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New report: Blacks are ‘beyond broke’

Freddie Allen | 6/19/2014, 7:47 p.m.
The growing racial wealth gap – $200 in median wealth for Blacks in 2011 and $23,000 for Whites – threatens ...
Rep. Keith Ellison, D-Minn., discusses the wealth gap. Freddie Allen

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WASHINGTON – The growing racial wealth gap – $200 in median wealth for Blacks in 2011 and $23,000 for Whites – threatens national economic security in the United States, according to a recent report by the Center for Global Policy Solutions.

“When it comes to the racial gap in liquid wealth, African Americans and Latinos are nearly penniless,” the report stated. “The median liquid wealth of Whites is over 100 times that of Blacks.”

The report said that when retirement savings are taken out of the analysis, the disparities in liquid wealth are even more disturbing.

“Blacks are found to hold a mere $25 and Latinos just $100 in liquid wealth, compared to $3,000 held by the typical White household,” the report said.

During a press conference on the report on Capitol Hill, Rep. Keith Ellison, D-Minn., said that the racial gap is not some product of changes in the economy.

“It’s our tax policy, designed to help the rich. It’s also our trade policy, off-shoring our jobs, and it’s also the attack on unions,” Ellison said.

Rep. Steven Horsford, D-Nev., said that families are living paycheck-to-paycheck and are drowning in debt from predatory loans and mortgages and decreased home values following the housing crisis.

This great divide in wealth has contributed to many of the problems that are facing communities of color, including lower educational achievement and family insecurity, according to Horsford.

He said that minorities were institutionally restricted from having access to wealth-building tools largely until the Civil Rights Movement and, though explicit institutional racism has somewhat subsided, the wide gap in wealth between families of color and White families is still a reflection of more discreet systematic and social barriers that have limited economic mobility.

The report outlined a number of policy recommendations, including a universal “baby bond” trust program.

Darrick Hamilton, associate professor of Economics and Urban Policy Milano Graduate School of International Affairs, Management and Urban Policy at The New School in New York City said that baby bonds could help close the wealth gap.

“The idea is that as an adult you can engage in wealth building you can purchase an asset so that you have the opportunity to build economic security over a lifetime,” Hamilton said. He explained: “If the average account is $20,000 at birth and we have about 4 million babies born per year, that would make the cost of around $80 billion dollars a year for the program.”

Hamilton said that would be about 2.2 percent of the federal budget and rival what gets spent at the Department of Education.

He said: “If you could design another program like the Department of Education that would help close the racial wealth gap and provide economic security for all Americans I ask, would you do it?”

Maya Rockeymoore, president of the think tank that produced the report, said that the African American community should know that it’s not about them, it’s about the system and how it is structured with policies that deny their opportunity to have equitable chances for growing wealth in this nation.