American Sociological Association

Disrupting the Racial Wealth Gap

March 8, 2019

by Melvin L. Oliver and Thomas M. Shapiro

Toxic levels of wealth inequality in the United States broke into public awareness on the heels of the Occupy Wall Street Movement in 2011. Some academics and social justice advocates had tried for years to elevate wealth inequality to the public square, but it took a social movement that started in Manhattan for people to take notice. Despite the movement’s focus on social class, race—the racial wealth gap, in particular—was notably absent as wealth inequality became a public conversation.

Understanding the profound intersections of race and wealth opens a window to our past, how advantage and disadvantage are passed along through family wealth, and how racial stratification is constructed and maintained. Historic wealth-amassing government policies, such as the Homestead Acts, Federal Housing Act, and the GI Bill, facilitated property ownership, homeownership, business development, and education largely for Whites, while systematically excluding similar opportunities for African Americans and other minority groups. The racial wealth gap is a result of both this historical legacy and enduring contemporary racial discrimination. As an indicator of racial inequality, framing a widening racial wealth gap against hard-won advances on the legal front provides a needed distinction between law and worsening material realities. Much discussion of what a racial justice filter might look like has been percolating, mostly in urban areas like Seattle, Oakland, Boston, Buffalo, and Tacoma.

Years of strategically and doggedly seeding the public discourse by advocates and researchers resulted in increasing attention to this “new” way of looking at racial inequality—examining the racial wealth gap. A breakthrough was symbolized by President Obama’s calling out the racial wealth gap as he spoke at the Lincoln Memorial on the 50th Anniversary of the March on Washington in 2013. Taking stock of the sweep of success and enduring challenges ahead, Obama stated: “Yes, there have been examples of success within Black America that would have been unimaginable a half-century ago. But as has already been noted, Black unemployment has remained almost twice as high as White employment [sic], Latino unemployment close behind. The gap in wealth between races has not lessened, it’s grown.”

We are firmly convinced that focusing on the racial wealth gap serves two critical functions: providing a scope for the extent and direction of racial inequality, a story on which path the nation is headed; and a reliable racial justice filter for policy and institutional practice.

Wealth Matters, Race Central

Wealth is the financial value of everything a family owns minus all debts, including home mortgages, credit card debt, and student loans. The most recent Survey of Consumer Finances (2016) reports that African-American families right in the middle possess a bit more than $17,000 in net wealth. Hispanic families right in the middle report close to $21,000 wealth. This includes wealth in home equity, which is by far the largest pot of wealth for about three-quarters of families, excluding wealthy families and those in poverty. Of course, many African-American and Hispanic families have nowhere near the median figures. Many have far less or no wealth. Many are in the red. With current monthly government poverty lines at $2,615 for a family of four, the dire straits even of typical families, much less those with little or no wealth, come quickly. An event like a government shutdown affecting wide swaths of federal workers might prove a household and family challenge for decades to come.

Contrary to African-American and Hispanic families, White families have amassed $171,000 in net wealth at the median. African-American families thus possess a dime for every dollar of White families’ wealth. Controlling for education, middle-class status, income, or occupation closes the racial wealth gap, but leaves major inequities in place.

The racial wealth data above provide a snapshot from a good representative sample. But they are only a slice at one point in time, leaving aside questions of family origin and family trajectory over time. Therefore, it is important to examine the same families, preferably over decades, to assess contemporary race and wealth dynamics. The Panel Study of Income Dynamics is positioned well for this task, as it started examining wealth in 1984 and has continually followed the same set of families and their wealth trajectories.

Read the full article in the Winter 2019 Contexts.



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