This comes from a combination of factors, both within and outside of the control of black wage earners. Income stability is a huge issue in the black community, with unemployment, and long term underemployment being both chronic and 2-3 times the rate experienced by whites. A second factor contributing to this is generational wealth. A third, is simply ignorance about financial investment and handling money. Lastly, is the existence of predatory and racially biased lending, forcing black people to pay considerably more for major loan based purchases such as autos and homes.
The one thing each of us can control is financial literacy.
The wealth gap between Blacks and Whites has grown by fourfold over the course of Generation X’s lifetime, exploding to $95,000, a study released today found. And the debt burden among African American families has nearly doubled.
The study comes from Brandeis University’s Tom Shapiro, who’s among the pioneers in measuring economic equality by considering overall household wealth—your assets minus your debts—rather than just income. Shapiro’s research team looked at data from a decades-long, national survey of family economics and discovered that, between 1984 and 2007, the wealth gap saw unprecedented growth, as assets among high-income White households shot up while debt among all Black households did the same.
The visuals show it best. This first chart shows median assets by race (charts are from the report):
But a second chart breaks it down by income levels:
So rich White people got really rich at the close of the 21st century. It puts the neo-liberal growth years into a new light–all that growth went into very few pockets. Meanwhile, Black folks’ debt shot up, too, as the lending market got less regulated and more perilous for working families. As Shapiro and his coauthors write:
Among those with no financial assets, credit is often an emergency resource. Summing all assets and debt, one in ten African‐Americans owe at least $3,600, while their debt burden was about half of this in real terms in 1984 ($2000). In sum, many African Americans hold more debt than assets. [Emphasis added]
The problem of debt growth can’t be overstated. Yes, all Americans have drowned in the fees and trap doors federal regulators never thought twice about until this year. But Shapiro’s research points to why financial regulation is about a lot more still: Black neighborhoods in particular are awash in predatory financial products, ranging from subprime home loans to check cashing joints, and that has helped propel a lopsided and unsustainable economic trajectory.