The Racial Wealth Gap is Toxic Inequality
Last week I attended the Center for Global Policy Solutions (CGPS) and the Insight Center for Community Economic Development's 2014 Color of Wealth Summit. The day-long summit featured speakers and experts who are committed to closing the racial wealth gap as a crucial way for us to grow our economy and to ensure justice for all.
The morning panel set the stage for the day by summarizing key research that has repeatedly shown the lack of wealth that exists in households of color, including a new report by CGPS and Duke University called, "Beyond Broke: Why Closing the Racial Wealth Gap is Priority for National Economic Security."
The report highlights that even though the economy has technically started to recover from the Great Recession, the average African-American and Latino household still owns only six and seven cents, respectively, for every one dollar in wealth held by the typical White family. This is an increase of only a penny per group since 2009. Furthermore, homeownership rates, access to retirement accounts in the workplace, and graduation rates for African-Americans and Latinos are all lower compared to rates for Whites, as you can see in the infographic above.
The report also lists policy recommendations to begin to close this gap. A few recommendations included:
- Expanding social security.
- Expanding access to low- and no-cost financial services.
- Ensuring that mortgage relief programs are transparent and fair.
- To enact a universal "baby bond" trust program to progressively endow every American child with an account to allow them to purchase a home or start a new business.
- To make refundable tax credit expansions permanent and to increase the EITC for childless workers.
Tom Shapiro, who is director of the Institute on Assets and Social Policy, called the racial wealth gap "toxic inequality" that is going to continue to hold back our economic growth unless the systematic and institutional reasons for its existence are reversed. He specifically mentioned the role that our upside-down tax policies have in promoting wealth for the top 1% and how they do very little for the bottom.
A number of Members of Congress spoke, including Senator Ben Cardin (D-MD), Representative Marcia L. Fudge (D-OH) and Representative Nancy Pelosi (D-CA). Representative Pelosi stated that the "racial wealth gap is an immorality" and commented on the vast amount of money low-income communities pay to access their own money. She also asserted her strong position to raise the minimum wage and to eliminate the gender wage gap.
Overall, speakers, panelists and audience members agreed that these trends will continue without concrete policy changes that start protecting and encouraging asset building and wealth building in multiple facets of these communities' lives.
Check out Prosperity Now's Federal Policy Briefs to see some recommendations we have for building and protecting wealth in low- and moderate-income communities.