Authors: William A. Darity Jr.
Abstract: In this national election season, pressure is mounting for presidential candidates to make a commitment to a Black Agenda, a policy program directed at the particular interests and needs of African Americans. A primary goal of the emerging Black Agenda is to narrow the racial gap in well-being and opportunity. To achieve this, the Agenda must build around a program that will eliminate the gulf in wealth between blacks and whites. Racial wealth inequality—where wealth is the difference between the value of what you own and what you owe (net worth)—is a critical source of racial differences in well-being and opportunity. The best available evidence demonstrates that the intergenerational transmission 1 of resources and associated benefits are the most pronounced drivers of the gap.1,2 Families with wealth are able to provide access to high quality, debt-free, education, social networks linked to well-paid employment, better health, entrée into safe, high amenity neighborhoods, and negligible economic anxiety to their children, access not available to young people from more limited circumstances. Indeed, with sufficient wealth, even black families can purchase some degree of separation from historical and current discriminatory practices. There are two main ways to calculate the racial wealth gap: the median gap and the mean gap. Both measures illuminate the canyon dividing black and white wealth. Most current political conversations focus on the former. This involves a juxtaposition of the net worth position of a black household at the middle of the black wealth distribution against a white household at the middle of the white wealth distribution. This is a comparison of median levels of household wealth.
Key Findings
- The median black household possesses ten cents to every dollar of wealth that the typical white household has ($17,600 vs. $171,000, respectively), creating an absolute dollar of $153,400.
- When considering the mean net worth of each group, however, the absolute dollar difference rises more than five-fold, to $795,000.
- In short, none of the mechanisms the leading democratic candidates posit for closing the racial wealth gap-from increasing opportunities for homeownership, entrepreneurship, and education to trust fund accounts assigned to each newborn, also known as “baby bonds”-come close to resolving this gap.
- However, more direct measures like “baby bonds” generally have a larger impact than tangential efforts. Proposals such as Marianne Williamson’s call for reparations hold promise, but to fully alleviate the gulf in wealth, direct payments must be on the scale of $10 trillion-far beyond what Williamson has proposed.
