Whenever the subject of financial inequity is brought up, there is an automatic indictment and criticism of African-American spending habits. As if white people are born with an innate ability to save, and manage money. This accusation is insulting, woefully inaccurate, and just plain ridiculous. While some of us have made fiscal decisions that were not advantageous, there are just as many if not more people in the Caucasian community who have made financial decisions that were just as irresponsible. But there is still inequity and disparity.
The wealth gap between blacks and whites has nearly tripled over the past 25 years, due largely to inequality in home ownership, income, education and inheritances, according to a new study by Brandeis University.
The difference in wealth between typical Blacks & white households has ballooned to $236,500 in 2009, up from $85,000 in 1984, according to the study. By 2009, the median net worth of white families was $265,000, while blacks had only $28,500.
Brandeis researchers looked at the same set of 1,700 families over the 25-year period to see how their actual work and school experiences affected their wealth accumulation.
What they found is that home ownership is driving the growing gap. Price appreciation is more limited in non-white neighborhoods, making it harder for African-Americans to build equity. Also, because whites are more likely to have family financial assistance for down payments, they are able to buy homes an average of eight years earlier than black families and to put down larger upfront payments, that allows them to qualify for lower interest rates and mortgage costs.
The rate of home ownership for whites is 28% higher than that of blacks.
Another advantage whites have is the fact that they are more likely to receive an inheritance, from their families because of a certain level of generational weallth. Among the families studied, whites were five times more likely to inherit money than blacks, and their typical inheritances were 10 times as big.
Another differentiating factor is income. Whites are more likely to apply any raises they may receive to wealth building because they have already accumulated a cash cushion. African- American's were more likely to use their increase as emergency savings.
When it comes to education African-Americans graduate with significantly more student loan debt than their white counter parts, 4 out of 5 Black students graduate with student loan debt compared to 64% of whites.
The fact of the matter is that white society has benefited greatly from a system of privilege that has afforded them every possible opportunity to succeed. The United States was founded on the premise of white prosperity. The drafters of the constitution were slave masters, who built a great a deal of their wealth trafficking human flesh, and thought of Black people as little more than property. So when we look at economic disparities we are looking at a generational pattern driven by a system that was not designed to be all inclusive, and is still economically oppressive centuries later. The bottom line is, it is easy to stay ahead in a race designed for you to win, with ever changing rules and circumstances that are always in your favor.