More Evidence that Racial Wealth Divide is Increasing

In September of 2017 the Institute for Policy Studies and Prosperity New released an update on their 2016 report, The Ever-Growing Gap: Without Change, African-American and Latino Families Won't Match White Wealth for Centuries. The new study is entitled, The Road to Zero Wealth, How the Racial Wealth Divide is Hollowing Out American's Middle Class. The full report is available on the inequity.org website.

While the 2016 research indicated that families of color are moving toward wealth equality with whites at such a slow rate that it would be decades or even centuries before wealth equality could be reached, this new report claims that "If the racial wealth divide is left unaddressed and is not exacerbated further over the next eight years, median Black household wealth is on a path to hit zero by 2053—about 10 years after it is projected that racial minorities will comprise the majority of the nation’s population. Median Latino household wealth is projected to hit zero twenty years later, or by 2073. In sharp contrast, median White household wealth would climb to $137,000 by 2053 and $147,000 by 2073." (Page 5) This means that an African American child born today in the wealthiest nation in the world has a 50/50 chance of having more debts that assets when she reaches 35 years old.

As the authors point out this is not just a matter of wealth inequalty. "The accelerating decline in wealth over the past 30 years has left many Black and Latino families unable to reach the middle class." While wealth for the top 10% of Americans is a means of creating additional wealth, but wealth for those with little or no wealth have a handicap when it comes to entering or remaining in the middle class. "Ultimately, wealth can be the difference between a family maintaining and strengthening their economic status or flailing in economic insecurity." (Page 5-6)

The wealth gap between whites and non-whites is accelerating according to this report: "By 2024, median Black and Latino households are projected to own 60-80% less wealth than they did in 1983. By then, the continued rise in racial wealth inequality between median Black, Latino and White households is projected to lead White households to own 99 and 75 times more wealth than their Black and Latino counterparts, respectively."(Page 5)

The report provides support for the argument of this chapter that the current system is not working. The white paradigm has resulted in a whites and non-whites having very different access to wealth. And equally important, the current system is not going to reduce the inequity. The authors of this report propose very specific policies that can be changed to turn the system around so that non-whites can begin to build wealth and have greater opportunity to enter and remain in the middle class. See the footnote in Chapter 14 on page 221.