wealth,” she said. “That said, reducing employment discrimination and accessing a better job can help close the gap. We propose reducing employment discrimination by strongly enforcing civil rights protections, helping workers collectively bargain and supporting a job guarantee, which scholars like William Darity, Jr. and Darrick Hamilton have argued will raise Black bargaining power in the labor market.”
Hanks noted the adverse impact of disproportionate Black incarceration rates, citing a study in the Washington Post that discussed the role of imprisonment in hindering employment and general wealth-building: “If incarcerated people were included in the official unemployment rate, Black male unemployment in 2014 would have been 19 percent rather than 11 percent, the official Current Population Survey rate. Moreover, because Black families are disproportionately touched by the system and have less wealth, those who interact with the criminal justice system are more likely to struggle to pay bail or hefty fines and fees. This is another example of the structural compounding impacts of trying to build wealth in America for Black families.”
In an era some had considered post-racial and in an atmosphere where some Whites express feelings that they are the most economically threatened racial group, many Americans do not realize that the Black-White wealth disparities are so stark.
“Potentially, I think when people see that a Black educated household still has less wealth than a non-educated [White] household, they will realize that we have a significant problem,” predicted Solomon. “We need to have an honest conversation on how racism impacts our daily lives as Americans. This is a significant, if not leading factor, in driving the gap. We need a better understanding of how targeted policies are necessary to close it. Our hope is that this paper can deliver that message.”