The Black-white wealth gap is widening — a racial equity stimulus can narrow it

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Even before the deadly COVID-19 pandemic swept America, the Black-white wealth gap remained stubbornly vast. The crisis is driving the gap to historic levels. 

Certainly, the recently passed $1.9 trillion American Rescue Plan is a watershed moment. That such legislation has become law — that our federal government acted decisively with a bill targeted to aid low and middle-income families — evokes equal parts inspiration and relief in its radical departure from previous trickle down approaches that have increased inequality and racial injustice.

The Rescue Plan is a desperately needed life preserver for countless Americans, but what does it mean to be pulled from treacherous waters onto a leaking ship? As the end of the pandemic appears on the horizon and the federal government, states and localities rightfully deploy their fiscal resources to move the country forward, we must ensure that those resources move beyond plugging holes in our American vessel and ensure we are not headed towards the same inequitable and unjust outcomes we left in 2019.

As the Washington Post reported in June 2020, “in 1968, a typical middle-class Black household had $6,674 in wealth compared with $70,786 for the typical middle-class white household.” In a stark illustration of how little progress had been made, the same Post article cited data from the Historical Survey of Consumer Finances indicating that in 2016 the typical middle-class Black family had $13,024 in wealth compared with white families who had $149,703. 

We need bold policies to change this trajectory. Since stimulus packages have long been effective tools to catalyze progress, spur growth and reinvigorate the economy, now is the time for a multi-year $10-12 trillion racial equity stimulus package that is laser-focused on repairing harm from decades of redlining, denying capital to African-American business owners, steering Black borrowers into predatory loan products, underinvestment in school systems serving Black and brown children and criminalization of Black and brown bodies in schools and in communities — a stimulus designed specifically to redress the damage brought about by structural racism in American institutions and public policy.

According to the Economic Policy Institute 2017 research report, Average wealth for white families is seven times higher than average wealth for black families. Worse still, median white wealth (wealth for the family in the exact middle of the overall distribution — wealthier than half of all families and less-wealthy than half) is twelve times higher than median black wealth … These raw differences persist, and are growing, even after taking age, household structure, education level, income, or occupation into account.”

We know that the Black-white wealth gap is not a matter of Black people’s lack of talent or intellect. It is a function of structural racism and public policy. It is not, as Dr. Jared Ball routinely cautions, a matter of Black people consuming too much or making poor choices with their resources. Black people have been intentionally locked out of wealth creation. For decades, de jure and de facto segregation and racial animus meant that Black people could not find good paying jobs, purchase homes in certain neighborhoods, access relief packages, etc. 

The harm has been so deep that it is impossible to wish, read or pray it away. There must be a targeted economic stimulus for Black, brown and tribal communities, coupled with public policies intentionally written to measurably reverse decades of race-based damage and disparities. For more than four decades, the National Urban League has highlighted these consistent disparities in its State of Black America reports. Recently, the Schott Foundation’s Loving Cities Index documented the disparities in infrastructure supports in more than 20 cities that children and families need to have an opportunity to thrive. 

In response to the COVID pandemic, Congress recently passed a $900 billion relief package and President Biden just signed a much-needed $1.9 trillion stimulus bill. These vital resources should be provided. But we also can’t ignore the other pandemic that has ravaged American people, families and communities for centuries — structural racism. We cannot assume that a stimulus targeted to sustain a nation during COVID will also flatten the curve of America’s wealth gap.  

To close the racial wealth gap, we must deploy an infusion of resources to support retirement for workers, expand access to quality affordable healthcare, make homeownership accessible, eliminate education inequities and enact a living wage. Closing the racial wealth gap also requires making higher education more affordable while simultaneously providing relief for families struggling under the weight of student loan debt. 

While the widening racial wealth gap is clearly disastrous for Black households, it also hinders the broader economy as well. According to a McKinsey and Company report, closing the gap would boost the gross domestic product by 4 to 6 percent by 2028. The McKinsey report estimated “the effect of narrowing the wealth gap between Black and white Americans from its 2016 level,” optimistically assuming that “Black wealth grows faster than white wealth…would add $1 trillion to the 2028 economy.” 

Many sources reinforce that making strides in racial justice in every area of our lives actually improves the GDP. In a national report, the W.K. Kellogg Foundation and Altarum offered even more optimistic figures: “The United States economy could be $8 trillion larger by 2050 if the country eliminated racial disparities in health, education, incarceration and employment, according to ‘The Business Case for Racial Equity: A Strategy for Growth.’ The gains would be equivalent to a continuous boost in GDP growth of 0.5 percent per year, increasing the competitiveness of the country for decades to come.”

Clearly, closing the racial wealth gap holds advantages for Black, brown and tribal communities as well as the broader community. It is imperative our nation take steps to narrow the gap, strengthen our democracy and live up to its promises of liberty and justice for all. America can only achieve this if we confront the ways in which society has disadvantaged Black bodies and then immediately implement systemic policies and fiscal measures at a sufficient scale to remedy the harms.

Panels, passionate speeches and good intentions will not fix this — the solution is nothing short of targeted policy coupled with direct stimulus aid.

Marc H. Morial is president and CEO of the National Urban League. Morial served as mayor of New Orleans from 1994 to 2002. Dr. John H. Jackson is president and CEO of the Schott Foundation for Public Education. From 2001-2007, Jackson served a national director of Education and chief policy officer for the NAACP. Jackson is also a former senior policy advisor in the Clinton administration’s Office for Civil Rights at the U.S. Department of Education and an adjunct professor of Race, Gender and Public Policy at the Georgetown Public Policy Institute. 

Tags Discrimination Distribution of wealth Economic inequality Economy of the United States Joe Biden Mortgage industry of the United States racial wealth gap Racism in the United States Redlining Social inequality Social Issues Wage gap wealth

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