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White Families Now $95K Richer Than African-American Families On Average, According To New Study

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In the last 23 years, the gap between the average net worth of African-American families and white families has more than quadrupled, according to a new study by researchers at Brandeis University.

In examining data from 1984 to 2007, Brandeis's Institute on Assets and Social Policy found that
the average white family now has accumulated $95,000 more in total wealth than the average African-American family. One quarter of African-American families, the report notes, currently have no financial assets to protect themselves from financial ruin. (Scroll down to see chart.)

The report's authors argue that, through a mixture of policy mistakes and discrimination, most of the wealth during that period flowed into the hands of white families.

In a study published last year, the University of California, Berkeley's Emmanuel Saez found that income inequality in the U.S. had hit an all-time high in 2007. But the Brandeis study points to a "broken chain of achievement" among African-Americans that, even at relatively moderate levels of income, creates large disparities.

"By 2007, the average middle income white household accumulated $74,000," the report's authors note, "whereas average high income African Americans owned only $18,000." Here's more from the report:

The racial wealth gap results from historical and contemporary factors but the disturbing four fold in crease in such a short time reflects public policies, such as tax cuts on investment income and inheritances which benefit the wealthiest, and redistribute wealth and opportunities. Tax deductions for home mortgages, retirement accounts, and college savings all disproportionately benefit higher in come families. At the same time, evidence from multiple sources demonstrates the powerful role of persistent discrimination in housing, credit, and labor markets. For example, African Americans and Hispanics were at least twice as likely to receive high cost home mortgages as whites with similar incomes. These reckless high cost loans unnecessarily impeded wealth building in minority communities and triggered the foreclosure crisis that is wiping out the largest source of wealth for minorities.

The report also places a good bit of blame on the growth of predatory lenders targeting African-American communities. An independent Consumer Financial Product Protection Agency, like the body currently being debated in Congress, could help narrow the racial wealth gap by restricting payday lenders, high-cost lenders and check cashing stores, suggests the report.

(Check out a PDF of the report here.)

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