There are two stunning statistics in a report released this week by CFED and the Institute for Policy Studies that should be fundamental to any discussion of economic growth and racial equity.
One is that the average wealth of white families in the past 30 years has grown by 84 percent – less than the rate of inflation, to be sure, but the average wealth of black families has grown at only one-third as much.
Second, it would take African-American families on average 228 years to amass the same wealth that white families have today, given the current rate of growth.
This is the consequence of historic racial and wealth inequality, woven deeply into the fabric of our economic system and our politics. This is also the discussion that is largely absent from our political discussion in both political parties. It was totally absent from Republican presidential nominee Donald Trump’s economic speech in Detroit Monday, which did not mention racial disparities at all. Clinton talks more often about racial discrimination, but she has not focused attention on the consequences of a centuries-long and growing gap between white and black America when it comes to the accumulation of wealth.
The authors of the report note that usually when economic disparities between black, white and Latino households are discussed, it’s in terms of income. “While income is necessary to meet daily expenses, wealth helps families get through lean times and empowers them to climb the economic ladder,” the report says. “Wealth is money in the bank, a first home, a college degree and retirement security — it’s the countless opportunities afforded by having savings and investments. Unfortunately, when an overwhelming amount of wealth is concentrated in such few hands, not only do highly unequal societies suffer from significant negative social and health outcomes, there are also fewer opportunities available for others to get ahead.”
The report calls the racial wealth gap “the natural result of public policies past and present that have either been purposefully or thoughtlessly designed to widen the economic chasm between White households and households of color and between the wealthy and everyone else.”
What must we do to close the gap? The report suggests first conducting a government-wide audit of policies that have created or are perpetuating the gap. Those policies range from discriminatory housing practices to provisions in the tax code to the disproportionate impact on people of color of conservative-led states not expanding Medicaid coverage, which leave households of color with higher medical bills and correspondingly less money in savings.
The report also suggests replacing mortgage interest and real estate tax deductions with tax benefits that encourage and support home ownership among lower-income families. It also suggests strengthening the earned income tax credit, with an incentive to put away some of the proceeds in a savings account, and the creation of a simple retirement savings account for workers who currently do not have access to a work-based retirement savings plan.
More fundamentally, the report calls for forceful action to curb the flood of wealth to the very top of the income scale that has harmed all families, regardless of race or ethnicity. Remember the modest 84 percent growth in income what white families have received over the past 30 years – not enough for white families to feel as if they are falling behind? Compare that to the growth of the wealth of the Forbes 400 over the same period: 736 percent.
White families and black families should not be pit against each other in a fight over the crumbs on the table. All families should be angry at how a rigged economic system is disadvantaging them while a few make out like bandits.