Both Parties Need Racial Economic Justice at the Top of the Agenda
In the lead up to the Democratic and Republican National Conventions, we're producing a three-part series on major themes of the 2016 election season and policy reforms that Prosperity Now believes should be at the center of the national debate. Earlier this week, we kicked off with a focus on economic inequality and the role unfair tax programs play in holding back opportunity. Yesterday, we focused on higher education access and success and the game-changing potential of children's savings policy. And today, we're going to focus on the growing racial wealth divide and strategies for expanding racial equity as we boost economic opportunity.
Over the next two weeks, both of our major political parties will come together to officially mark the end of a long and bitter presidential primary season and the (official) start of the general election campaign. One party will meet in the home of the newly-minted NBA Champions, the other in the City of Brotherly Love. While miles apart, each party convention provides another big national opportunity to shine a light on some of the most pressing issues that our country needs to address. This year, racial justice should be at the top of that list.
While racial injustice has been a persistent problem since the founding of this country, recent events have rightly shifted our national focus to the multitude of systematic problems in our criminal justice system. Given what just occurred last week in Baton Rouge and Minnesota, in which two black men were again senselessly killed by the police, followed by the racially-motivated killing of five Dallas officers, it's hard not to pay attention to anything else.
Communities of color have been facing deeply rooted, institutionally discriminatory problems within the criminal justice system, but they've also been facing persistent racial economic inequities. While it's easy and quick to point to a lack of income as the driving economic problem facing communities of color, the truth is that income inequality is just a small piece of a much larger—and often overlooked—racial economic problem: the racial wealth divide.
Today, Latino and Black families earn about $13,000 and $20,000 less per year, respectively, than the typical white household ($50,400), and they have about $100,000 less in wealth than white families. Why? As alarming as this disparity is, it's even more deplorable because of the purposefully or thoughtlessly made decisions by policymakers that have systematically deprived communities of color of equal economic opportunity.
What are these discriminatory policies? Notable examples include:
- The federal government's sanctioning of racial housing discrimination, through the practice of "redlining", that shut out entire communities of color in a number of cities—like Cleveland and Philadelphia—from the opportunity to purchase their own homes, the greatest driver of wealth in this country. The racial economic impacts of this decision can be seen in a whole range of places within the housing market today; they're also clear evident in some of country's most racial segregated cities and financially vulnerable neighborhoods.
- Intentionally withholding G.I. benefits, such as low-cost home mortgages, low-interest business loans and tuition assistance, from service members of color by racially biased officials within the Department of Veterans Affairs who interpreted the G.I. Bill to favor white service members over those of color.
- The intentional targeting and exclusion of people of color from 1790 through the 1960s from accessing the asset that is full citizenship.
Over the next two weeks, party leaders and others will come together in these two cities to have conversations about the proper role of government and how to make the country stronger and fairer. While we don't know the specifics of what these political leaders be discussing, we'd hope to hear them talk about these two solutions:
- Conducting an evidence-based, government-wide audit of federal policies to understand the role current federal policies are playing in perpetuating or closing the racial wealth divide. While we know the role that past policies have played in growing racial economic inequality, a number of policies today that have substantial impact on the economic opportunity of communities of color. Unfortunately, we don't fully know what all those policies are or how they are impacting the racial wealth divide. An audit like this one would not only help us to understand the racial impact of a whole range of policies, it would also provide policymakers with the critical information they need to start addressing them.
- Fixing unfair upside down tax incentives to ensure households of color also receive support to build wealth. As we wrote about earlier this week, Congress already spends over $660 billion to build up the wealth of American households, but unfortunately much of that money goes to wealthy — often white — households, leaving very little for everyone else. Instead of spending that money on wealthy families who don't need the help, we'd like to see a conversation at the conventions about using these dollars in to provides wealth-building support to everyone, particularly communities of color. To that end, we hope party leaders discuss using the half-trillion in unfair spending to ensure that every child in the United States starts off with a small nest egg for the future in the form of a Children's Savings Account (CSA) opened automatically at birth. That's because CSAs are one of the initiatives with the greatest potential for closing the racial wealth divide — by 20-80%, depending on the structure and funding of the accounts.
Just four years from now, when both parties meet again for their 2020 conventions, more than half of the country's children will be minorities. About 20 years after that, as party leader prepare meet to nominate their 2040 presidential candidates, people of color will make up a majority of country's population.
Given these demographic shifts and the fact that Black and Latino households today own just $0.06 and $0.07 of wealth, respectively, for every dollar of white-owned wealth, decisive action has to be taken in Cleveland and Philadelphia this summer to ensure that we start addressing the racial wealth divide. Failure to address this growing problem will not only severely impact the economic opportunity of communities of color, it will also have serious ramifications for the overall economic well-being of our country.
Although this post marks the end of our three-part series on the major themes of the 2016 election and the policy reforms we believe have the potential to create an opportunity economy, there's still more that needs to be done. Over the next few months, Prosperity Now will be releasing its policy blueprint, outlining ways the next President and Congress can expand economic opportunity for all. Moreover, in late September, Prosperity Now will host its 2016 Assets Learning Conference, bringing together 1,300+ policymakers, practitioners, private sector leaders and advocates to continue the conversation. Together, we can face our country's economic challenges and create solutions to put us on the path to achieving racial and economic equality.