Ask a Trainer: What is the Racial Wealth Gap and What Can We Do About it?
The basic facts of the racial wealth gap are that Black Americans hold about 13% of the wealth of white Americans. This wealth disparity can be seen through almost every measure of wealth, from actual financial holdings, to income levels, to housing values, to stock ownership. While this issue can seem simple on its surface, the history, current reality, and potential solutions for this problem are complex.
The true challenge of the racial wealth gap is the fact that wealth begets wealth. While we at The Financial Gym believe that ALL people have the power to take control of their financial situation, there is something to the saying that “it takes money to make money.”
A lack of wealth has led to historically less home ownership, which leads to under-resourced neighborhoods and schools. This in turn leads to Black students taking on higher debt loads for secondary education, a lack of stock ownership, and less capital available to start businesses. By owning fewer or smaller businesses, Black people are largely left out of the hiring class and ultimately have less power at every level to make effective changes.
It will take significant systemic changes to completely eradicate this inequality. The good news is that there are some things that you can do as an individual to help create an environment where we can solve this problem.
Acknowledge that this problem exists and to take the time to understand its complexities. There are a lot of resources out there to help you. Here are a few I recommend:
What We Get Wrong about Closing the Racial Wealth Gap - Explains the racial wealth gap and the policy changes that can help bridge the gap
Explained | Netflix - This episode in Season 1 explains the wealth divide.
Amend the Fight for America | Netflix - A look at the evolving, often lethal, fight for equal rights in America through the lens of the US Constitution's 14th Amendment.
From Here to Equality - An exploration of the racial wealth gap and a proposal for economic reparations
2. Support Black creatives and business owners.Whether that means adding a Black-owned restaurant to your monthly rotation or investing in a Black-owned business or project. Use these sites to find Black-owned businesses to patronize or invest in:
OfficialBlackWallStreet - This provides a directory of Black-owned businesses near you and online.
EatOkra - This provides a registry of Black-owned restaurants in your area.
Support Black Owned - Search directory
iFundWomenofColor - A crowdfunding platform for established businesses owned by women of color
BuytheBlock - A crowdfunding platform for Black owned businesses and real estate investment projects
3. Keep a close eye on new legislation that could help close the gap and voice your support for it.
American Jobs Plan - This current proposal from the Biden administration is meant to give funds to non-profit organizations, cities, and minority-owned businesses to specifically reverse past damage done to minority communities and businesses
American Opportunity Accounts Act - Otherwise known as the Baby Bonds Bill, this proposed legislation would create investment accounts for babies born in the U.S. with a larger share going to the most impoverished Americans
Commission to Study and Develop Reparation Proposals for African-Americans Act - H.R. 40 is a proposal to study how and if monetary reparations could be enacted to address the racial wealth gap and damages caused to the Black community by slavery
American Families Plan - this proposal would extend federally-funded schooling to pre-k for 3 and 4 year-olds and 2 years of community college
The racial wealth gap is a complex problem, but just like with any hard financial challenge, self-reflection and intentional action will go a long way. It is time for us to decide as a nation whether we’re willing to keep tolerating this level of inequality. If the answer is no, then the next step is to do the work to make the changes we want to see.