4. Dispelling myths about the racial wealth gap
Ask and you shall receive. All 10 articles on myths about the racial wealth gap have been put together in one location.
- For new subscribers and those who may have missed the series, here's a refresher (click the links to open the full stories).
1. The racial wealth gap can be closed through education. On average, Black households led by college degree holders have lower net worth than white households with less than a high school education. Black households with post-college education have about half as much wealth as the average white household with a college degree.
2. Personal responsibility. Even if Black people could close the income gap by "working harder,"a 2018 paper from Duke notes, "Earnings and other types of income are not key determinants of wealth."
3. Home ownership. The data show Black homeowners in the U.S. on average start with much less wealth, purchase lower-priced houses and grow less value in their homes, no matter their age or income level. White homeowners have disproportionately benefited from federal housing programs.
4. Individual accomplishment. Over the last 30 years, as individual Black Americans have seen increased success, the overall wealth gap has widened.
5. Increased savings. A 2004 study found that if income is controlled, there is "a slight savings edge for Black households" over white households.
6. Black-owned banks. If every single Black-owned business put every single dollar of its revenue into Black-owned banks every year, after a decade Black-owned banks would have 6% of the total assets that banks led by white people had in the fourth quarter of 2019.
7. Entrepreneurship. Black Americans have unequal access to capital. "Black-owned firm application rates for new funding are 10 percentage points higher than white-owned firms, but their approval rates are 19 percentage points lower," according to a 2016 Fed report.
8. Financial literacy. A 2017 report from the St. Louis Fed finds, "[M]eager economic circumstances — not poor decision making or deficient knowledge — constrain choices and leave asset-poor borrowers with little to no other option but to use predatory and abusive alternative financial services."
9. Imitating "model minorities." A 2014 BLS study finds that across races in the U.S., "Once families decide to invest in their children’s higher education, little difference exists in the level of expenditures between racial and ethnic groups."
10. "Stronger families." "[W]ealth differences among white and Black women persist despite type of family structure, marriage, age, or education," a Duke study noted in 2018.