The white population in the United States can expect their wealth to grow $18,000 each year over the next 30 years, while the annual increase for African Americans will be only $750 if current fiscal policies stay in place.
“The Ever Growing Gap”, a study released in August, examines racial income disparities using data from the Survey of Consumer Finance, a research project of the Federal Reserve Board. The Corporation for Enterprise Development and Institute for Policy Studies used information from 1983 to 2013 to make their projections
Their report defines wealth as more than just extra money in the bank. It includes home ownership, having the means to earn a college degree and save for retirement, and other opportunities that are attainable with savings and investments.
The authors point to tax policies designed to build household wealth, benefit homebuyers, increase retirement savings and start a business — opportunities that are out of reach for the poorest segments of the population.
Looking back, whites saw their average wealth increase 84 percent over the past 30 years — 1.2 times the rate for Latinos and three times the African American growth rate.
If the growth rate stays at the current pace, it would take black families 228 years to accumulate the same wealth that white families have today. For Latino families, the gap would take 84 years to close.
Home ownership rates reflect the wealth disparities, the study found. African Americans comprise 41 percent of homeowners and Latinos 45 percent, while 71 percent of white households own their home.
The report frames these disparities in the context of recent deaths of African Americans in police shootings.
“These senseless and violent events have not only given rise to the Black Lives Matter movement, they have also sharpened the nation’s focus on the inequities and structural barriers facing households of color,” the report states.
The authors acknowledge their look at wealth data rather than household income further skews the differences, but they note the gaps still exist when considering median wealth figures.
The report says a more even distribution of wealth would allow the disadvantaged to “get ahead, rather than just scrape by.”
“Imagine that instead of low-wealth Black and Latino families finding themselves unable to deal with fluctuating incomes or how they’re going to make it through an unexpected financial emergency, they have the freedom to invest in their children’s future aspirations. Or, instead of resorting to selling loose cigarettes or CDs to earn a little more money for their families, Blacks and Latinos have the opportunity to build long-term wealth by owning their own businesses.”
To address the differences, the report offers recommendations:
– Conduct a government-wide audit of federal policies to understand the role they play in maintaining or closing the racial wealth divide.
– Fix tax incentives to ensure households of color also receive support to increase wealth.
– Explore a dedicate wealth tax and expand existing progressive taxes to address the concentration of wealth among a small percentage of the population.