A huge wealth gap has opened up between blacks and whites in the US over the past quarter of a century because of racial discrimination and economic policies that favor the affluent.
A typical white family is now five times richer than its African-American counterpart of the same class, a report released on Monday by Brandeis University in Massachusetts said.
White families typically have assets worth US$100,000, up from US$22,000 in the mid-1980s. African-American families’ assets stand at just US$5,000, up from around US$2,000.
A quarter of black families have no assets at all. The study monitored more than 2,000 families since 1984.
“We walk that through essentially a generation and what we see is that the racial wealth gap has galloped, it’s escalated to US$95,000,” said Tom Shapiro, one of the authors of the report by the university’s Institute on Assets and Social Policy.
“That’s primarily because the whites in the sample were able to accumulate financial assets from their US$22,000 all the way to US$100,000 and the African-Americans’ wealth essentially flat-lined,” he said.
The survey does not include housing equity, because it is not readily accessible and is rarely realized as cash. Although, if property were included it would further widen the wealth divide.
Shapiro said the gap remains wide even between blacks and whites of similar classes and with similar jobs and incomes.
“How do we explain the wealth gap among equally achieving African-American and white families? The same ratio holds up even among low income groups ... But there are greater opportunities and less challenges for low and moderate income families if they’re white in comparison to if they’re African-American or Hispanic,” he said.
Shapiro said one of the most disturbing aspects was that wealth among the highest-income black Americans has actually fallen in recent years, dropping from a peak of US$25,000 to about US$18,000, while among white counterparts of similar class and income it has surged to around US$240,000.
In 1984, high-income black Americans had more assets than middle-income whites. That is no longer true.
“I’m a pretty jaded and cynical researcher in some way, but this was shocking, quite frankly, a really important dynamic,” Shapiro said.
The report attributes part of the cause to the “powerful role of persistent discrimination in housing, credit and labor markets.
Black Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes,” the report said.
Although many black families have moved up to better-paying jobs, they begin with fewer assets, such as inheritance, on which to build wealth. They are also more likely to have gone into debt to pay for university loans.
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