In a new study highlighting the widening racial wealth gap, researchers found it would take a jaw-dropping 228 years for the average Black family to attain the wealth of a white family under today’s public policies.
The analysis, titled “The Ever-Growing Gap,” looks at the accumulation of wealth of the last 30 years, all while examining the wealth-building policies that have consistently given white, already wealthy families financial advantages over Black and Latino ones.
Researchers from the Corporation for Enterprise Development and the Institute for Policy Studies found that the average wealth of white families had grown by 84 percent; that’s an astounding three times as fast as the rate for African-American households and 1.2 times the growth rate for Latino households.
“If the past 30 years were to repeat, the next three decades would see the average wealth of White households increase by over $18,000 per year, while Latino and Black households would see their respective wealth increase by about $2,250 and $750 per year,” the study states.
At such a slow rate of growth, it would take until the year 2244 for the average Black family to build wealth that matches what white families have today, the New York Daily News reports. Just three years ago, the average household incomes for Blacks, Latinos, and whites were $85,000, $98,000, and $656,000 respectively. The study notes that even if Black and Latino households experienced higher growth rates, the racial wealth divide would still exist.
These stark racial disparities in the accumulation of household wealth slowly continue to widen under today’s public policies.
Government programs like the G.I. Bill and Federal Housing Administration have historically benefited white families, more so than African-American and Latino households. For example, the advantages of an education guaranteed by the G.I. Bill were mostly reserved for white veterans, Atlanta Black Star reports. For the handful of Black veterans who could participate in the program, their benefits were still fewer than those of their white counterparts. The Federal Housing Administration was known for its discriminatory policies as well, as African-American families in search of a home loan were often denied or labeled as flight risks.
“Together, these actions are largely to blame for the racial wealth divide we see today,” the study states. “They were also the two largest public wealth-building policies to work against the ability of households of color to build wealth—until now.”
According to the analysis, many of today’s programs that favor building the wealth of those already at the top manifest through the U.S. tax code. These federal tax programs disproportionately pump money into wealthy households, exacerbating the rise in income inequality.
“More than 50 years after the Civil Rights Act was passed, many wealth-building policies still continue to heavily favor households that do not need help building wealth while doing little or nothing for low-wealth households of color,” the report states. “Today, these policies [disproportionately] skew towards wealthy—predominately White—households.”
While examining racial wealth disparities, the study also looks at the many factors that act as barriers to finical success for African-American and Latino families. These factors include higher rates of unemployment, lower returns on income earned, limited ability to deal with a financial emergency, lower education attainment, and non-existent retirement savings among other things.
Authors of the study also tied widening economic disparities to the social unrest in communities of color and tensions with the criminal justice system.
“In the last decade, we have seen the catastrophic economic impact of the Great Recession and an ensuing recovery that has bypassed millions of Americans, especially households of color,” the authors wrote. “This period of economic turmoil has been punctuated by civil unrest throughout the country in the wake of a series of high-profile African-American deaths at the hands of police.”
The following are a few of the researchers’ suggestions to solving the widening gap in racial wealth attainment and reducing “the wealth concentration at the top.”
- Conduct an evidence-based, government-wide audit of federal policies to understand the role current policies play in perpetuating or closing the racial wealth divide.
- Fix unfair, upside-down tax incentives to ensure households of color also receive support to build wealth.
- Address the distorting influence of concentrated wealth at the top through the expansion of existing oppressive taxes and the exploration of a dedicated wealth tax.