Next leader must address growing racial wealth gap

By Josh Hoxie

Saturday, Aug. 20, 2016 | 2 a.m.

Two years ago this month, Michael Brown was shot by a white police officer in Ferguson, Mo., sparking months of sustained protests and helping to ignite the Black Lives Matter movement. While police violence and inequities in our criminal justice system have dominated the discussion of our racial divide since, there’s a lot more to the story.

Less covered — but just as startling — is the stark racial economic divide in this country.

In a new report called “The Ever-Growing Gap,” my co-authors and I examine 30 years’ worth of data on the wealth divide between white families and black and Hispanic families. Even we were shocked at just how wide the chasm has become — and how much wider it’s going to get if we don’t do something about it.

Over the past 30 years, the average wealth of white families has grown by 84 percent. That’s three times the rate of growth for the black population, and 1.2 times the rate of growth for the Hispanic population.

If the next three decades are anything like the past three, the average wealth of white households will increase by more than $18,000 per year, while Hispanic and black households will lag at about $2,250 and $750 per year, respectively. By the time nonwhites become a majority in this country, black and Hispanic households will have fallen behind white households by an average of more than $1 million.

In other words, they’ll never catch up.

In fact, it would take 228 years for the average black family just to reach the level of wealth white families have today.

This amounts to permanent insecurity for America’s black and Hispanic families.

Wealth, after all — the money left over after subtracting all your debts from all your assets — is incredibly important to the well-being of families. Wealth is what tides you over when you lose a job or medical calamity strikes. Wealth is a safety net, and not having it means living a precarious life.

Our study looked at the past 30 years. But wealth was incredibly skewed along racial lines even before that, with the average white family owning five times more than black and Hispanic families. While many factors contribute to this inequality, public policy played a major role.

The most important asset most families own is a home. But black and Hispanic families were largely left out of the post-World War II housing boom, as “redlining” blocked off whole neighborhoods from receiving subsidized mortgages along starkly racial lines. In fact, from 1934 to 1968, just 2 percent of Federal Housing Administration mortgages went to nonwhites.

Meanwhile, people in occupations typically held by nonwhites, such as farm laborers and domestic workers, were left out of the laws establishing minimum-wage protections and Social Security benefits.

Unfortunately, many current policies are contributing to this growing gap even today.

For example, incentives in the tax code for things such as retirement savings and homeownership overwhelmingly benefit those who already have significant wealth. The total share of tax expenditures that a typical working family can expect to receive to help save for retirement, buy a house, save for college and contribute to savings is just $174. For millionaires, who scarcely need the help, it’s nearly $150,000.

While the Internal Revenue Service doesn’t collect race data on tax filers, we know these millionaires are overwhelmingly white.

Changing the trajectory of the racial wealth gap, which is as old as our country itself, won’t be easy. One smart step in the right direction would be for the next president to order a government-wide audit to assess the impact of federal policy on expanding or shrinking the divide.

If we want the next generation to inherit a more perfect union than our own — or any union at all worth its name — we can’t afford not to.

Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies. He’s a co-author of the new report “The Ever-Growing Gap: Failing to Address the Status Quo Will Drive the Racial Wealth Divide for Centuries to Come.” He wrote this for insidesources.com.