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by Gianna Melillo | Jun. 07, 2022
Efforts to close the wealth gap between white and Black Americans have not only stalled over the past few decades, but new data indicate the gap is worsening — due in part to the COVID-19 pandemic.
Using historical census data and early state tax records from 1860 to 2020, researchers from the National Bureau of Economic Research found that in 2019, the white-to-Black per capita wealth ratio was 6 to 1. This equates to Black Americans holding 17 cents on average for every white dollar of wealth, with Black Americans earning 50 cents for every dollar white Americans earn.
Wealth concentration, which reached its highest levels since World War II during the pandemic, is only exacerbating the racial wealth gap, researchers say.
Taking a look back, researchers found the 50-year period directly following emancipation — more than 100 years ago — marked the closest Black and white wealth has ever come to being equal.
“The top 0.01% of households now own 36.1% of private wealth,” researchers wrote. “Given that there are so few Black households at the top of the wealth distribution, faster growth in wealth at the top will lead to further increases in racial wealth inequality.”
In 2020, the wealth gap was virtually identical to that seen in 1950.
This is the first continuous study on white-to-Black per capita wealth ratios since 1860, a year before the Civil War and three years before the Emancipation Proclamation. Researchers note that barriers to Black economic progress were “pervasive” in the post-Reconstruction era, with exclusion of Black Americans from political processes, discrimination in land and labor markets, and other historical discriminatory practices contributing to disparities seen today.
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Savings from income and capital gains are the main drivers of wealth growth, according to researchers, and differences in wealth-accumulating conditions are driving the racial wealth gap.
To see if equal wealth accumulation were possible following emancipation in the absence of known barriers, researchers created a model excluding all other obstacles Black Americans faced with regard to personal wealth gain. Even with these caveats, the model illustrated a slower path to wealth equality over the 150 years following emancipation.
Another simulation chronicling equal wealth accumulation since 1870 would still put the current wealth gap ratio at 3 to 1, with equal wealth between the two races another 200 years in the future.
Authors warned should current trends persist, racial wealth differences will grow further apart and may reverse course altogether.
White households benefiting from increased overall capital, high wealth-to-income ratios, and portfolio differences between white and Black Americans have all contributed to an increase in the gap first seen in the 1980s and continuing today.
Income inequality experienced in childhood has been linked with poor adult health outcomes, and older generations who experienced income inequality in the past are already exhibiting increased incidence of chronic disease and physiological dysregulation.
Several solutions to the wealth gap have been proposed including improved housing policies, assistance to families with children and reparations for slavery.
Long-term policies targeting portfolio composition may also be beneficial, but hundreds of years may pass before tangible results come to fruition, researchers cautioned. In their paper, they also argue that reparation payments that “equalize stocks of Black and white per capita wealth” could also help close the racial wealth gap faster.
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