Dealing With our Racial Wealth and Income Gaps

There are many things we can do to reduce the inequity created by the income and wealth gaps between Black and White people in the United States. We should not wait.

Racial Wealth and Income Gaps are Real

The enormous differences in wealth and income between White and Black people in our country have been well documented. White households earn more than twice as much as Black households on average and have nearly 10 times as much wealth. These gaps are due partly to past racism and partly to present racism.

Past racism is important because it affects the ability of Black families to pass on wealth to their children.  For example, the Federal Housing Authority underwrote an enormous expansion of home ownership in our country after World War II, but the practice of redlining effectively prevented most Black people from buying houses under this program. Today, as a result, far fewer Black families than White families are able to pass on wealth in the form of a family home.

Present racism is also important because it affects hiring practices: it is harder for Black people to get jobs than it is for White people. Present racism also affects wages. Black people are paid less than White people in similar jobs.

Reducing the Gaps and Their Effects

It is going to take a long time to eliminate these wealth and income gaps, but we can immediately reduce their importance by enacting policies that provide non-monetary income for all of our people.

For example, health care costs account for about 35% of poor Americans’ pre-tax income, but only about 3.5% of rich Americans’ pre-tax income. So, a decent, tax-supported, national healthcare system would immediately reduce the importance of the income gap considerably. Such a program would also reduce the size of the barrier to wealth accumulation by Black people.

Free post-secondary education provides another example. Educational debts are well-known to be a heavy burden for young Americans, and the burden is heavier for Black Americans. That burden makes it harder for Black people to accumulate wealth, to form families or to buy houses. If the burden were eliminated, the wage gap between Black and White workers would remain, but it would be less of a barrier to wealth formation for Black people. Over time, the gap would gradually be reduced as black people accumulated more wealth.

American housing policies are well-known to increase the cost and reduce the supply of housing for all Americans. Naturally, the high cost of housing affects Black people disproportionately because on average, they are poorer than White people. Changes in zoning laws and tax policies to encourage the development of affordable housing would go a long way toward improving the condition of many Black people in the United States. Some would be able to buy houses, while others would find that rent took a smaller share of their incomes. As a result, Black people would become better able to accumulate wealth, and the gap between them and White people would be reduced.

Let’s Not Wait

Policies like these would go a long way toward reducing the inequities that have resulted from racism in our country, and we do not have to wait for the elimination of racism in order to enact them. We should of course strive to reduce American racism because racism and its effects have always made a mockery of our claim to provide liberty and justice for all. However, eliminating racism will be a long fight, and we can do things to make people’s lives better without waiting for victory in that fight. Let’s get started now!