A Black dime for every White dollar

Black family

If you’re like me, every time you hear a news reporter or anchor talk about how great the nation’s economy is, you wonder what world they are living in. Certainly, these journalists are not referring to the ongoing struggle to make ends meet that so much of Black America faces.

However, new research speaks to those who are forgotten on most nightly news shows. “Ten Solutions to Close the Racial Wealth Divide”  is jointly authored by the Institute for Policy Studies, Ohio State University’s Kirwan Institute for the Study of Race and Ethnicity, and the National Community Reinvestment Coalition.

Three approaches

This insightful and scholarly work opens with updates on the nation’s nagging and widening racial wealth divide. It characterizes solutions as one of three approaches: programs, power, and process.

According to the authors, “programs” refer to new government programs that could have a major impact on improving the financial prospects of low-wealth families. “Power” refers to changes to the federal tax code that could bring a much-needed balance to the tax burden now borne by middle and low-income workers. “Process” refers to changes to the government operates in regard to race and wealth.

“For far too long we have tolerated the injustice of a violent, extractive and racially exploitive history that generated a wealth divide where the typical Black family has only a dime for every dollar held by a typical White family,” said Darrick Hamilton, report co-author and executive director of the Kirwan Institute for the Study of Race and Ethnicity at The Ohio State University.

From 1983-2016, the median Black family saw their wealth drop by more than half after adjusting for inflation, compared to a 33 percent increase for the median White households. These years include the Great Recession that stole nearly $1 trillion of wealth from Black and Latinx families, largely via unnecessary foreclosures and lost property values for those who managed to hold on to their homes.  

Fast-forward to 2018

The report shares the fact that the median White family had 41 times more wealth than the median Black family, and 22 times more wealth than the median Latinx family. Instead of the $147,000 that median White families owned last year, Black households had $3,600.  

When Congress passed tax cut legislation in December 2017, an already skewed racial wealth profile became worse.

“White households in the top one percent of earners received $143 a day from the tax cuts while middle-class households (earning between $40,000 and $110,000) received just $2.75 a day,” states the report. “While the media coverage of the tax package and the public statements of the bill’s backers did not explicitly state that it would directly contribute to increasing the racial wealth divide, this was the impact, intended or otherwise.”

The majority of today’s Black households rent rather than own their homes. Escalating rental prices diminish or remove the ability for many consumers of color to save for a home down payment.  CBS News reports the national average monthly cost of fair market rent in 2018 was $1,405.

Recent research by the National Low-Income Housing Coalition on housing affordability found that more than 8 million Americans spend half or more of their incomes on housing, including over 30 percent of Blacks, and 28 percent of Hispanics.

Down payment harder

Homeownership, according to the Center for Responsible Lending, remains a solid building block to gain family wealth. But with an increasing number of households paying more than a third of their income for rent, the ability to save for a home down payment is seriously weakened.

CRL’s proposed remedy in March 27 testimony to the Senate Banking Committee is to strengthen affordable housing in both homeownership and rentals. To increase greater access to mortgages, CRL further advocates low-down payment loans.

There’s no point in doing the same thing while expecting a different result. Change must be given a chance.


Charlene Crowell is the deputy communications director at the Center for Responsible Lending. Contact her at charlene.crowell@responsiblelending.org.

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