By Victor Corral
There is an enormous racial wealth gap in America. For every dollar of wealth owned by the average white family, the average family of color owns only 16 cents. Wealth, not just income, is the key to ensuring economic security and is what enables families to build a better future.
People of color and immigrants are uniquely positioned to ensure the US remains a globally competitive economy, but it will depend on our nation’s commitment to eliminating inequities and helping all families build their wealth.
In an April lecture at Morehouse College, Federal Reserve Chair Ben Bernanke attributed the racial wealth gap to a lack of “financial literacy” on the part of blacks, particularly with respect to savings behavior.
Such an explanation, however, is not the case. Economists ranging from Milton Friedman to Marjorie Galenson to the recently deceased founder of the Caucus of Black Economists, Marcus Alexis, found that, after accounting for household income, blacks historically have had a slightly higher savings rate than whites. In 2004, economists Maury Gittleman and Edward Wolff also found that blacks save at a moderately higher rate than do whites, again after adjusting for household income. This indicates even greater black frugality because many higher-income blacks offer more support to lower-income relatives than do whites, further reducing their resources to save.
Darity and Hamilton go on to break down all the ways that wealth transfer and the impacts of the current recession have been racialized, and offer concrete solutions. But they ultimately argue against the utopian ideal of a “post-race” society and for a more just reality:
We should strive not for a race-neutral America but a race-fair America. For that to occur, the transmission of racial economic advantage or disadvantage across generations would have to cease.
Victor Corral works for the Insight Center’s Closing the Racial Wealth Gap Initiative, a national effort to close the racial wealth gap for the next generation by injecting over 140 members of the Experts of Color Network into the national debate on America’s economic future. Both William Darity and Darrick Hamilton are members of the Experts of Color Network.Follow them @ www.twitter.com/racialwealthgap