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America’s racial wealth gap is enormous and getting worse

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This article is from Capital & Main, an award-winning publication that reports from California on economic, political, and social issues.

America’s racial wealth gap, pushed to the front of the nation’s agenda during the racial justice protests of last summer, has continued to widen and has indeed worsened during the COVID-19 pandemic.

The impact on Black lives, Black wealth and Black businesses has been enormous. According to the Federal Reserve Bank of New York, more than 40% of Black businesses shut down between February and April 2020. And 44% of Black workers say they have experienced income loss since March 2020, compared to 27% of white workers. Economists and business experts say it will take years for Black Americans, still staggering from the Great Recession of 2008, to recover.

“What COVID did was just peel back the ugly realities of the inequities that exist in the United States,” says Harold Epps, former director of commerce for the city of Philadelphia and senior advisor at Bellevue Strategies. “It just put a spotlight on us, just as the video cameras in Minnesota did.”

Last fall, a study by the RAND Corporation found that tens of millions of Americans could and should be making twice what they’re currently earning—for example, a full-time worker currently earning the national median wage of $50,000 would be making close to $100,000 now — if the country’s economic growth had been shared as broadly over the past 45 years as it was from the end of World War II until the early 1970s. Though the study found similar pay gaps between all racial groups, the wealth gap magnifies the loss of income experienced by Black workers. In other words, if a white and a Black worker each earn $50,000 for a job that should pay $100,000, the white worker is likely to still be far better off because their wealth is far greater than the Black worker’s. As the Federal Reserve Bank of Cleveland has determined, the income gap “is the primary driver behind the wealth gap and that it is large enough to explain the persistent difference in wealth accumulation.”

[Image: Capital & Main]The Black-white wealth gap is not an accident but rather the result of centuries of federal and state policies that have systematically facilitated the deprivation of Black Americans, says the Center for American Progress in a recent report.

“From the brutal exploitation of Africans during slavery, to systematic oppression in the Jim Crow South, to today’s institutionalized racism — apparent in disparate access to and outcomes in education, health care, jobs, housing, and criminal justice — government policy has created or maintained hurdles for African Americans who attempt to build, maintain, and pass on wealth,” the researchers wrote.

Black Americans have lower incomes regardless of education level, less wealth, less inherited wealth, lower savings and investment rates and lower retirement savings than white Americans, all perpetuating the wealth gap. Though Black Americans have vastly improved the racial gaps in both primary and secondary education, wage and wealth gaps persist and continue to widen.

“A racial gap exists in every income group except the bottom quintile (23.5% Black), where median net worth is zero for everyone,” according to a Brookings Institution Report, “Examining the Black-White Wealth Gap.”

The scale of the disparity in sheer numbers is shocking: Black Americans represent 13% of the U.S. population, but possess only 4% of the nation’s household wealth, and the net worth of a typical white family, at $171,000, is roughly 10 times greater than for a........

© Fast Company

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