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In 1921, Tulsa, Oklahoma’s “Black Wall Street,” a financially independent and vibrant community that had been built and sustained by Black Americans, became the site of one of the United States’ worst race massacres, fueled by White supremacists. Hundreds of people were killed, thousands were left homeless by fires, and hard-earned, substantial Black wealth and prosperity were destroyed.
The fate of many modern-day Black communities and households echoes that of Black Wall Street. Success achieved despite the ravages of structural racism remains in constant tension with economic oppression that, while not always as obvious as the Tulsa massacre, still systematically disadvantages Black communities. Today, Black Americans make up roughly 13% of the U.S. population but hold just 3% of the country’s wealth.1 The median net worth of a White family in the United States in 2019 was $188,200, as compared with $24,100 for a Black family.1 The racial wealth gap is large, persists across income groups, and has not changed in over a century.2
Wealth, defined as assets minus liabilities, matters because it is a fundamental determinant of health.3,4 Health equity strategies that fail to address the racial wealth gap may therefore be ineffective. Health systems, as key institutions responsible for health in the United States, are well positioned to directly promote wealth building among Black staff, patients, and communities. For example, the health care sector is the largest U.S. employer and the largest employer of Black Americans, but Black staff members are often among the lowest-paid employees and have the worst health outcomes.5 In addition, health systems help to drive their local economies, with both job opportunities and purchasing power.
Although analyses of disparities frequently focus on income as a social determinant of health, it’s an incomplete measure of socioeconomic status, given that households with income above the federal poverty level may still experience “net-worth poverty.”6,7 Income can be sensitive to transient shocks (such as health care expenditures) and may not provide the most robust measure of financial resilience.
Wealth, on the other hand, drives health in myriad ways. Wealth affords choice and stability — in housing, education, and nutrition, for example, all of which are well-studied social determinants of health.8 Wealth provides a cushion for dealing with unexpected emergencies, such as unanticipated medical expenses, involvement in the criminal justice system, or job loss. Wealth also provides a level of security that buffers against the weathering effects of chronic stressors.9,10
Moreover, greater wealth is independently associated with reduced premature mortality, lower rates of chronic diseases such as hypertension, and improved functional status throughout the life course.4,11 For example, among people 54 to 64 years of age, those in the lowest wealth quintile have a 17% risk of death and a 48% risk of disability over 10 years, as compared with a 5% and 15% risk, respectively, among those in the top wealth quintile.12 These associations remain strong in natural experiment studies, which are better geared than traditional observational studies to reveal causal effects.13,14 Wealth is associated with self-reported health status even within racial or ethnic groups.15 In addition, a substantial portion of racial disparities in the risk of developing several chronic diseases and disabilities is associated with disparities in total wealth, and not income.4
Historical and present-day racial discrimination and exclusion, attributable to myriad government and institutional policies and practices, undergird the racial wealth gap.4 Though Black people contributed 12 generations of unpaid labor during enslavement that generated tremendous wealth for White families and shored up the U.S. economy, they entered the era of Reconstruction with little to nothing. During the Jim Crow period, laws designed to bolster economic outcomes for specific vulnerable populations — for example, Social Security for older adults and the G.I. Bill for veterans — were structured and executed in such a way as to largely exclude Black people.16
The Federal Housing Administration promoted investment in the creation and growth of White-only suburbs and, using redlining, discouraged investment in Black urban neighborhoods, contributing to racial disparities in home ownership rates and home equity for homeowners, which remain bedrocks of wealth accumulation and transfer in the United States.17 Researchers have estimated that eliminating disparities in home ownership could narrow the gap by 31%.18
Mass incarceration and police surveillance, predatory lending by the largest U.S. banks, and discrimination within the real estate industry — all concentrated in segregated Black neighborhoods — remain threats to wealth building.19,20 Wealth disparities generated by racist policies extend across generations. These intergenerational disparities are further entrenched by U.S. tax law, which provides preferential treatment for inherited assets.21
Since wealth begets wealth, disparities in the availability of capital — ranging from differences in available familial wealth and personal savings to being steered toward subprime loans — also make it difficult to narrow the racial wealth gap.22,23 This dynamic was apparent during the Covid-19 pandemic, when differential access to capital, including Covid-19 relief funds, contributed to an estimated 41% decrease in Black business ownership as compared with a 17% decrease in White business ownership.24
Health systems could address the racial wealth gap — and thereby reduce the racial health gap — by using a combination of three broad strategies: reducing expenses, maximizing income, and decreasing debt while increasing savings.25 These strategies are not exhaustive, but they are a good place to start. Most health systems have relevant expertise — for example, in their human resources, finance, community engagement, and development departments. Embracing an asset-based approach to this work, which focuses on the strengths already present in Black communities, and incorporating partnerships with community-based organizations are critical to operationalizing efforts in a range of areas.
