Have you ever wondered that why an average Black family’s net worth in America is currently approximately one-tenth that of a white household? What’s the reason behind the significant racial money disparities among black and white Americans?
The income disparity between black and white Americans has remained persistent and comprehensive. It symbolizes the cumulative consequences of four centuries of institutional and systematic racism, according to academics, and is responsible mainly for persistent inequities in income, welfare, employment, and opportunity.
The racial wealth gap has been caused by systemic inequalities, a lack of adequate education, high default risk on student loans and labor laws, and a slew of other things. Consequently, income is unequally allocated in our country based on race, notably between white and black1 households. Black Americans have a small portion of the wealth of white families, making them more financially unstable and providing them with fewer possibilities for upward mobility.
Some critical reasons exacerbate this vicious cycle of wealth inequality. Based on a long history of job discrimination and other discriminatory behaviors, black households, for instance –, have significantly less access to tax-advantaged types of investment.
Financial services businesses would have additional opportunities due to the integration of black families into the financial system. According to our analysis, if black Americans had the same access to economic goods as white Americans, financial institutions might generate an additional $2 billion in yearly income. Financial services businesses might earn up to $60 billion in annual revenue per year because African Americans achieved complete parity with Hispanics in terms of economic growth.
Factors Affecting Racial Economic Inequality
When employees of color and white workers are in similar situations, they make equal retirement plan participation and contribution amounts. Following are the factors affecting racial, economic inequality among white and black Americans:
- African American employees have more excellent unemployment rates than white workers at all levels of education. They are more likely to be working part-time when they seek full-time positions.
- As a result of social inequality, African Americans are disproportionately employed in jobs that do not provide retirement funds.
- In the business world, Black People confront both racial and gender discrimination.
- People who have higher labor market participation rates than white women, Black People have much fewer jobs and part-time employment while seeking decent work.
Source: Eric Thayer / Reuters
Challenges And Solutions To The Racial Wealth Gap:
Certain obstacles face African Americans attempting to accumulate money and improve their financial well-being.
- Three out of five people living in the affected communities are still struggling economically 80 years later. As per the Census Bureau, black homeownership hit a new low of 40.6 percent in the second quarter of 2019 compared to 2016. The percentage of white people who owned a home was far more than 30% higher.
- There has been no change in the hiring rates of Black Americans in the previous 25 years. According to PayScale, when asked for a raise, persons of color are less likely to get one. The median and mean wealth of black households were less than 15% of white communities, at $24,100 and $142,500, respectively.