Racial Wealth Gap
Diversity
gives America a unique competitive advantage in today’s interconnected global
economy. However, much of our potential remains untapped because members of
historically marginalized racial and ethnic groups continue to be
systematically excluded from the economic mainstream. In particular,
communities of color have not had the same opportunities as white communities
to build wealth and develop income-generating assets. Even a small set-back,
such car trouble or an illness, can send an asset-less family into a financial
downward spiral. Many minorities are therefore unable to achieve financial
security, much less upward mobility.
While the
importance of asset development has long been recognized by policy makers, some
have benefitted more than others from policies aimed at encouraging wealth
accumulation, contributing to an ever-widening racial wealth gap. Between 1984 and 2007, the wealth gap between
whites and African Americans increased more than 4 times, from $20,000 to
$95,000. Because families of color hold a greater share of their wealth
in the form of home equity, this gap
has most likely grown larger with the subprime mortgage crisis.
Resources:
Diverging Pathways: How Wealth Shapes Opportunity for Children
Children of color are four times more likely than white children to be born into the most economically fragile households. A poor start affects long-term well-being, making it difficult for children of color to catch up to their white counterparts and do as well in adulthood.
To contribute to greater understanding of the importance of wealth and its effects on the children of the current generation, this paper summarizes household wealth data for a nationally representative sample of children representing all major racial and ethnic groups. It illustrates how disparities in wealth relate to indicators of child well-being.
This paper is a product of the Insight Center for Community Economic Development with primary author,Trina Shanks, Ph.D., of the University of Michigan School of Social Work.
Disparities in Assets and Ownership: Limitations to the American Dream in Communities of Color
Millions of Illinois families pursue the American Dream each year, reaching for a more successful and prosperous future. However, this dream fails to become a reality for many Illinois families, particularly households of color. The data is clear – there are staggering disparities in wealth between communities of color and whites in Illinois. Limitations in access to reasonable credit, secure financial savings accounts and educational opportunities leave many communities of color deprived of assets necessary to build wealth and financial security.
The Illinois Asset Building Group has detailed the historic inequalities and faltering policies that have hindered wealth building in communities of color in the report, Disparities in Assets and Ownership: Limitations to the American Dream in Communities of Color.
The Racial Wealth Gap Increases Fourfold
Assessing the wealth holdings of the same families for 23 years (1984-2007) shows that the wealth gap between whites and African Americans increased more than 4 times, from $20,000 in 1984 to $95,000 in 2003. These data indicate that the general trend in lending in which consumers of color pay more for accessing credit, increases their debt and blocks opportunities to move forward, putting them at a severe economic disadvantage. Public policies have and continue to play a major role in creating and sustaining the racial wealth gap, and the research brief suggests they must now play a role in closing it.
This paper is the product of the Institute on Assets and Social Policy and is authored by Thomas M. Shapiro, Tatjana Meschede, and Laura Sullivan.
The Economic Mobility of Black and White Families
This report explores the differences between white and black families with regard to economic success and income mobility. As with other chapters in this volume, it seeks to answer two main questions. The first, focusing on absolute mobility, asks about the economic progress of white and black families over recent generations. Do children of black and white Americans advance beyond their parents in terms of family income?
The second question, focusing on relative mobility, asks about movement up and down the income ladder. Do black and white children starting on similar rungs on the ladder have an equal shot at rising in society?
The report is authored by Julia Isaacs of The Brookings Institute and is a product of the Economic Mobility Project, an initiative of The Pew Charitable Trusts.
Laying the Foundation for National Prosperity: The Imperative of Closing the Racial Wealth Gap.
As the economy takes a downturn, some American families are better able to weather hard times than others. Not only are workers of color facing more job loss than white workers, but they tend to have less to fall back on. Those losing homes, exhausting savings, and drowning in debt are disproportionately African American, Latino, Native American, and Asian/Pacific Islander.
Research has shown that this enormous disparity is not explained by income level, level of education, rate of return on investment, or family background; it is not due to a lack of effort on the part of people of color. Rather, it is the result of historic inequities in public policy, regulations and practice. This persistent legacy of our nation’s past drains families’ capacity to give the next generation a solid start.
The goal of this paper is to illuminate the pernicious and persistent racial wealth gap and to recommendways to narrow it. It will not be closed without attention and intention.
This paper is a product of the Insight Center for Community Economic Development with primary author, Meizhu Lei, Director, Closing the Racial Wealth Gap Initiative.
Lifting As We Climb: Women of Color, Wealth and America's Future
The report “Lifting as We Climb: Women of Color, Wealth, and America’s Future,” examines the wealth gap between women of color and the rest of the population, a gap that significantly limits the economic prospects of future generations and holds back the progress of the American economy.
Using data from the 2007 Survey of Consumer Finances, the amounts and types of wealth owned by women of different races are analyzed. Explanation is given as to why women of color have less wealth than white women and men of their same race, locating the roots of the gap in past and present institutional factors. These include but are not limited to the ways in which government benefits, the tax code, and fringe benefits exclude many women of color from wealth-building opportunities that are provided to other segments of the American population.
This paper is a produce of the Insight Center for Community Economic Development and was written by Mariko Chang, Ph.D., with the help of Meizhu Lui, Director of the Closing the Racial Wealth Gap Initiative.
