22 May The Great Racial Wealth Divide
Division has always been a common theme throughout American society. The existence of the “haves” and the “have nots” is a reality. The clearest example of this division is how wealth is unequally divided in this county. According to Wikipedia, the richest 1% hold about 38% of all privately held wealth in the United States while the bottom 90% held 73% of all debt. The current and growing racial wealth divide did not happen by mistake. Historical wealth building policies, by design, specifically prevented households of color from participating in wealth building.
Drivers of the racial wealth divide include: (1) lower homeownership rates and home values, (2) greater rates of unemployment, (3) income inequality, (4) lower higher education degree attainment, (5) limited ability to weather a financial emergency and (6) increased exposure to wealth-stripping products and services.
Government policies have worked successfully to exclude households of color from building wealth and promoted the growth of the great racial wealth divide. Some of these policies included, housing discrimination through the practice of “redlining”, which shut out households of color from the opportunity to purchase and invest in the largest driver of wealth in this country: a home. Below is a timeline of these government policies:
• 1935: The exclusion of farmworkers and domestic workers—who were predominately people of color—from coverage under the Social Security Act of 1935.
• 1938: The exclusion of a number of tip-based professions predominantly held by Black workers— such as servers, shoe shiners, domestic workers and Pullman porters—from the first minimum wage protections enacted as part of the Fair Labor Standards Act of 1938.
• 1944: Biased distribution of G.I. Bill benefits by officials within the Department of Veterans Affairs, which resulted in an unequal distribution of benefits—such as low-cost home mortgages and tuition assistance—for service members of color.
Information related to the racial wealth divide and efforts to address its growth are abundant. For those interested in more information on this topic, prosperitynow.org and inequality.org are excellent starting points.
Charles O. Lee is the Consumer Protection Director for the Mississippi Center for Justice.
*Image credit: Facebook: Race Wealth Divide*