Federal Policies Helped Create the Racial Wealth Divide. Here's the First Step to Fixing It.
In recent weeks, presidential candidates on the right and the left have spoken about the issue of race, the role it plays in a person's life and what they, if elected President, would do to alleviate racial economic and social disparities. In part, the heightened focus on race on the campaign trail can be attributed to the events that unfolded in cities like Flint and Ferguson, which have reignited the public's attention to the stark realities communities of color face each day. The other reason is that the campaign has now begun to shift to states in which people of color are a large part of the electorate.
In the lead up to the Nevada caucuses, South Carolina primaries and Super Tuesday, presidential candidates Bernie Sanders, Marco Rubio and Hillary Clinton have all touched on the issue of race. Other candidates have discussed race in other contexts as well.
While candidates approach the topic of race from different perspectives, they generally acknowledge — in one form or another — that in order for the country to move forward, we have to address the impact race has on social and economic outcomes. Solutions proposed by these and others candidates have ranged from reforming the criminal justice system, to strengthening families and communities, to creating more jobs and greater opportunities for households of color. These solutions and the broader discussions that the campaign is sparking are a valuable start. However, the economic factors at the root of many of these disparities are still receiving less attention than they should be.
The reality is that what household of colors face today isn't just a byproduct of the current criminal justice system, the economic downturn or lack of jobs; rather, it's the byproduct of decades of racial discrimination that permeates virtually every aspect of the economy — from housing to education to access to financial services – and has systematically deprived communities of color of equal economic opportunity. The end result is something so overwhelming and persistent that it limits the ability of people of color to get ahead from the minute they're born.
That 'something' we're talking about is the racial wealth divide.
Today, black and Hispanic households own just $0.06 and $0.07 of wealth, respectively, for every dollar of wealth owned by white households — up just one cent from where they were at the end of the recession. Unfortunately, discriminatory federal policies are partly to blame for helping create and grow the racial wealth divide.
Over the past century, many federal initiatives that expanded economic opportunity for white families, were also used to systematically create long-term economic barriers for households of color. Most notably, the Federal Housing Administration's more than three decades of redlining entire communities of color out of the opportunity of owning a home — the single largest driver of wealth in this country — is one of the greatest drivers of today's racial wealth divide.
In the more than 50 years since the Civil Rights Act was passed, policymakers have outlawed redlining and repealed many other discriminatory policies. But other policies that continue to actively limit the wealth-building potential of households of color remain in effect today. Examples can be found in the tax code, where high value tax benefits overwhelmingly go to wealthy white households, as well as in the Affordable Care Act, which has created a healthcare coverage gap for 1.7 million adults of color because of the optional Medicaid expansion.
In just four years from now more than half of the country's children will be minorities and by 2040, more than half of the nation's entire population will be people of color. The demographic shifts, when coupled with the alarming breadth of economic inequality households of color face today, point to the need for decisive action.
Closing the racial wealth gap is going to require leadership at the federal level. But in order to achieve real racial equity, policymakers and the broader public first need to understand how current policies are leaving communities of color behind.
This is why we'd like to see the next president to take executive action – within their first 100 days in office – to authorize a thorough, 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. With this understanding in hand, only then can policymakers take the necessary steps to address the countless economic disparities household of color face today and ultimately close the racial wealth divide.