Authors: Darrick Hamilton and William A. Darity Jr.
Abstract: This article examines the mismatch between the political discourse around individual agency, education, and financial literacy, and the actual racial wealth gap. The authors argue that the racial wealth gap is rooted in socioeconomic and political structure barriers rather than a disdain for or underachievement in education or financial literacy on the part of Black Americans, as might be suggested by the conventional wisdom. Also, the article presents a stratification economic lens as an alternative to the conventional wisdom to better understand why the racial wealth gap persists.
Key Findings
- The Pew Charitable Trusts (2015) report on American debt concludes that the racial wealth gap has more to do with a lack of assets for Black and Latino families than racial variation in debt or an abundance of debt on the part of Blacks and Latinos. Instead, evidence suggests that inheritance and other intergenerational wealth transfers benefit Whites to a much larger extent.
- Over the past 40 years, regardless of education, the Black unemployment rate has remained roughly twice as high as the White rate. White high school dropouts have lower unemployment rates than Blacks who have completed some college or earned an associate degree.
- Black parents with more limited resources display a greater inclination to provide financial support for their adult children’s education than their White counterparts; however, these parents are working from a much smaller basis of wealth than White parents, even when compared to those who didn’t provide financial support to their children.
- The median wealth for Black families whose head earned a college degree is only about two-thirds of the median wealth of White families whose head dropped out of high school.
- In short, it is wrong to think that Black families don’t value education, and it is also wrong to think that heightened returns on education for Blacks will be the magic bullet that addresses the racial wealth gap.
