America’s racial wealth gap triples over 25 years

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CHARLENE CROWELL

 

(NNPA)—As long as most of us can remember, Black communities have taught and believed that a college education is the key to social and economic advancement. But according to a new research and policy brief by Brandeis University scholars, that long-held belief is only one of several factors affecting Black America’s ability to build wealth.
After Brandeis University’s Institute on Assets and Policies traced 1,700 working Americans households over 25 years, the researchers found that the wealth gap between White and Black families nearly tripled, increasing from $85,000 in 1984 to $236,500 in 2009. For each dollar in income increase during these years, White wealth grew $5.19 while Black wealth growth amounted to 69 cents.
“Our analysis found little evidence to support common perceptions about what underlies the ability to build wealth, including the notion that personal attributes and behavioral choices are key pieces of the equation,” said the report by the Brandeis’ Institute on Assets and Social Policy (IASP). “Instead, the evidence points to policy and the configuration of both opportunities and barriers in workplaces, schools, and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated and that continue to permeate the most important spheres of everyday life.”
The report ranked the biggest drivers of America’s racial wealth gap:
Years of homeownership;
Household income;
Unemployment;
College education and
Inheritance/other financial support
On average, White families became homeowners eight years earlier than Black families. Oftentimes inheritance and other financial support favored families with pre-existing wealth. With more White families able to receive family financial assistance, make larger up-front payments for home purchases, they benefited from lowered interest rates and lending costs.
By contrast, Black homeowners were more likely to have high-interest, risky mortgages even when income and credit scores were comparable to those of Whites. As labor market instability tended to affect Black more negatively than Whites, accrued monetary assets became the vehicle to withstand the lack of income and eliminated many opportunities to invest to build wealth. As a result, Black mortgage borrowers became more than twice as likely to lose their homes to foreclosure.

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