New Report: Without Change, African-American and Latino Families Won't Match White Wealth for Centuries
A report released today by the Institute for Policy Studies and the Corporation for Enterprise Development, The Ever-Growing Gap, examines our country’s growing racial wealth divide and the trajectory of that divide. Among its findings is that if the 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.
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.
Key Report Findings
- 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.
To address the growing crisis, the report's authors Dedrick Asante-Muhammed, the director of the Racial Wealth Divide Initiative at the Corporation for Enterprise Development, and Chuck Collins, a senior scholar at the Institute for Policy Studies, offer the following recommendations:
- Conduct an evidence-based, government-wide audit of federal policies to understand the role current policies play in perpetuating the racial wealth divide: In order to address the racial wealth divide, policymakers first need to understand how current federal policies are leaving households of color behind.
- Fix unfair, upside-down tax incentives to ensure households of color also receive support to build wealth: Only by reforming the U.S. tax code and redeploying the more than half-trillion dollars spent on unfair tax programs can we ensure that all families—particularly households of color—have the same opportunities to build wealth that wealthy families currently enjoy.
- 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: Expanding opportunity for those at the bottom of the economic spectrum is not enough: we must also address the growing concentration of wealth at the top, predominantly in White hands, if we are going to reduce the racial wealth divide