Despite overwhelming evidence that the racial wealth gap persists in the U.S., it remains a taboo topic in mainstream policy circles and most officials studiously avoid offering targeted solutions to help close this gap. However, this issue is ignored at our nation’s peril given the anticipated growth of racial and ethnic groups over the next few decades.
Beyond Broke: Why Closing the Racial Wealth Gap is a Priority for National Economic Security uses the most recently available data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP) along with the National Asset Scorecard in Communities of Color (NASCC) to highlight the current state of America’s racial wealth gap. The report also provides an in-depth analysis of housing wealth and liquid wealth, while also evaluating how wealth disparities manifest across racial and ethnic categories and within racial and ethnic subpopulations in four geographically diverse U.S. cities.
The report findings include:
- Between 2005 and 2011, the median net worth of households of color remained near their 2009 levels, reflecting a drop of 58 percent for Latinos, 48 percent for Asians, 45 percent for African Americans but only 21 percent for whites.
- Asians and Latinos are twice as likely to live in a state hardest hit by the housing crisis.
- Hispanic households experienced the largest drop in net worth following the recession.
- More than half of whites own four or more tangible assets, compared to 49 percent of Asians and only one in five of African Americans and Latinos.
- For most African Americans and Latinos, checking accounts are their only liquid asset.
- African Americans (38 percent) and Latinos (35 percent) are over twice as likely as whites (13 percent) to hold no financial assets at all and to have no or negative net worth.
To address this challenge, the report calls for Congress and the Administration to ensure that future mortgage settlements include the collection of racial/ethnic, gender, geographical and other demographic data in order to ensure that relief programs are transparent, fair, and targeting the hardest-hit communities. The report also calls for the Federal Housing Finance Agency to allow Freddie Mac and Fannie Mae to perform principal reduction and loan modifications for distressed homeowners.
This report was prepared by the Center for Global Policy Solutions in collaboration with the Carolina Population Center at the University of North Carolina, Chapel Hill, the Research Network for Racial and Ethnic Inequality at Duke University, and the Milano Graduate School of International Affairs, Management and Urban Policy at The New School. This is a publication of the Closing the Racial Wealth Gap Initiative, a national collaborative effort managed by the Center for Global Policy Solutions in collaboration with the Insight Center on Community Economic Development and with generous support from the Ford Foundation. The program seeks to build awareness and support for efforts to address racial and ethnic wealth inequalities based on structural factors. To achieve this goal, more than 180 scholars, advocates, practitioners, and other experts of color have come together to inform the national economic debate with diverse perspectives and to provide policy solutions to create an inclusive and equitable future for all Americans.