05/27/2010 03:18 pm ET | Updated May 25, 2011

Economic Inequality from Cradle to Grave

What's an acceptable level of social inequality? The loaded answer is obviously "none." But it seems that few people realize what the socioeconomic gaps across racial and gender lines aren't just about paychecks of different sizes. The damage lasts far into the future and is compounded with each generation.

As Racewire's Kai Wright pointed out last week, a new research paper from the Brandeis University Institute on Assets and Social Policy shows that in terms of overall household wealth, the gap between blacks and whites more than quadrupled over the past generation. It's unclear what impact the current economic collapse will have; blacks have suffered far worse than other groups in many respects, but the recession could perversely lead to greater "equality" by pushing down whites' economic status.

But the implications of these findings are even more profound when projected over the next few decades. According to the study:

The growth of the racial wealth gap significantly affects the economic future of American families. For example, the racial wealth gap in 1984 amounted to less than three years tuition payment for one child at a public university. By 2007, the dollar amount of the gap is enough to pay full tuition at a four year public university for two children, plus tuition at a public medical school. The gap is opportunity denied and assures racial economic inequality for the next generation.

Other studies reveal how shrinking opportunities for the younger generation in turn erodes networks of support for their elders. A related report published by Demos and the IASP noted that the coming years will bring painful economic insecurity among Black and Latino seniors:

A lifetime of fewer assets leads to a much more vulnerable retirement for many households of color.

On average over half (52.0 percent) of Americans age 65 and above have access to interest income; however, less than one in four (22.2 percent) African-American seniors have interest income. While overall 22.5 percent of seniors receive dividend income, very few older African Americans (5.2 percent) received dividend income.

So while millions have seen their retirement nest eggs vaporize during the recession, many people of color have virtually no savings to look forward to once they're too old to work, and whatever they did manage to save has likely been shattered by the mortgage crisis and epidemic unemployment:

Subsequent generations will face severe challenges in retirement if current trends in pensions and rising health costs are not reversed. The impact of the current housing crisis has reduced the asset holdings of many households, thereby reducing the largest asset of most retired households.... The number of older Americans who are filing for bankruptcy has now reached record levels, an indication of the impending crisis for future retirees. Financial assets among middle class families of color dramatically decreased between 2000 and 2006, and the 2008 recession bodes for a more uncertain future.

About nine in ten Black and Latino seniors "are not economically secure," and that "52 percent of African-American and 67 percent of Latino single seniors are vulnerable and at risk of inadequate resources to sustain their older age life cycle."

Certain policy measures could preempt some of the looming crisis, such as shoring up social security, tightening the dysfunctional financial regulatory system, and expanding access to retirement savings accounts.

Of course, one really basic way to enhance financial security is to enable people of color and the poor to do what rich white people have been doing for a while now: earn enough money to provide for themselves, their children and their parents later in life.

A number of recent think-tank studies analyze job creation strategies for the disadvantaged, including green jobs for low-income, low-skill workers, along with programs for engaging "disconnected" youth who are shut out of the education system and the job market. The immediate impulse among policy wonks and politicians may be to hook people into the labor force as soon as possible, perhaps emphasizing quantity over quality.

Anxieties about persistently high jobless rates are getting political attention, but they may eclipse long-term concerns about whether economic recovery today will ensure security throughout the life cycle; chipping away at the wealth gap demands more than just getting young people or laid-off workers out of the unemployment. In an economy that seems hell bent on keeping people of color from getting head, you need a lot more than a job these days to build a real life.

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