solutions to close Wealth Gap and Financial Inequalities in the US among for the Afro American community
The Road To Zero Wealth
“if nothing is done to close the gap, black households that are in the lower percentile will have zero wealth by 2053.”
The existence of a wealth gap in the US, a racial wealth gap is not news. What is news as captured in the study; The Road To Zero Wealth. Is the fact that if nothing is done to close the gap, black households that are in the lower percentile will have zero wealth by 2053.
The implications of this result will not only affect black and white households but the American economy as well. The seeds of this financial insecurity were not sown today.
It dates as far back as Jim Crowism, Slavery, and several other policies that prevented black households from building wealth. And stripping the little wealth they have off them. Several authors have provided certain notable structural solutions that could address the growing wealth gap moving forward.
Most notably the late 2019 report, that captures ten solutions. Although the wealth gap is not tied to personal behaviors. There are certain steps a colored household can take to overcome the detrimental effects of the wealth gap and build wealth. Which is what this article seeks to address.
The racial wealth gap is a difference in the median wealth of the white family and African-American families Racial Wealth Gap. The median is representative of what is typical in reality. Thus, it is an accurate representation of how wealth is shared in the US.
Wealth represents the number of assets a household has when its liabilities and debts are subtracted from it. Wealth can be easily built when an individual has access to all the seeds that beget wealth.
Land, Favorable laws, policies, environment, and capital. Seeds which are becoming increasingly available to African-Americans, since 1963 (Urban Institute, 2016) in what can be called “government boost and blocks”. Hence, the racial economic inequality.
Causes of the racial wealth gap in America
We can’t point to one single reason why a wealth gap exists. But we can point to several events and policies in history that led to the creation and perpetuation of the racial wealth gap. The 246 years of slavery where white households profited from the labor of slaves. created the foundation for racial economic inequality.
The Indian land thefts of the late 70s. The Chinese exclusion act. The denial of naturalization. Redlining and Jim Crowism all fostered this inequality and divide. As well as cultural factors such as Consumption patterns leading to a lack of financial assets. The African American family structure. And low African American inheritance recorded in Race And Social Problems.
Even in today’s economy, where several of these policies have been banned, it remains difficult for the low-income class to grow wealthy. For example, Business Insider published an article highlighting that 40 million Americans were estimated to have lost their jobs after the pandemic hit in march 2020.
When the economy bounced back, a large percentage of the available aid went to large corporations, banks, and hedge funds. Controlled and owned by white households. Only such households had the capital to reinvest in the economy and profit off the turnover.
The economic inequality continues to serve as markers to racism even where it does not exist. Exacerbating racial tensions and polarizing the economy.
Dr. Martin Luther King Jr famously wrote in his book Why We Can’t Wait;
”Whenever this issue of compensatory or preferential treatment for the Negro is raised, some of our friends’ recoil in horror. The Negro should be granted equality, they agree; but he should ask nothing more. On the surface, this appears reasonable, but it is not realistic. For it is obvious that if a man is entered at the starting line in a race 300 years after another man, the first would have to perform some impossible feat in order to catch up with his fellow runner.”
Dr. Martin Luther King Jr
Head of Sales , Intel
Solutions to close the racial wealth gap in america for the black community
We have to course correct by building systems that will address the racial wealth gap and build wealth now.
Closing the racial wealth gap and making wealth accessible to African Americans is a task that has no single solution. But a collective combination of policies, reparations, process changes. As well as education when it comes to accessing and growing wealth. As a country, this is a step we must take to address economic inequality and reduce racial tension. As a structural problem, addressing the wealth Gap calls for structural solutions, some of which include;
1. Institutionalizing a children's savings account.
In 2016 the Casey Foundation published a report highlighting research that shows a crucial oversight.
If a children savings account was created in 1979 and allowed to flourish, the wealth gap between white households and black households would have shrunk by a whopping 82%. This policy will change everything.
By the time the child comes of age, He/she would have enough capital wealth to build more wealth, start a business, pay for college, and invest in risky assets.
Our advice is to take this solution as a personal project even if it’s not institutionalized yet.
2. Consulting with a wealth coach
“what we do to move forward and build wealth in the face of a glaring racial wealth gap?” is a question we get asked a lot. Closing the racial wealth gap is a task that would take a significant amount of time to accomplish. What can Black households do now? The answer to this important question is not commonplace. More systemic education makes little difference.
The recent Netflix documentary on the racial wealth gap Illustrates a significant cultural problem. The wealth of black college graduates decreases over time in comparison with their white counterparts whose wealth increased within the same period due to African American family structure. Affected households need Specific knowledge from wealth and financial experts. In order to increase their credit score, secure valuable investments and acquire profitable risky assets. In addition, with taking advantage of limited government policies, building wealth now.
Working with a wealth coach who understands the cultural problems plaguing African American households can play a massive role in assisting colored folks by navigating these problems on their way to wealth. This is an immediate way to take control of your future and build wealth now.
The solutions presented here are not exhaustive as there are several other policy changes and process reforms that will bridge the gap. The ones listed here, however, are the most effective solutions towards bridging the gap in the shortest possible time. Together with building wealth now in a low wealth household.
This is the best positive move forward in a country that is still plagued by the effects of policies as old as the united states itself. This is the time to course-correct before racial tensions and economic inequality spiral out of hand.
Increase access to wealth-building assets
Savings from a reformed homeownership tax expenditure can support low wealth families.
When they are first time buyers of homes rather than support the wealthy in purchasing their second and third homes. Currently, over 75 billion is spent annually on the deductions mostly for wealthy households. (Effects of Reforms of the Home Mortgage Interest Deduction by Income Group and by State)
The solutions presented here are not exhaustive as there are several other policy changes and process reforms that will bridge the gap. The ones listed here, however, are the most effective solutions towards bridging the gap in the shortest possible time. Together with building wealth now in a low wealth household.
This is the best positive move forward in a country that is still plagued by the effects of policies as old as the united states itself. This is the time to course-correct before racial tensions and economic inequality spiral out of hand.