If current trends continue, it will take African Americans 228 years to accumulate as much wealth as white people enjoy. And, even then, there’s no guarantee that racial income disparities will narrow.
According to new analysis from the Corporation for Enterprise Development and Institute for Policy Studies, the racial wealth gap is as wide as it ever was. Over the last 30 years, white families have seen their assets grow 84%. That’s three times the rate seen by the black population, and 1.2 times the rate among Latinos. If the same ratios play out over the next three decades, whites can expect an increase of $18,000 per year, while Latino and black households can expect increases of $2,250 and $750 per year respectively.
“Despite the progress of the civil rights movement, white households have been pulling away from households of color, particularly black and Latino households, for decades,” the report says. “Today, the lingering effects of generations of discriminatory and wealth-stripping practices have left Latino and black households owning an average of six and seven times less wealth ($98,000 and $85,000, respectively) than white households ($656,000).”
CFED and IPS concentrate on wealth, as opposed to income, because the former is more important. You can buy stuff with income, but wealth is what allows people to borrow, get a home, save for retirement, and generally join the middle class. It argues that wealth is increasingly concentrated among a rich white elite. The country’s 400 richest individuals (net worth of $2.34 trillion) now control more wealth than the whole black population and one third of the Latino population.
To compensate, the report calls for several measures. These include a government-wide government internal audit to quantify the impact of federal policies on the racial wealth divide. It includes redirecting property tax breaks–like the Mortgage Interest Reduction, which favor richer people with bigger mortgages–towards people on lower incomes. And it includes ideas like a nationwide system of children’s savings accounts, which help build nest eggs from birth.
“By acknowledging the role that public policies continue to play in fueling the racial wealth divide and by fixing unfair wealth-building programs so that they expand opportunity for all, we can begin making the investment needed to close the racial wealth divide,” the authors say.
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