New Study: Racial Wealth Gap Worst in 25 Years
by Dr. Boyce Watkins, Syracuse University – Scholarship in Action
A new study presented some disturbing, yet expected news about the sad state of economic affairs within the African American community. According to the study, the wealth gap between white and black Americans has become the widest that it’s been in the last 25 years. As it stands, whites have a wealth level that is 20 times greater than blacks, and 18 times greater than Hispanics.
Much of the drop in black family wealth is due primarily to the decline in home values and heightened unemployment during the great recession of the last three years. African Americans currently have the highest unemployment rates in America, with the most recent data listing the rate at 16.2 percent.
The wealth gap is the largest that it’s been since officials began tracking the disparities back in 1984. At that time, the gap was merely 12-to-1, implying that African Americans are worse off than they were in the 1980s, when Ronald Reagan promoted trickle-down economics, which destroyed black communities everywhere.
“I am afraid that this pushes us back to what the Kerner Commission characterized as ‘two societies, separate and unequal,’” said Roderick Harrison, a former chief of racial statistics at the Census Bureau. “The great difference is that the second society has now become both black and Hispanic.”
Another reason that whites are so much better off than blacks is because they are more likely to own stocks. The same Wall Street bankers who caused the recession were the first to be bailed out, leading to a quick recovery for those who owned securities. Whites are far more likely than blacks to own 401(k) and IRA plans, in addition to stock funds, with these assets accounting for 28 percent of their wealth. On the contrary, only 19 percent of black wealth comes from these assets.
Each time I notice how much worse off the black community has been during the last three years, my mind goes back to the statement by President Obama, in which he argued that the “rising tide will lift all boats” as it pertains to the economic recovery. The argument by the Obama Administration was that by dealing with the broader economy, African Americans would naturally benefit. At the time, there were those who expressed concern, given that this policy of ignoring economic inequality sounded a lot like a racialized version of trickle-down economics.
Since that time, black unemployment has risen by 150 basis points (14.7 percent to 16.2 percent), while white unemployment has declined (9.4 percent to 9.1 percent). Additionally, black family wealth has dropped to levels we haven’t seen since I was a little boy. Having so many Wall Street bankers on the Obama Administration economic team doesn’t add much hope that perhaps our government even remotely understands the complexities of deep and historic wealth gaps between blacks and whites in America.
Like a festering disease left untreated, racial inequality has resurfaced in America. Most interesting is that nearly every member of Congress and the Obama Administration has remained tone deaf to the issue, arguing that there are bigger fish to fry than the uncomfortable issue of race. The differences in composition of black wealth vs. white clearly implies that unique economic medicine must be used for varied segments of our economy. One cannot always treat two different illnesses in separate sections of the body with the same medication. Trickle-down economics didn’t work in the 1980s and it is not working today.
The Republicans will surely jump on this information, arguing that African Americans have little reason to support President Obama. The problem they have is that history clearly proves that they won’t do any better. Their opposition to Affirmative Action programs, opposition to labor unions and desire to hammer social security, in addition to their commitment to ruthless and uncompassionate capitalism implies that they would only worsen the wealth gap themselves. The great Republican hero, Ronald Reagan, is the one who sent our nation into the tailspin of deficit spending and greed that puts our country on the brink of its first default in history.
While Republicans have clearly declared themselves to be the party of the rich (or in their warped minds, “job creators”), the Democrats expect African Americans to line up in lockstep with every issue that matters to white liberals, but refuse to say a peep about the intense and persistent economic pain within black America. As a result, we have a black president who grants our community tremendous symbolism, but refuses to take a stand on racial issues because he knows that white liberals won’t like him anymore. As a result, he fills his cabinet with elitist Harvard cronies and ethically-problematic colleagues from Chicago whose only interest is to preserve power and manipulate our minds into showing up to vote for politicians who consider us to be an afterthought.
The evidence clearly shows, without question, that black people are not better off under Obama. It is up to the Obama Administration to provide evidence to the contrary, rather than hoping that their political foot soldiers will discredit anyone who speaks up on the issue. The rising tide is NOT lifting all boats, so we need a better solution than that.
Dr. Boyce Watkins is a Finance Professor at Syracuse University and founder of the Your Black World Coalition. He is also the author of the book, “Black American Money.”