If today's economic dynamics remain in place, average African-American family wealth will remain staggeringly behind.
If trends of the past 30 years continue, it would take the average African-American family 228 years to accumulate the same wealth that the average white family enjoys today. It would take 84 years for the average Hispanic family.
This is the most jaw-dropping finding from a new report from the Corporation for Enterprise Development (CFED) and the Institute for Policy Studies. But it’s not the only one.
Using three decades of Federal Reserve Survey of Consumer Finances data, the report found that the average wealth of white families increased by 84 percent — goosed by a 736 percent rate for the mostly white richest Americans. “If the past 30 years were to repeat, the next three decades would see the average wealth of white households increase by over $18,000 per year, while Latino and black households would see their respective wealth increase by about $2,250 and $750 per year.”
Also, by 2043, when people of color are expected to constitute a majority of the U.S. population, the wealth divide would double. That’s not a prescription for success in a “consumer economy.”
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If anything, the report is skewed upward by the boom of the 1990s, when the black-white unemployment gap narrowed dramatically and black wealth grew. And it doesn’t even address the likely effect of advanced automation, robotics and artificial intelligence on job creation for all Americans in coming decades.
The report lays out some responses, including changing tax and savings incentives to better benefit low-income households and establish a Children’s Savings Account, opened automatically at birth. This is, at best, a start when productivity is falling because companies use record profits for stock buybacks instead of investing in workers.
And to be sure, plenty of white households have seen stagnant or falling incomes too, something that is said to be fueling the Trump campaign. There are some common problems: monopolies and cartels, loss of manufacturing jobs and destruction of unions.
African-American wealth has been hurt by a number of unique factors, and not only slavery. The century of Jim Crow saw barriers and destruction of black intergenerational wealth. For example, the 1921 Tulsa race riot, which may have killed hundreds, saw resentful whites destroy a black middle-class neighborhood — said to be the wealthiest African-American enclave in the nation.
After the end of de jure segregation, factories and other businesses fled cities for the suburbs, often leaving behind people of color who didn’t have cars as metropolitan transit systems were falling apart or failing to keep up. Post World War II federal housing loan assistance, such as FHA and VA, often excluded blacks. As a result, they lacked the biggest element of most family’s wealth, a home. Schools in low-income, minority areas remain poorly funded.
Today’s report is a reminder of where the greatest economic pain lies.
Today’s Econ Haiku:
The moguls respond:
Productivity is low!
Cut wages some more!