MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
"Just three years from now... White households are projected to own 85 times more wealth than Black households and 68 times more wealth than Latino households," according to a news release summarizing a report released yesterday by the Institute for Policy Studies (IPS), a progressive Washington think tank, and Prosperity Now, a think tank that focuses on research and solutions for a more equal availability of wealth.
The news release notes,
At a time when households of color make up a growing share of the population and are projected to reach majority status by 2043, their declining wealth is already taking a significant toll on the broader economy. The nation's overall median wealth decreased 20% from 1983 to 2013 ($73,000 to $64,000) -- a period when Black and Latino median wealth went down and White wealth slowly went up.
The report, "The Road to Zero Wealth," released on September 11 is filled with startling findings about the wealth gap between people of color and the nation's white population. It focuses on overall family wealth and assets rather than income:
For several years, politicians, researchers, journalists and the public have focused their attention on growing economic inequality in the United States. Most often, this focus is on income (i.e., the wages earned from a job or from capital gains) rather than on wealth (i.e., the sum of one's assets minus their debts). Income inequality, while stark, pales in comparison to the vast economic divide exposed by examining disparities in wealth. For example, a recent study by the Organization for Economic Co-operation and Development (OECD) found that while the top 10% of income earners in United States take in almost 30% of the nation's income, the wealthiest 10% own an astounding 76% of the country's wealth. That means less than a quarter of the nation's wealth is left for the bottom 90% of the American population.
As stark and as overlooked as these disparities are, they are particularly acute along racial lines as a disproportionate share of the nation's wealth is held in White hands while households of color own a shrinking slice of the proverbial pie. Today, this translates into a racial wealth divide in which the median net worth of Black and Latino families stands at just $11,000 and $14,000, respectively—a fraction of the $134,000 owned by the median White family. Even more disturbing is that when consumer durable goods such as automobiles, electronics and furniture are subtracted, median wealth for Black and Latino families drops to $1,700 and $2,000, respectively, compared to $116,800 for White households
While some falsely argue that this racial wealth divide stems from choices made by individuals and communities, the facts tell a different story. Recent research shows that the racial wealth divide persists across all levels of educational attainment and family structures, seriously diminishing the "personal choices" argument. Case in point? White high school dropouts own more wealth than Black and Latino college graduates. Furthermore, single-parent White households own more wealth than two-parent Black households.
"I think that we are heading toward a racial and economic apartheid," Chuck Collins, a co-author of the report and director of IPS's Program on Inequality, told Truthout. "By 2053, when people of color will compose the majority of the country, median Black household wealth will hit zero." In the same year, according to the report, white household wealth will rise to $137,000. Collins attributes the negative trend for people of color to many things: predatory lending, a decline in housing value and ownership, contract buying, payday loans and the economic need to live off debt, among other factors.
"These overall trends of economic inequality supercharge the racial divide," Collins said. "Many households of people of color are one step away from bankruptcy. Evaluating net worth is important because it provides a fuller picture about the financial well-being of families." Collins tied a good part of the divide to the impact of multi-generational racism, in which Black families have not been able to build up equity through housing ownership, savings, investments and general financial capacity.
Collins also emphasized to Truthout that wealthy whites often have their assets hidden in offshore accounts or in other schemes that would, if revealed, actually show the wealth disparity to be larger than it already is.
One of Collins' co-authors sees the report as a clarion call to address the racial wealth gap -- an issue which has recently been pushed aside in much mainstream discourse. "Since the election of President Trump, much discussion has focused on the economic challenges facing the White working class," said Dedrick Asante-Muhammad, a senior fellow for Prosperity Now's Racial Wealth Divide Initiative, as quoted in the news release. "We need to expand the conversation to address the dangerously depleting wealth in Black and Latino communities."
Asante-Muhammad's exhortation is borne out by several of the report's findings, including these two:
Even earning a middle-class income does not guarantee a family middle-class economic security, according to the report. White households in the middle income quintile—those earning $37,201-61,328 annually—own nearly eight times as much wealth ($86,100) as Black middle-income earners ($11,000) and ten times that of their Latino counterparts ($8,600).
This disconnect in income and wealth is visible across every socioeconomic level. The report found that on average, only Black and Latino households with an advanced degree have middle-class wealth or higher, while White households, on average, need only a high school diploma to attain that same level of wealth.
Given other findings in the report, it is clear that communities of color are facing a severe crisis when it comes to the wealth gap:
Since 1983, the respective wealth of Black and Latino families has plunged from $6,800 and $4,000 in 1983 to $1,700 and $2,000 in 2013. These figures exclude durable goods like automobiles and electronics, as these items depreciate quickly in value and do not hold the same liquidity, stability or appreciation of other financial assets like a savings account, a treasury bond or a home. By comparison, since 1983 the median wealth of White households has risen by nearly $15,000 reaching $116,800 in 2013 . Put differently, in just over a generation, median Black and Latino households saw their already-low net worth decrease by 75% and 50%, respectively, while median White households saw their net worth increase by 14%. The result is a wealth divide between Black and Latino households and White households that now stands at over $115,000, a nearly 20% increase.
Whereas these data reveal general trends in the years since 1983, we also see evidence that the Great Recession disproportionately impacted households of color. Even with the wealth loss experienced by White households during the Recession, median wealth never dipped below 1983 levels. For households of color, on the other hand, the Great Recession wiped away the gains made over the past three decades in their entirety. Put another way, although Black and Latino households started out well behind their White counterparts in 1983, the Great Recession essentially set them back to where they started. At the same time, White households experienced only minor setbacks, from which they have largely been able to recover.
The IPS-Prosperity Now report is ominous evidence that the effort to achieve economic equality is being stymied by a deeply entrenched and intertwined economic and racist legacy that is worsening by the year.