Past and Present Racial Wealth Imbalances Don’t Have to Tell Our Future

The racial differences in income are disheartening

The distinction between wealth and income is very important when we talk about racial disparities. If we only look at income, the disparities don’t look nearly as bad as they really are.

Source: Pew Research Center

The racial differences in wealth are massive

But if you look at wealth instead of income, the difference is not twice as much. It’s more like thirteen times as much. In 2013, the median wealth of White households was $144,200 compared to $11,200 for Black households.

Source: Huffington Post, quoting Pew Research Center

Our past: the story of cumulative discrimination

Racism goes way beyond just interactions between people. It’s also built into laws, policies, and systems that block opportunities and equal access to resources.

Different kinds of racism. Source: Project Linked Fate
  • Redlining blocked access to home ownership for the Black community.
  • The GI bill promoted home ownership and college education, but it basically excluded Black soldiers.
  • Social security also excluded the jobs most Black people had.
Role of government policy in creating massive racial wealth differences

Our present: wrong policies for wrong problem

Racial wealth imbalances tell a different story in the present. These imbalances reveal a lack of understanding about racism. Many people don’t know about the role government policies played — and continue to play — in today’s racial economic differences. They don’t know how those problems have gotten worse over generations. They don’t know how bad the problem is. They assume there are other reasons for the problems. This leads to policy suggestions that won’t solve the problems.

  • 1) Income inequality is not the same as wealth inequality. We need to focus on policies that will build enough income to cover debts and build wealth.
  • 2) We can’t reduce the imbalance just by increasing wealth for those with the least. We must also address the policies that are increasing wealth for those who already have the most.
  • 3) This is not just a small difference or imbalance. Things are completely out of whack. We need major change to get back on track. If not, we will continue to destabilize our economy and the social fabric of our country.

Our future: why it’s important to spread the wealth now

People can share their wealth with future generations. Parents can use their wealth to access high quality education and college for their children. They can also use wealth to help adult children make down payments on their first home.

  • Minnesota has raised their minimum wage and increased taxes on the rich.
  • Other state and local governments are proposing bills that cap CEO pay at 100 times that of the lowest paid worker.
  1. In this post, I mostly focus on the wealth imbalance between Black and White people. The wealth imbalances between Latinx and White people is very similar, though slightly less. These imbalances are caused by many of the same problems. It is likely that there is a wealth imbalance between Native American and White people too, because of similar problems, but unfortunately data is not available for this group. The wealth imbalances between Asian and White people is hard to measure, because it depends on how you measure different Asian groups and data for this group has not been collected as long.

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