Systemic inequities and barriers keep people of color from achieving economic security through employment, education, and homeownership, resulting in racial disparities in wealth and income. These disparities are the consequence of ongoing discrimination, structural inequality, and biases across our institutions. They continue to emerge in new forms of technology — including artificial intelligence and algorithmic risk assessment tools — that influence nearly every facet of life. The confluence of these inequities has created a massive, persistent racial wealth gap in the United States.
Here are three things you should know about the racial wealth gap:
Homeownership has been one of the most effective ways that Americans build wealth, which can be passed down from generation to generation. And although equal access to housing is a civil right, systemic racism within our housing institutions has long kept communities of color from accessing fair housing opportunities. The gap between Black and white families’ home ownership has persisted over the years. In 1976, the gap between Black and white families’ home ownership was 25 percent (44 percent of Black families owned a home, compared to 69 percent of white families). In 2022, the gap grew even more to 30 percent (45 percent of Black families owned a home, compared to 75 percent of white families).
When applying for mortgage loans, Black applicants were 1.8 times more likely to be denied for a mortgage than white applicants, while Latino applicants were 1.4 times more likely to be denied than white applicants, according to an analysis of 2019 data. The racial bias in mortgage interest rate is most exemplified by those who earn between $30,000 to $44,999 in annual income, where the median interest rate for Black homeowners is 6.95 percent higher than that of white homeowners.
The Black-white income gap has persisted and grown since 1970, from a gap of $23,700 in 1970, when the median income for a Black household was $30,400 compared to $54,100 for a white household, to $33,000 in 2018, when the median income for a Black family of three was $51,600 compared to $84,600 for a white family of the same size.
The economic position of Black Americans relative to white Americans over the years remains precarious at best. Through litigation and advocacy, the ACLU works to remedy deeply entrenched sources of inequality and ensure that access to opportunity and the ability to build wealth is available to all. We’ll continue to tackle the roots of the problem by breaking down systems designed to discriminate against Black, Indigenous, and other people of color.
FAQs
The racial wealth gap refers to the disparity in assets of typical households across race and ethnicity. The gap in assets is far wider than disparities in wages across races. Income inequality, housing policies, limited educational opportunities, and a lack of support structures contribute to the racial wealth gap.
How to bridge the racial wealth gap? ›
The solutions in this report include:
- Baby Bonds.
- Guarantee Employment and Significantly Raise the Minimum Wage.
- Invest in Affordable Housing.
- Medicare for All.
- Postal Banking.
- Significantly Raise Taxes on the Ultra-Wealthy.
- Turn Upside-Down Tax Expenditures Right-Side Up.
- Congressional Committee on Reparations.
However, between 2019 and 2022, the gap breeched 10% of the average—signaling an increase in disparity not seen since 2007, when the gap reached $214,970. The growing disparity means that in 2022, for every $100 in wealth held by white households, Black households held only $15.
How to close the racial wealth gap in the United States? ›
Rooting out bias in appraisals can help narrow the racial wealth gap. According to a recent study, eliminating racial disparities in the amount of wealth families gain from owning a home would narrow the wealth gap by 16% between Black and white households and by 41% between Latino and white households.
What is the main cause of the wealth gap? ›
Some of key factors behind the increase in within-country income inequality noted in the literature include technological progress, globalization, commodity price cycles, and domestic economic policies such as redistributive fiscal policies, labor and product market policies.
What explains the gap between rich and poor? ›
Many factors explain the rise of income inequality. Some are economic, such as the role of technology in the globalising economy; others are social, such as shifts in who people marry; and some relate mainly to the rising incomes of top earners.
How does the wealth gap affect society? ›
Excessive inequality can erode social cohesion, lead to political polarization, and lower economic growth.
What does it mean to bridge the wealth gap? ›
Bridging the Wealth Gap focuses on asset building through increased savings, banking, and credit history improvement. Unequal access to savings, positive credit history, and banking is a national problem that especially impacts renters and contributes to the racial wealth gap.
How to close the racial housing gap? ›
We can achieve that in several ways, including:
- Increasing access to down payment assistance. ...
- Increasing access to affordable credit. ...
- Investing in affordable homeownership. ...
- Retargeting the mortgage interest deduction.
Asian households overall had more wealth than other households two years since the start of the pandemic. In 2021, Asian households had a median net worth of $320,900, compared with $250,400 for White households.
To belong to the 1% in America, your net worth would have to be about $5.8 million or higher, according to the new Wealth Report from real estate company Knight Frank.
What is the top 1% wealth in the US? ›
You need more money than ever to enter the ranks of the top 1% of the richest Americans. To join the club of the wealthiest citizens in the U.S., you'll need at least $5.8 million, up about 15% up from $5.1 million one year ago, according to global real estate company Knight Frank's 2024 Wealth Report.
How much would it cost to close the racial wealth gap? ›
Using that as the measure, the researchers found it would take $7.5 trillion to halve the wealth gap, and $15 trillion to eliminate it. It would take $7.5 trillion to halve the Black-White wealth gap, and $15 trillion to eliminate it.
What is the average income of a Black family? ›
Economics. According to the Census Bureau in 2021 , the average non-Hispanic black median household income was $48,297 in comparison to $77,999 for non-Hispanic white households.
What is the average net worth of a Black man? ›
Average Net Worth For African Americans (Blacks)
Now let's look at the Economic Policy Institute data for median and average wealth for Whites and Blacks. The average net worth for African Americans is $95,261 and the median net worth for African Americans is just $11,030.
What is the wealth gap in the United States? ›
To be in the top 10%, a family needed $1.92 million or more (about $507,000 more than in 2019). Their average wealth was $7.73 million, up 17% from 2019. To be in the next 40%, a family needed at least $192,000 in wealth. Their average wealth was $644,000, up 35% from 2019.
How does the racial wealth gap impact education? ›
According to the Century Foundation, Black students are more likely than white students to have negative financial experiences, such as defaulting on their loans or paying high interest rates. Student debt burdens maintain the racial wealth gap.
How does wealth gap affect the community? ›
Societies with pronounced economic inequality suffer from lower long-term GDP growth rates, higher crime rates, poorer public health, increased political inequality, and lower average education levels.
How did the wealth gap caused the Great Depression? ›
This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize.
