The Racial Wealth Gap: An Old and Enduring Legacy

The Racial Wealth Gap: An Old and Enduring Legacy

The U.S. Census Bureau recently released its annual report on the state of poverty and income in the United States. The data are encouraging: Americans of nearly all races saw increases in household earnings, continued improvements in economic security, and decreases in poverty in 2016. And yet, despite these modest gains, African Americans and their families continue to face the highest poverty rates in the country. 

At 22 percent, the poverty rate of African Americans more than doubles that of non-Hispanic whites (8.8 percent) with black children being three times as likely to be poor than white children. African Americans today remain chronically under-paid and face a significantly higher risk of unemployment than whites at every educational level — despite comparable years of experience and qualifications. And the longer-term trends look even worse. A new report by the Institute for Policy Studies and Prosperity NOW finds that if America’s racial wealth and earning divide continues unabated, the average African American household’s wealth will erode to zero within a generation. 

The root cause of African Americans’ disparate outcomes in earning potential, generational wealth-building, educational achievement, and concentrated poverty is undeniably structural. Simply put, the long-standing issue is not that black families and neighborhoods disproportionately suffer as a result of poor choices, but from subpar options and unequal opportunity, born of a habitually rigged socioeconomic playing field, poisoned and deprived built-environments, and of a re-segregating and still-greatly inequitable school system.

How Did We Get Here?

To date, it would take the average black family 228 years to accumulate the same level of wealth that white families have today, highlighting public policy’s key role in both creating and driving today’s racial wealth disparities. While much warranted attention has been focused on the not-so-distant periods in U.S. history — particularly the eras of redlining and Reaganomics — the structural roots of the racial wealth and achievement gap stretch all the way back to the founding years of our nation.

The 228-year figure, while astonishing in magnitude, has, perhaps, an even more striking, deeper historical connection. Almost exactly 228 years ago, the 1790 Naturalization Act — one of the first official laws of the newly minted United States of America and the birth year of the U.S. Census — legally defined who could be a U.S. citizen and thus own land, vote, and file a lawsuit, among other vital (and wealth-building) privileges. American citizenship was effectively restricted to “any alien, being a free white person,” who had been in the U.S. for at least two years. 

While it temporarily excluded the naturalization of poor, indentured European immigrants, our country’s new, racialized definition of citizenship effectively resulted in the permanent disenfranchisement of fixedly “non-white” groups like African Americans, Native Americans, and Asian Americans. This legally discriminatory definition wasn’t amended to extend citizenship to people of color (in symbolism only as it was still by no means fully or equitably bestowed) until, arguably, the passage of the Immigration and Nationality Act of 1952 — over 162 years later. 

That’s more than 162 years of deep, nearly exclusive investments into white families to not only buy and amass land, but also to also build crucial generational wealth through homeownership and diversified income —a racially distinct gap that is ever-present and wide today.  

Where Do We Go Next?

Our nation’s racialized past and current context repeatedly shows us that policies are rarely neutral by default. Instead, they must be designed to right past and current wrongs, encourage equity, and reflect societal aspirations rather than social ills. Ending America’s race-based poverty and enduring wealth and achievement gaps will require special attention to the central role that both governmental and institutional policies and systems have played –and, most importantly, continue to play in unfairly privileging white Americans over all other racial and ethnic groups.

To pursue meaningful remedies, legislators will need to craft targeted policies that both acknowledge and aim to counteract the compounding, deleterious effects of the historical statutes and structures that created the racial divide at the onset. Such an agenda would prioritize racial equity-based policymaking. Examples of such policies include: enacting comprehensive criminal-justice reform; ending de facto apartheid schools; strengthening the Consumer Finance Protection Bureau; eradicating voter suppression; and halting failed “law and order” policies, to name a few.

Ultimately, we will not halt, let alone eradicate our country’s worsening race-based opportunity and prosperity gaps until American society adequately grapples with their root causes. Real solutions must be more than just Band-Aids over deep, wide, and festering wounds. Executive leadership at every level of government must earnestly and continually confront America’s racial history and ensure that the level of investment afforded to white households finally gets extended to all families. 

Rejane Frederick is Associate Director of the Poverty to Prosperity Program at the Center for American Progress.

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