Saturday, July 13, 2024

‘The Gray Room’: Eliminating the wealth gap

Editorial by Daniela Raymond

Growing up we have always been submerged in the idea of the “American Dream,” the foundation that the United States of America has been built on: life, liberty and the pursuit of happiness. For many their thoughts are flooded with the American dream, while others are drowning in the “American reality”.  

As Americans, we can all see how challenging it is to move up the income ladder in the United States, and as Black Americans, climbing the totem pole is significantly harder. But why?  

According to the RAND Corporation, a research organization, the average Black household in America has about $24,000 in saving investments, home equity and other forms of wealth, and continues to trend downwards. On the other hand the median white household is estimated to be worth $189,000. 

The unequal distribution of wealth within the United States is detrimental to Black families and households, leaving them disadvantaged in any crisis and unable to build generational wealth. Because the average Black household holds only a quarter of the wealth of white households, it leaves them in a distressing financial situation often with few economic opportunities available to them. 

Generational wealth provides families with the assets to invest in education, buy a house or property, start a business and participate more actively in the democratic process. The unresolved Black-white wealth gap is far from coincidence, but a consequence of the centuries of state and federal policies that have worked to systematically oppress Black Americans. Government policy has created and maintained barriers for African Americans who seek to accumulate, preserve and pass on wealth, from the brutal exploitation of Africans during slavery to systemic oppression in the Jim Crow South, to today’s institutionalized racism – apparent in unequal access to and outcomes in education, health care, jobs, housing and criminal justice.

The racial wealth gap would be significantly narrowed if there were no differences in homeownership rates and returns. If public policy successfully eliminated racial disparities in homeownership rates, median Black wealth could grow by more than $30,000, shrinking the gap by 31%, according to the U.S. Senate report in 2021.

A deceivingly beneficial tactic for resolving this gap has always been education. 

“No matter what you want to do with your life, I guarantee that you’ll need an education to do it,”  former president Barack Obama stated in a 2009 address to students. 

This idea is regularly coached to Black people: The path out of poverty and into the middle class is to complete your college education. 

College degrees do not eliminate income gaps. In fact, college degrees actually make the upwardly mobile Black middle class more vulnerable. Additionally, the disproportionate debt Black students take on to pay for their education is widening the racial wealth gap because education does not lead to economic parity for Black workers. Today, the average wealth of a white family is nearly 10 times more than that of a Black family, and the average wealth of a white college graduate is almost seven times greater than that of a Black graduate.

Now more than ever there is a vital conversation concerning reparation programs and other approaches that can help close the racial wealth gap. Society needs to be rethinking systems built on expanding this gap. Increased taxes on the wealthiest Americans or tuition-free education strategies, for example, might benefit many Americans, not just Black families. Nevertheless, due to the disproportionate effect that unfair institutions have on Black Americans, there is a chance that racial wealth disparities will be reduced.

Wealth isn’t as simple as money in the bank, it is the key to where economic opportunity lies. It’s insurance through difficult times, capital to build a small business, tuition for higher education, savings to retire, a trampoline into the middle class, and for many, a catapult into their “American Dream.”

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