The Racial Wealth Gap

Success will come if millions of us act to overcome racism and segregation

A new (July, 2022) study from the Federal Reserve Bank of Chicago again illuminates the pervasive – and pernicious – issues presented by the racial wealth gap.

It includes “...data on racial disparities in income, employment, home ownership, education, access to credit, and retirement savings – all factors that contribute to a significant and persistent gap in net worth between households of different races and ethnicities, particularly between Black households and White households.”

“While none of the economic factors listed fully explains the racial wealth gap, each factor, along with a history of racism and discrimination has contributed to the extreme wealth inequality in America today.”

The study’s conclusions (all are direct quotations):

1. Racial disparities in income are significant and persistent.

2. In 2019, the average White household had 5.2 times greater wealth than the average Hispanic household and 7.8 times greater wealth than the average Black household.

3. Higher unemployment rates and lower household incomes for Black Americans reflect a history of structural barriers to economic mobility.

4. White Americans have higher rates of home ownership than Black and Hispanic Americans.

5. Black and Hispanic Americans have significantly less saved for retirement than their White and Asian American counterparts.

6. Black and Hispanic Americans are less likely to be fully banked and more likely to pay higher banking fees than White Americans.

7. While White students are more likely to earn a baccalaureate degree, Black and Hispanic graduates shoulder a higher financial burden.

I daresay that the nation badly needs a comprehensive (and coherent!) plan to address these insidious problems.

To me, one of the most confounding issues is the existing plethora of unfocused, uncoordinated, and piecemeal programs. Some are successful; others are not. Sadly, some of them work at cross purposes. (I do not mean to denigrate existing efforts – all of them are highly motivated, and mean well.)

What’s lacking is comprehensive planning and a unity of purpose – at the state level, at least. (I’d prefer federal, but I’ll take what I can get.)

There are so many fronts on which to begin.

A full court press on breaking down segregation through job, health, education, housing, business development, and community investment programs is essential.

So too is some modicum of equity in the provision of financial services. (This but is one example of the “unfocused and piecemeal” situation of which I speak: experiments with things like banking through post offices have had mixed results.)

Resolute (as opposed to half-hearted) efforts toward equal pay for equal work would go a long way.

I conclude by observing that dynamic planning, and the implementation of comprehensive and compassionate programs, will not of themselves succeed.

Overall success will come if, and only if, millions of us solemnly resolve – and then decisively act – to overcome racism and segregation in everything we say and do.

Source: “Seven Economic Facts About the U.S. Racial Wealth Gap”

https://www.chicagofed.org/-/media/publications/working-papers/2022/wp2022-32-pdf.pdf?sc_lang=e