Time to dismantle America’s lingering legacy of economic exclusion: Racial wealth gap could close with systemic public policy reforms, says new research
CHARLENE CROWELL | 2/19/2017, 5:35 a.m.
Center for Responsible Lending
As 2017’s Black History Month observances unfold in communities across the country, new research on racial wealth gaps refutes the age-old advice for people of color to pull themselves up by their proverbial bootstraps. According to researchers at Demos and the Institute for Assets & Social Policy at Brandeis University, historical and systemic privileges afforded Whites and denied to Blacks are the true root causes.
The Asset Value of Whiteness: Understanding the Racial Wealth Gap analyzed data from the 2013 Survey of Consumer Finances. After examining individual differences by race in consumer spending habits, education, family structure and employment, the report concluded that these factors are not “sufficient enough to erase a century of accumulated wealth.”
“For centuries, White households enjoyed wealth-building opportunities that were systematically denied to people of color,” said Any Traub, report co-author and Associate Director of Policy and Research at Demos. “When research shows that racial privilege now outweighs a fundamental key to economic mobility, like higher education, we must demand our policymakers acknowledge this problem and create policies that address structural inequity.”
The significance of these new findings must not be lost during the month set aside to observe Black history. As observances honor those whose sacrifices and dedication led to notable achievements, February should also be a time to rededicate ourselves to the battles not yet won.
Public policies of the past systemically advantaged Whites and allowed their families to create intergenerational wealth that now serves as a financial springboard for future generations. New public policy reforms must be enacted to correct and replace the harms Blacks have faced as a result of our financial exclusion.
For example, a college education is often cited as an essential gateway to higher incomes and America’s middle class. Yet Blacks frequently pay the cost of higher education with a greater student loan indebtedness than their White counterparts.
“With less student loan debt to pay off over their working years, the typical White college graduate has a head start on building wealth compared to their Black peers,” the report states.
Independent findings from the Center for Responsible Lending support the new report. Today more than half of Black families with a college student borrow to pay for college. Further, on average, Black college graduates owe $7,400 more on student loans than their White classmates.
When it comes to wages and employment, in 2012, the median full-time wage earned by Blacks was $621 per week compared while the median wage for Whites was $792 each week, the equivalent financial loss of $8,892 per year. When gender was added, Black women fared even worse and earned only 68 percent – or $28,005 of the $41,184 made by similar White males.
With smaller paychecks and fewer discretionary dollars in household budgets, it is little wonder that the report also found that the median White single parent has 2.2 times more wealth than the median Black two-parent household, and 1.9 times more wealth than the median Latino two-parent household.