It
would take the average black family 228 years to accrue the same amount of
wealth that white families have today.
Most media coverage of racial injustice has understandably
focused on our country’s unfair policing and criminal justice system. But to fully understand the current reality of racial inequality in America, we also need to take an honest look at our nation’s shocking wealth disparities.
Wealth — the total assets a family owns after the bills are paid
— is the safety net we all need to help us get through the tough times and
invest in our futures. And its polarization along racial lines is striking.
The average wealth for white households is $656,000. For Latinos
it’s $98,000, and for black households it’s just $85,000. The average
wealth of black and Latinos combined still doesn’t come close to half of white
wealth.
And while white wealth continues to grow substantially, any
gains in black and Latino wealth pale in comparison. Current estimates show
that if nothing changes, the racial wealth divide will grow to $1 million by
2043.
In fact, it’ll take the average black family 228 years to accrue the same amount of wealth that white families have today. That’s just 17 years shorter than the centuries-long institution of slavery in the U.S. For Latinos, it’ll take 84 years to reach average white wealth today.
Generations of racial discrimination in programs like housing
and government benefits are now reflected in dismal bank statements and
paltry retirement funds for blacks and Latinos.
In particular, racial bias in mortgage lending — known as
redlining — has consistently barred communities of color from the
wealth-building train, resulting in low homeownership rates.
After World War II, for example, predominately white families
received government-subsidized mortgages that allowed them to purchase homes,
while black families didn’t. The result has played out over generations: Today,
more than 70 percent of whites own homes, compared with only 41 percent of
blacks and 45 percent of Latinos.
For many blacks and Latinos, a lack of assets has contributed to
economic insecurity and sometimes-heartbreaking reversals of fortune. This
explains the dizzying disparities in retirement savings: The average white
household in the U.S. today has $130,000 in retirement funds, while average
black and Latino households have $19,000 and $12,300, respectively.
The younger generation isn’t doing any better. College debt is
rising for all races, andnearly half the
workforce earns less than $15 an hour — barely enough to pay
the bills.
The structures in place driving these inequalities, like tax cuts for the
wealthy and global trade deals that drive down wages, amplify
existing racial wealth divisions. They pit low-wage workers of all races
against each other, leaving us vulnerable to the politics of blame and
deflection.
The good news is we can reverse these trends through public
policies that both reduce overall inequality and close the racial wealth
divide.
First, we should fix the upside-down system of tax incentives
that currently flows almost exclusively to wealthy households. We should
redirect the $650 billion a year Congress allocates in tax subsidies to support
first-time homebuyers and first-generation college students.
Additionally, taxing multi-million dollar inheritances and
investing in tuition-free higher education are approaches that can expand
wealth and opportunity for everyone.
We can reverse the racial wealth divide if we understand our
history of racial discrimination and press lawmakers to stand on the side of
opportunity, not inequality.
Dedrick
Asante-Muhammed directs the Racial Wealth Divide Initiative at the Corporation
for Enterprise Development. Chuck Collins is a senior scholar at Institute for
Policy Studies and author of Born
On Third Base. They are co-authors of the report, The Ever-Growing Gap. Distributed by OtherWords.org.