Many people view progress on racial equity as a consistent step in the right direction, in which people of color come to be more equal with their White peers as the years pass by.
Those individuals ought to take another look at household wealth statistics.
A new study, “The Road to Zero Wealth,” analyzes wealth accumulation across racial lines over the last 30 years, as well as what can be expected in the future if current trends don’t change. The findings weren’t very hopeful.
The wealth gap between the average Black family and the average White family today is huge. A median Black family possesses a mere $1,700 in wealth-total assets once total debt is deducted. Thirty years ago, what the family had was the equivalent of $6,000 in today’s dollars. The assets of the median Latino family are similarly small, only $2,000, and has also been on a downward slope over the last three decades.
The median household wealth of White families, on the other hand, is much higher: $116,000, which climbed from $102,000 over the same length of time.
So wealth accrued by the average Black and Latino families has dipped while the average White families have seen an increase. How does this look going into the future?
By 2053, only 10 years after Whites are expected to become a minority, Black families in the middle will have no wealth in its position if current trends don’t change. Twenty years later, Latino families in the middle will see the same results. White families in the middle, however, will still own six figures.
Even those Black and Latino families who have reached the traditional milestones of middle class life–a good-paying and a college degree–still fall far behind their White peers in terms of wealth. In households that have a member holding a bachelor’s degree, Black and Latino families’ wealth is only one fifth that of their White families. Actually, they possess less wealth than White family whose head of household only has a high school diploma.
These numbers depict a startling trend in which assets and economic opportunities are directed away from families of color and toward White families. The surviving legacy of slavery and the Jim Crow era all contribute to this widening gap. For example, a mere 2% of the heavily subsidized mortgages offered by the Federal Housing Administration in the 30 years after the Great Depression went to non-White families. Houses are the largest asset most middle-class families have, so this sort of federally sanctioned racism created a tremendous, intergenerational disadvantage for the Black and Latino families that weren’t allowed a piece of the pie.
Contemporary public policy changes grounded in expanding inequality also play an important role. One of those policies is America’s complex system of tax expenditures–basically discounts given to certain groups and persons that together add up to more than a half a trillion dollars in public spending every year.
One example is the mortgage interest deduction, a tax break geared towards promoting home ownership. An unfortunate qualification for the deduction is that one must itemize their tax returns, which alters the beneficiaries heavily toward those that are already wealthy–who are disproportionately White.
Adjusting our priorities around tax incentives, in addition to investments in new programs like Children’s Savings Accounts (CSA) and a federal jobs guarantee, could reverse the racial wealth gap spanning the course of three decades. Had Congress implemented a strong universal CSA program in 1979–planting small savings and investment accounts for all children that could ripen as they got older–the divide between Whites and Latinos would have been gone by now and the divide between Whites and Blacks would have fallen by 82%.
Changes to policies like these would need bold leadership from across the federal government, including Congress and the White House. In today’s political climate, marked more times than not by scandal and regressive policy decrees as well as gridlocks in Congress, this does not appear to be happening any time soon.
But the good news is that the policies needed to start turning the tide on our growing divide are readily at hand. We have identified the problem and how to fix it. Building the political will, and political power, to put such policies in play is the next step.