Setting the Record Straight on Racial Wealth Inequality

Black woman holding two stacks of differing coins

What drives the racial wealth gap?

Mainstream economic theory posits that differences are driven by human capital -- that greater human capital (i.e. education) leads to greater earnings, enabling greater savings and, in turn, higher accrual of wealth.

However, this framework ignores the reality of wealth: that it takes wealth to make wealth, and that one of the biggest drivers of the modern racial wealth gap is the historical racial wealth gap.

In this article -- co-authored by Fenaba R. Addo, a Cook Center Faculty Affiliate; William A. Darity Jr., the Cook Center Founding Director; and Samuel L. Myers, Jr., a Cook Center Distinguished Fellow -- the authors set the record straight, pushing back against false narratives of racial economic progress and showing how the racial wealth gap is in fact increasing.

Key Findings

  • Between 2019 and 2022, the real disparity in the Black-White wealth gap grew by about 23 percent at the median and 16 percent at the mean.
  • Inheritance statistics reflect the wealth gap: more White households expect (and receive) inheritances than do Black households. These transfers play an outsized role in the racial wealth gap.
  • Federal tax policy has increasingly enabled the passing forward of wealth (to younger generations) at relatively low cost, a development that has disproportionately aided wealth White families.