The California Reinvestment Coalition is holding Steven Mnuchin's former bank accountable for the redlining that took place under his watch.
Without Change, African-American and Latino Families Won’t Match White Wealth for Centuries
Racial and economic inequality are the most pressing social issues of our time. In the last decade, we have seen the catastrophic economic impact of the Great Recession and an ensuing recovery that has bypassed millions of Americans, especially households of color.
This period of economic turmoil has been punctuated by civil unrest throughout the country in the wake of a series of high-profile African-American deaths at the hands of police. These senseless and violent events have not only given rise to the Black Lives Matter movement, they have also sharpened the nation’s focus on the inequities and structural barriers facing households of color.
However, even when these economic inequities do get attention, the focus is often on a single facet of the issue: income. The new report Ever-Growing Gap, published by the Institute for Policy Studies and the Corporation for Enterprise Development, focuses instead on a related but distinct facet of the issue: the essential role that wealth plays in achieving financial security and opportunity. It examines our country’s growing racial wealth divide and the trajectory of that divide.
This growing wealth divide is no accident. It is the result of public policy designed to widen the economic chasm between white households and households of color and between the wealthy and everyone else. In the absence of significant reforms, the racial wealth divide—and overall wealth inequality—are on track to become even wider in the future.
- Over the past 30 years the average wealth of white families has grown by 84%—1.2 times the rate of growth for the Latino population and three times the rate of growth for the black population. If that continues, the next three decades would see the average wealth of white households increase by over $18,000 per year, while Latino and Black households would see their respective wealth increase by only $2,250 and $750 per year.
- Over the past 30 years, the wealth of the Forbes 400 richest Americans has grown by an average of 736%—10 times the rate of growth for the Latino population and 27 times the rate of growth for the black population. Today, the wealthiest 100 members of the Forbes list alone own about as much wealth as the entire African American population combined, while the wealthiest 186 members of the Forbes 400 own as much wealth as the entire Latino population combined. If average Black households had enjoyed the same growth rate as the Forbes 400 over the past 30 years, they would have an extra $475,000 in wealth today. Latino households would have an extra $386,000.
- By 2043—the year in which it is projected that people of color will make up a majority of the U.S. population— the wealth divide between white families and Latino and black families will have doubled, on average, from about $500,000 in 2013 to over $1 million.
- If average black family wealth continues to grow at the same pace it has over the past three decades, it would take black families 228 years to amass the same amount of wealth white families have today. That’s just 17 years shorter than the 245-year span of slavery in this country. For the average Latino family, it would take 84 years to amass the same amount of wealth White families have today—that’s the year 2097.
Addressing this growing crisis:
- Conduct an evidence-based, government-wide audit of federal policies to understand the role current policies play in perpetuating the racial wealth divide
- Fix unfair, upside-down tax incentives to ensure households of color also receive support to build wealth
- Address the distorting influence of concentrated wealth at the top through the expansion of existing progressive taxes and the exploration of a dedicated wealth tax