Racial Wealth Gap Continues to Widen
5:45 pm, February 27th | by Colette McIntyre
A study released by Brandeis University’s Institute on Assets and Social Policy found that the wealth gap between white and Black individuals has swelled in the past twenty-five years. Researchers argue that the inequity is driven by “policies and institutional practices that create different opportunities for white and African-Americans.”
The report, which may be the most detailed study of the racial wealth gap ever, analyzed the life experiences of 17000 working-age households between 1984 and 2009 and found that the wealth gap between white and Black participants nearly tripled in that time. In 2009, the median net worth of white households grew to $265,000 while the median net worth for Black households increased to $28,500. Researchers found that income gains for Black households produced less household wealth than for a white household: over the course of the study, every $1 increase in a Black family’s average income added 69 cents of additional wealth; for white households, $1 generated $5.19 in wealth. According to the study, the oft-cited agents of “personal choice” and “behavior” aren’t to blame: 66 percent of the wealth divide was driven by institutional factors such as unemployment, inheritances, and wealth accumulation.
Homeownership continues to hold significant power over racial inequality: housing-related polices are accountable for more than 25 percent of the wealth divide. Since Black families are less likely to receive family assistance or inheritances that could be applied to down payments, they start acquiring homes eight years later than the average white family; this in turn meant that Black families had less time to build equity. Even when the typical Black family was able to purchase a home, the property appreciated at a different rate than a white family’s did. Housing is so entangled with Black wealth that over half the collective wealth of Black households was lost during the recession.
Even education has failed to shrink the gap — while more African Americans are attending college, a disproportionate amount of Black students are dropping out due to financial concerns. 80 percent of Black graduates are burdened with debt, compared with 64 percent of white graduates.
Angela Glover Blackwell, seminar moderator and the founder-CEO of the social equity research group PolicyLink, believes that the widening racial wealth gap could have grave implications for the nation as a whole:
The nation’s ability to achieve sustained growth and prosperity hinges on how quickly we can erase lingering racial and class divides and fully apply everyone’s talent and creativity to building the next economy. This nation must erect a policy framework that advances a new growth model and is driven by equity.
[Photo via Shutterstock]