Bridging the Racial Wealth Gap
By Courtney A. Fiske*
The gap between the personal wealth of white and black Americans undergirds socioeconomic inequality in the United States. What’s more, it’s widening.
This fact served as the springboard for an online seminar hosted last Thursday by the Insight Center for Community Economic Development. Entitled “Social Security at 75,” the discussion probed the intersections between race, wealth (defined as earnings minus expenditures), and economic security.
The seminar centered on a study released last month by Professor Thomas M. Shapiro and his colleagues at the Institute on Assets and Social Policy at Brandeis University. Analyzing economic data from a cohort of families between 1984 and 2007, Shapiro found that the racial wealth gap between whites and African Americans had more than quadrupled over the 23-year period.
Despite marked expansion in the financial resources of white families, which grew from $22,000 to $100,000 in a single generation, African American families experienced negligible increases in wealth (see Figure 1 from Shapiro's report). An important side note: most of the wealth generated during this period went to the highest income white families. Today, the median family of color—whether black or Latino—owns 16 cents for every white family’s dollar. For single women of color, the statistics become bleaker: they own only one cent of wealth for every dollar owned by men of their race. These numbers do not reflect the recent economic downturn, which, many economists believe, has exacerbated the divide.
If racial inequality is old news, why do these numbers offer fresh cause for alarm? As Meizhu Liu, Director of the Insight Center’s “Closing the Racial Wealth Gap” Initiative, explained, wealth breeds more wealth. Transmitted between generations, financial assets enable families to attain economic security and access opportunities for socioeconomic advancement—whether by purchasing a home, starting a business, or financing higher education. Lacking savings, many African American families enter a self-perpetuating cycle wherein poverty leads to further impoverishment. “If achieving a post-racial society is a national goal, closing the racial wealth gap must be a national imperative,” Liu concluded.
Taking up Liu’s charge, Kilolo Kijakazi, a program officer at the Ford Foundation, advanced Social Security reform as a means of bridging the divide. Despite deeming Social Security “the nation’s most successful social program,” Kijakazi noted that workers with unfavorable labor market experiences—especially women and racial minorities—continue to receive benefits that leave them below the poverty line. To remedy the situation, Kijakazi suggested:
- Implementing an effective minimum benefit for the most economically vulnerable;
- Providing family care credits to workers with young children and/or ailing elderly parents;
- Improving access to disability benefits and addressing backlogged claims.
The takeaway: racial progress is not a given. Absent focused policy reforms, socioeconomic parity between whites and African Americans will continue to exist as a distant reality.
*Courtney Fiske is currently a Research intern with the National Council for Research on Women. She is pursuing a BA in Social Studies at Harvard University.