The Ever-Growing Gap: Without Change African-American and Latino Families Won't Match White Wealth for Centuries

The Ever-Growing Gap: Without Change African-American and Latino Families Won't Match White Wealth for Centuries

Racial and economic inequality are the most pressing social issues of our time. In the last decade, we have seen the catastrophic economic impact of the Great Recession and an ensuing recovery that has bypassed millions of Americans, especially households of color. This period of economic turmoil has been punctuated by civil unrest throughout the country in the wake of a series of high-profile African-American deaths at the hands of police. These senseless and violent events have not only given rise to the Black Lives Matter movement, they have also sharpened the nation’s focus on the inequities and structural barriers facing households of color.

However, even when these economic inequities do get attention, the focus is often on a single facet of the issue: income. The new report Ever-Growing Gap, published by the Institute for Policy Studies and the Corporation for Enterprise Development, focuses instead on a related but distinct facet of the issue: the essential role that wealth plays in achieving financial security and opportunity. It examines our country’s growing racial wealth divide and the trajectory of that divide.

This growing wealth divide is no accident. It is the result of public policy designed to widen the economic chasm between white households and households of color and between the wealthy and everyone else. In the absence of significant reforms, the racial wealth divide—and overall wealth inequality—are on track to become even wider in the future.

Methodology: The figures presented in this report were calculated using Survey of Consumer Finance (SCF) net worth figures, as calculated using Edward Wolff’s framing in “Household Wealth Trends in the United States, 1962-2013: What Happened Over the Great Recession?” The main difference in this framing from the standard SCF definition of net worth is the exclusion of consumer durable goods (i.e., automobiles, electronics, furniture, etc.). This definition is
rooted in the idea that wealth should be readily converted to cash (i.e., fungible), and durable goods are not.68
Figures are in 2013 dollars except when specified as 2015 dollars. Forbes 400 figures come from the 2015 edition of that publication, as well as historical figures from “Discontinuities in the Distribution of Great Wealth: Sectoral Forces Old and New,” by Leonard Broom and William Shay. Projection figures were calculated using a simple compounding interest projection formula.

32 pages; 68 References; 6 Tables of Data

Dedrick Asante-Muhammed

Chuck Collins

Josh Hoxie

Emmanuel Nieves

Institute for Policy Studies

8 August, 2016

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