America’s Structural Racism: Black-White Wealth Gap Persists

The already large racial wealth gap between white and black American households in America grew even wider after the Great Recession of 2007-2009. A new report from the Center for American Progress finds that the racial gap in wealth is widening. The report finds that in 2016 the median wealth of Black households led by a person who was at least 25 years old was $13,460. For similar White households the median wealth was $142,180.

Wealth—the measure of an individual’s or family’s financial net worth—provides all sorts of opportunities for American families. Wealth makes it easier for people to seamlessly transition between jobs, move to new neighborhoods, and respond in emergency situations. It allows parents to pay for or help pay for their children’s education and enables workers to build economic sustainability in retirement. Importantly, it is the most complete measure of a family’s future economic well-being. After all, families rely on their wealth to pay their bills if their regular income disappears during an unemployment spell or after retiring, for instance.

Several key factors exacerbate this vicious cycle of wealth inequality. Black households, for example, have far less access to tax-advantaged forms of savings, due in part to a long history of employment discrimination and other discriminatory practices. A well-documented history of mortgage market discrimination means that blacks are significantly less likely to be homeowners than whites, which means they have less access to the savings and tax benefits that come with owning a home. Persistent labor market discrimination and segregation also force blacks into fewer and less advantageous employment opportunities than their white counterparts. Thus, African Americans have less access to stable jobs, good wages, and retirement benefits at work— all key drivers by which American families gain access to savings. Moreover, under the current tax code, families with higher incomes receive increased tax incentives associated with both housing and retirement savings. Because African Americans tend to have lower incomes, they inevitably receive fewer tax benefits—even if they are homeowners or have retirement savings accounts. The bottom line is that persistent housing and labor market discrimination and segregation worsen the damaging cycle of wealth inequality.

The full report, “Systematic Inequality: How America’s Structural Racism Helped Create the Black-White Wealth Gap,” may be found here.