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US racial wealth gap stretching

By Crissinda Ponder · Bankrate.com
Thursday, March 28, 2013
Posted: 10 am ET

The wealth gap among black and white Americans is widening, but personal ambition and behavioral choices make up only a small portion of the reason why.

According to a recent study by the Institute on Assets and Social Policy at Brandeis University, the total wealth gap between black and white families just about tripled over a 25-year period -- from $85,000 in 1984 to $236,500 in 2009. White families have a median net worth of $265,000 compared to black families' $28,500 median net worth. The data were insufficient for Asian-American, Latino and immigrant households.

Over the 25-years studied, for every $1 increase in income, 69 cents of additional wealth was generated for black households, compared to $5.19 for white households.

Causes of the widening wealth gap

With little evidence supporting the claim that behavioral choices and personal ambition drive the amount of wealth a family builds, what are the causes of the wealth gap that is quickly approaching the quarter-million-dollar mark?

The research points to the following explanations.

  • Years of homeownership.
  • Household income.
  • Unemployment.
  • College education.
  • Inheritance, financial support from family and friends and pre-existing family wealth.

Though time has healed many of the wounds of pre-civil rights era discrimination and injustice, some issues present in that chapter of history still exist today.

According to the study, the "toxic inequality" evident in the data threatens the U.S. economy and American society. Shrinking the wealth gap will need to involve policy changes that remove barriers found in workplaces, schools and communities that all determine how wealth is built.

How are you personally building your wealth?

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1 Comment
March 30, 2013 at 12:10 pm

Thanks for sharing this interesting information from the study and very valid points....