To succeed, deployment of these strategies requires a parallel assessment of how health system activities may be harming the financial well-being of local communities. For example, health systems and health policymakers could commit to avoiding anticompetitive behaviors that may increase health care costs and thereby reduce wages and community economic well-being.26,27 Similarly, health systems could commit to ceasing activities that can directly reduce individual economic security, including the imposition of medical debt and the use of aggressive bill-collecting practices.28
Health systems can facilitate their patients’ enrollment in public benefits programs, allowing families to cover their basic needs — a prerequisite for beginning to save and building wealth. Many low-income households may be eligible for dozens of local, state, and federal benefit programs, such as the Low-Income Home Energy Assistance Program (LIHEAP) and the Pharmaceutical Assistance Contract for the Elderly (PACE). In Philadelphia, as in cities throughout the country, approximately 40% of eligible families are not enrolled in public benefits, forgoing $450 million in benefits each year to which they’re entitled.29
Downstream effects of structural racism often render Black people more likely than White people to face poverty-associated problems, such as food insecurity, that are addressed by public benefits programs. The impact of these programs has been clearly documented. For example, prenatal participation in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is associated with reduced Black–White disparities in infant mortality.30
Such programs indirectly transfer cash to beneficiaries by providing needed services that would otherwise be paid for out of pocket or be unobtainable. By directly assisting both employees and patients to enroll in benefits for which they’re eligible, health systems can affect health while enabling families to use their own money for other expenses or to start building savings and wealth.
Health systems are also well positioned to help staff and patients maximize their income by offering free tax-preparation services. The federal government provides several tax credits that return cash to families with low-to-moderate incomes. For example, the earned income tax credit (EITC) and the child tax credit (CTC) can provide up to $6,700 and $2,000 per child, respectively, offering an evidence-based means of poverty reduction.31 These credits often go unused; each year, approximately 20% of eligible people nationally do not receive their EITC. The impact of the 2021 expansion of the CTC, alone, is illuminating: estimates show a 6.2-percentage-point reduction in poverty among Black children, which translates into 686,000 children lifted out of poverty.32
One of us leads the Children’s Hospital of Philadelphia’s Medical Financial Partnership (MFP), which collaborates with several community-based financial empowerment organizations to offer services in a large primary care clinic in a Black community serving predominantly low-income families. Qualifying families and medical staff alike get their taxes done by Internal Revenue Service–certified tax preparers. This free service not only saves the filer the cost of preparing the return, but also includes an in-depth review of the return before submission that can itself be empowering. Over a 2-year period, the MFP prepared 337 federal tax returns, procuring nearly $700,000 in refunds for the community.33
Health systems and organizations must also provide all health care workers a living wage. Black and Latina women are overrepresented in lower-wage health care occupations (e.g., home health aides or nursing aides), and nearly 2 million of these workers and their children live below the federal poverty line.34 Among health care workers, lower pay is associated with a higher risk of death.35 A recent study revealed that adoption of an industry-wide $15 minimum wage could reduce poverty among low-wage health care workers by as much as 50%.5 The increasing adoption of a $15 minimum wage by hospitals is an encouraging sign, though direct employees of hospitals account for only a fraction of all low-wage workers in the health care industry.
Managing household finances, including budgeting, planning and monitoring short- and long-term savings, and investing, are skills needed to build wealth, and they require specific knowledge that is not typically covered in primary or secondary education. Rather, the necessary skills are often passed down in a family or learned informally in adulthood from friends or colleagues with experience. Unfortunately, the extent of peer experience can itself be limited by intergenerational exclusion from opportunity. In addition, wealthy people hire experts to manage their money, effectively overcoming gaps in personal knowledge and experience. Health systems can intervene for the less wealthy by providing structured means for staff and patients to learn core financial management and wealth-building skills.
Financial counseling could be provided by a team of health system employees or by contracting with external organizations whose mission is to assist people from historically low-wealth communities. Services could include an assessment of current financial status and needs, followed by the delivery of a core set of customized financial best practices, such as helping families enroll in a savings program, access scholarship funds, start investing for education, or prepare for home ownership.
At the same time, work aimed at eliminating the racial wealth gap should not be only outward-facing — there are many internal opportunities for health systems to advance this goal. For example, organizations can increase assets for their Black staff members by connecting them to long-term investment products such as Children’s Development Accounts (CDA), or “baby bonds,” which could be started for young children of all low-wage employees. CDAs are an asset-building strategy that has been proposed as a way to close the racial wealth gap.21 Small initial investments early in a child’s life will grow with the child. For example, educational 529 child savings accounts significantly reduce the amount of debt college students need to take on, and having access to savings makes it more likely that a person will enroll in and graduate from college.36 Currently, Black Americans are 14 percentage points less likely than White Americans to have a bachelor’s degree — and we know that high school graduates make at least $1 million less in a lifetime than college graduates.37
In addition, though institution-facilitated asset building (e.g., 401(k) matching) is a well-accepted component of professional compensation within health care, wealth building targeting Black staff in particular is not. Indeed, retirement accounts are often not offered at the smaller employers where members of marginalized racial and ethnic groups and low-income workers tend to work.38 And uptake by low-wage Black staff at larger health systems may be low. An innovative way to help employees build wealth is by assisting them with and subsidizing home buying, since home ownership is a primary means of increasing one’s assets. Many universities offer this type of benefit to faculty, but it is not generally included in compensation packages for lower-wage, predominantly Black staff members — who may, in fact, be displaced by the gentrification caused by these very programs.
