In his recent address at Mother Emanuel AME Church in Charleston, South Carolina, President Biden lauded the strides made in bolstering Black wealth and economic mobility. While his remarks showcased optimism, experts argue they failed to paint a complete picture of the ongoing struggle to close the racial wealth gap. According to Lenwood V. Long, Sr., president and CEO of the African American Alliance of CDFI CEOs, there’s much more at play beneath the surface.
The Optimism and Reality
“We’re growing back Black wealth, but we have a lot more to do,” Biden remarked optimistically, explaining, “The racial wealth gap is the smallest it’s been in 20 years, under my watch.”
Black Homeownership Challenges
Biden highlighted the increasing numbers of Black homeowners and the surge in Black business ownership as positive indicators.
However, Long points out that the rate of Black homeownership (44%) still lags significantly behind that of white Americans (73%).
Surge in Black Business Ownership
The surge in Black business ownership, on the other hand, signifies progress. Biden emphasized the significance of starting a new business as “the ultimate act of hope.”
Wealth Concentration Among the One Percent
Nevertheless, Long underscores that despite these positive developments, the racial wealth gap continues to exist due to the growing concentration of wealth among the one percent.
Disparities in Wealth Growth
Long points to data from the Federal Reserve Board of Governors to back up his point, revealing concerning disparities.
The report explains that “Despite faster growth in wealth for the typical Black and Hispanic family, the absolute dollar-value differences in wealth between the typical White and the typical Black and Hispanic family grew in 2022 because the typical Black and Hispanic family had less wealth in 2019.”
Concerning Statistics
The report goes on to state that in 2022, Black households held only 15% of the wealth held by white households.
Wealth Disparities in Stock Equity
Long delves into a report from the Brookings Institution, which highlights that the largest disparity in wealth growth was found in financial assets.
While stock equity comprises nearly 30% of white wealth, it only represents 4% of Black wealth.
A Barrier to Closing the Gap
The report states, “Since 1980, the profits made from selling off stocks – known as capital gains – have acted as a key driver of stock equity disparities, significantly concentrating wealth into white households.”
Systemic Wealth Compounding
The report goes on to state, “These findings illustrate the systemic compounding of wealth, which exacerbates racial gaps.
In other words, wealth begets wealth. Past and present discrimination in critical markets – including housing, banking, taxation, higher education, and more – result in lower average wealth for Black families.”
Biden’s Policy Measures
Long commended the Biden administration’s efforts to address racial wealth equity through various policy measures.
Initiatives such as expanding federal contracting opportunities, ensuring fair home valuations, and providing tax credits and economic assistance have been instrumental in mitigating some of the disparities.
Impact of Wealth Concentration
However, Long emphasizes that despite these efforts, decades of policies favoring the wealthy continue to widen the gap between the richest Americans and the rest of the population.
Billionaires vs. Black Households
He notes a 2020 report revealing, “The 400 richest American billionaires have more total wealth than all 10 million Black American households combined.”
Long-Term Impact of Policy Measures
Despite the proactive measures undertaken by Biden’s administration, the true impact of these efforts may take years to materialize.
Advocating for Equitable Policies
Long is an advocate for policies that create a more economically equal society, stressing that racial wealth equality should start with ensuring billionaires are not taxed less than teachers.
Levelling the Playing Field
He asserts that affirmative action and financial incentives are essential to bridging America’s wealth gap, which disproportionately affects people based on their race, stating that “Assuming a level playing field will simply make the gulf uncrossable.”
A Persistent Racial Wealth Gap
Long’s remarks follow a recent report titled “2024’s States with the Biggest & Smallest Wealth Gaps by Race/Ethnicity,” which charted the constant presence of the racial wealth gap in the United States.
Median Household Wealth Disparities
According to the report, the median household wealth for Black Americans stands at $14,100, significantly lower than the $187,300 reported for non-Hispanic white households.
Hispanic households also trail behind, with a median household wealth of $31,700.
At the State-Level
The report revealed that the racial wealth gap varies across different states. The District of Columbia exhibits the widest racial wealth gap, with a median household wealth of $281,700 for non-Hispanic white households, compared to a mere $11,100 for Black households.
Smallest Racial Wealth Gap
The report found the smallest racial wealth gap was in Hawaii, where the median household wealth was $104,300 for non-Hispanic white households and $87,300 for Black families.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
