Racial Wealth Gap Leading To Almost-Nonexistent Middle Class

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Above Photo: Top photo | Deborah Goldring stands inside her Baltimore home. From growing up black in the segregated 1960s, Goldring pulled herself out of poverty and earned a middle-class life – until the Great Recession. First, her husband fell ill, and they drained savings to pay for nursing homes before he died. Then Goldring lost her executive assistant job of 17 years. Then came a letter from the bank, intending to foreclose on her home of almost three decades. For Goldring and many others in the black community, where unemployment is still rising, job loss has knocked them out of the middle class and back into poverty. Some even see a historic reversal of hard-won economic gains that took black people decades to achieve. (AP Photo/Steve Ruark)

With people of color projected to make up the majority of Americans by 2043, a new study warns against policies that keep many black and Latino households out of the middle class.

A new study finds that if the racial wealth divide is left unaddressed, the median wealth for black Americans will fall to $0 by 2053, with Latino Americans reaching the same median wealth two decades later.

According to the report by the Institute for Policy Studies and Prosperity Now, the wealth gap between people of color and their white counterparts is showing no sign of narrowing in the coming years—even as racial demographics in the U.S. are rapidly shifting, with people of color projected to make up the majority of the population by 2043.

In the next three years, black households are projected to lose 18 percent of their median net worth, while white families are expected to gain about three percent more wealth.

The report, “The Road to Zero-Wealth,” defines middle-class wealth as a household net worth of $68,000 to $204,000, and notes the disconnect between income and wealth: a median income for one’s racial background does not guarantee entry into the middle-class.

RWG17-1-768x384“White households in the middle-income quintile—those earning $37,201-61,328 annually—own nearly eight times as much wealth ($86,100) as Black middle-income earners ($11,000) and ten times that of their Latino counterparts ($8,600),” write the authors.

Black Americans are also unable to accumulate middle-class wealth even with high levels of education:

If we consider educational attainment—often considered as the “great equalizer” between the rich and the poor and between families of different racial and ethnic backgrounds—White families whose head of household holds a high school diploma have nearly enough wealth ($64,200) to be considered middle class. A typical Black or Latino family whose head of household has a college degree however, owns just $37,600 and $32,600, respectively, in wealth.

 

In addition to impact of income inequality on individual families, the racial wealth gap has increasingly dire implications for the overall economy if, as the authors project, the majority of Americans aren’t able to enter the middle class:

If the racial wealth divide continues to accelerate, the economic conditions of black and Latino households will have an increasingly adverse impact on the economy writ large, because the majority of U.S. households will no longer have enough wealth to stake their claim in the middle class.

RWG17-2-768x384The report emphasizes the severe economic disadvantage black Americans had throughout the 20th century as the middle class grew. While the G.I. bill offered millions of veterans and their families access to home ownership, higher education, and business loans, the authority of individual states to implement the bill with little oversight led to “pervasive racial discrimination in which service members of color were more likely to be denied access to a range of benefits that greatly expanded the American middle class.” Meanwhile, black Americans have been subjected to redlining and other discriminatory practices, creating a vicious cycle in which households are refused credit as a penalty for living in low-income areas—in turn making it impossible, in many cases, to move into the middle class.

 

To combat the growing racial wealth divide and to keep it from resulting in a further-weakened middle class, the study urges, among other things, a correction of the country’s “upside-down” tax structure in which the government would “stop subsidizing those who are already wealthy and start investing in opportunities for low-wealth families to build wealth.”

“The growing racial wealth divide documented in this report is not a natural phenomenon, but rather the result of contemporary and historical public policies that were intentionally or thoughtlessly designed to help White households get ahead at the expense and exclusion of households of color,” the report reads. “Although public policy has been a significant contributor to the divide, the good news is that public policy can also help to close the divide.”

Read the full report ‘The Road to Zero-Wealth’ below

 

  • DHFabian

    We naturally select whichever statistics serve to support our broader point. Still, we should consider examining white poverty to gain a broader understanding of America’s current situation. This would be vital to having any chance of taking steps to reverse extreme “inequality” in the US, which would be necessary to prevent the economic collapse of the US itself. The more people in poverty, the fewer the consumer purchases. Fewer products need to be made, fewer workers are needed, so more people are pushed into poverty. We maintain our downhill slide.

    By race, the highest poverty rates are among American Indians, with African Americans coming in second. At the same time, the great majority of US poor are white. This is because the majority of Americans are white. If we were serious about addressing the critical issues that are pulling the US toward economic collapse, there would be daily, legitimate discussions about overall poverty. Instead, we avoid the word itself. US media no longer acknowledge anyone worse off than low wage workers. They paint a false picture of this country as being so successful, that there are jobs for all.

    Yes, these are complex issues. Saving our collective butts would require a public education push, necessary to dispel the fantasy that poverty is either a “lifestyle choice” or merely the consequence of laziness. Today’s US poverty is the classic “canary in the coalmine,” proof of the significant failures of our current system.

  • kevinzeese

    Not sure why you always want to minimize the unfairness of the economy in black communities. Your comments come across as racist.

    We all know there is a poor, white working and non-working class. That is not news

  • Glidehoyas

    They are included. The key word, “overall” which means most are included. The Nation’s Median wealth decreased nearly twenty percent.

  • Glidehoyas

    Kind of wonder did he read the article lol

  • GODBlessRealAmerica!!!

    The only RACIST IS YOU!!! YOU LiBERAL DEMOCRACKHEAD THUG KEEP POSTIN YO BS AND HATE AGAINST TRUMP!!!!!!!!!!!!! You’re an idiot!!!!!!!!!!!!!!!! https://uploads.disquscdn.com/images/e27d05d67f7957109afabaf6f0d6d070e6e7148fc8886be1af0cde942ff81850.jpg