Health systems spend billions of dollars each year to maintain their operations, including purchases of goods, services, and food, all of which provide opportunities to build Black wealth through procurement. First, health systems can shift a percentage of annual spending to Black-owned suppliers. A 5% shift in spending for a health system with an annual operating budget of $1 billion translates to $50 million to support Black wealth building. Such a commitment would be particularly powerful if hospitals invested this money directly in their local communities, where many staff and patients live; such investments would align with hospitals’ role as anchor institutions.
Second, health systems can help existing local small businesses build capacity so they can take on higher-value contracts. For example, businesses may need assistance hiring more staff or managing additional administrative requirements, including bonding and insurance, in order to handle increased operating budgets. Health systems may also directly invest in new and existing locally owned vendors. Tool kits exist for health systems seeking to expand inclusive, local sourcing.39
It will not be enough for health systems to simply offer the wealth-building opportunities we have outlined. Rather, they need to make it as frictionless as possible for staff and patients to take advantage of such services. All eligible employees could be granted time during normal working hours, and as part of their normal duties, to take part in wealth-building activities. Similarly, health systems that facilitate savings opportunities using 401(k) or 403(b) retirement accounts could not only expand these programs to all employees, but also take steps to ensure uptake by making enrollment easy (e.g., by using behavioral economics approaches, such as opt-out systems). As work by Chetty and colleagues makes clear, a neighborhood-based approach to this effort is important: opportunities and resources need not be hoarded, since “a rising tide lifts all boats,” and healthier, wealthier neighborhoods mean greater chances of economic mobility for all inhabitants.40
Other scholars and commentators have proposed reparations as a public health strategy for ending Black–White health disparities.2,3 Health systems have a choice to make: continue with the status quo or reposition themselves as essential actors in closing the racial wealth gap. We believe that large, sustained societal investments such as reparations are in fact the only way to address the gap and that health systems have a moral obligation to join the movement.
Disclosure forms provided by the authors are available at NEJM.org.
From the Penn Urban Health Lab (E.S.), and the Departments of Emergency Medicine (E.S.), Medical Ethics and Health Policy (A.V.), and Pediatrics (G.D.), Perelman School of Medicine, and the Leonard Davis Institute for Health Economics (E.S., A.V., G.D.), University of Pennsylvania, and the Possibilities Project, Children’s Hospital of Philadelphia (G.D.) — both in Philadelphia.
1. Darity W Jr, Hamilton D, Paul M, et al. What we get wrong about closing the racial wealth gap. Samuel DuBois Cook Center on Social Equity, April 2018 (https://socialequity.duke.edu/wp-content/uploads/2019/10/what-we-get-wrong.pdf).
2. Derenoncourt E, Kim CH, Kuhn M, Schularick M. Wealth of two nations: the U.S. racial wealth gap, 1860–2020. NBER working paper no. 30101. Cambridge, MA: National Bureau of Economic Research, 2022.
3. Bassett MT, Galea S. Reparations as a public health priority — a strategy for ending Black–White health disparities. N Engl J Med 2020;383:2101–2103.
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16. Blakemore E. How the GI Bill’s promise was denied to a million Black WWII veterans. History, April 20, 2021 (http://www.history.com/news/gi-bill-black-wwii-veterans-benefits).
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22. Faber JW. Racial dynamics of subprime mortgage lending at the peak. Hous Policy Debate 2013;23:328–349.
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24. Misera L. An uphill battle: COVID-19’s outsized toll on minority-owned firms. Federal Reserve Bank of Cleveland, October 8, 2020 (https://www.clevelandfed.org/newsroom-and-events/publications/community-development-briefs/db-20201008-misera-report).
25. Marcil LE, Hole MK, Jackson J, et al. Anti-poverty medicine through medical-financial partnerships: a new approach to child poverty. Acad Pediatr 2021;21:Suppl:S169–S176.
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28. Cooper Z, Han J, Mahoney N. Hospital lawsuits over unpaid bills increased by 37 percent in Wisconsin from 2001 to 2018. Health Aff (Millwood) 2021;40:1830–1835.
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36. Elliott W, Song H-A, Nam I. Small-dollar children’s savings accounts and children’s college outcomes by income level. Child Youth Serv Rev 2013;35:560–571.
37. Tamborini CR, Kim C, Sakamoto A. Education and lifetime earnings in the United States. Demography 2015;52:1383–1407.
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39. Zuckerman D, Parker K. Inclusive, local sourcing: purchasing for people and place. Democracy Collaborative, 2016 (https://healthcareanchor.network/wp-content/uploads/2021/12/Hospital-Toolkits-Inclusive-Local-Sourcing.pdf).
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September 1, 2022
N Engl J Med 2022; 387:844-849
DOI: 10.1056/NEJMms2209521
Debra Malina, Ph.D., Editor
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