The racial wealth divide hurts the entire middle class
Americans are more aware than ever that America has a race problem — and, more specifically, a racial wealth divide problem. As researchers from the Institute for Policy Studies and I found earlier this year, median white families are 41 times wealthier than median Black families in the United States.
As our country becomes more diverse, this shocking racial wealth divide is no longer a challenge for disenfranchised minorities alone. It’s a threat to the entire American middle class.
Let me show you how.
Since the early 1980s, median wealth among Black and Latino families has been stuck at less than $10,000, while median white wealth has grown to $140,000. Yet in spite of this growing white wealth, this huge divide means that national median wealth has actually declined.
The racial wealth divide, in short, is weakening our country as a whole.
Contributing to this divide is ongoing racial inequality in the two largest assets in most Americans’ portfolios: business ownership and homeownership.
For the last 40 years, Black and Latino homeownership rates have stayed below 50 percent, while white homeownership has remained steady at about 70 percent.
And although 13 percent of the U.S. population is Black, only 2 percent of U.S. businesses employing more than one person are Black-owned. Hispanics are 17 percent of the population but own just 6 percent of these businesses.
How do we fix this? By making smart investments.
The white middle class was built by major investments promoting education and homeownership, among other things, after World War II. But African Americans, Latinos, and Native Americans were almost entirely left out of these programs. Now these groups deserve significant investments of their own.
