Why are we facing a grand economic wealth gap between races?
February 24, 2022
Ever since the coronavirus health crisis became a global pandemic, several American families have lost their jobs, and even their homes. Many areas of the nation are facing growing gaps of racial disparity of home ownership, and the city of St.Louis, is one of them.
About 46.8 percent of St.Louisans are white people, while 45.2 percent are African–Americans (2019). Data from populationu.com shows that the number of white and black people in St. Louis is approximately the same, but it does not suggest that wealth is equally distributed between all races. Wealth inequality is the one thing that is causing the gap to grow.
Wealth equals the debt subtracted from the total amount of saved income and other assets, such as a house or a car. A doctoral research assistant at Washington University’s social policy institute has been studying the difference between who has wealth and who doesn’t.
Selina Miller, the assistant who conducted this research, found that one end of the wealth spectrum consists of people with little to no wealth, and are therefore vulnerable to an economic downturn. On the other hand, there are people with greater masses of money who do not have to worry about such an economic downfall; wealthier families are easily given more power in society.
People with a greater financial status were more capable of fending off the sudden financial crisis, as Miller discovered in her study. Wealth inequality is getting worse over time, even in a pandemic. “When there’s a lot of wealth inequality, we have less stability and we have people exposed to these things like eviction and food insecurity that we don’t want anybody to have to go through,” said Miller.
There are cumulative advantages and disadvantages to this, but financial disadvantages are hard to recover from, which is the case with many black and brown communities.
As of July 2021, wealth in white households continues to outpace those black and hispanic. The Federal Reserve Bank of St.Louis provided graphs that show the growing wealth gap between white and black people. On average, the wealth of a white household was about $1.292 million, while it’s $305,000 for blacks and $253,000 for Americans. For whites, that is $992,000 more wealth than black families and $1.05 million for hispanics.
William M. Rodgers, the director of the Institute for Economic Equity, said that discriminatory housing policies such as redlining have contributed to the increasing wealth gap, especially in St.Louis. “Neighborhoods deemed to have the highest risk were drawn in red,” said Rogers, who plans to collect wealth data in St.Louis over the next few years. “Borrowers in these neighborhoods were denied credit based on racial composition,” he added.
Rodgers is pursuing a goal of studying how low-wealth communities are often held back from economic opportunities, so he wants to find potential solutions that could help. He said that preventing people of color from buying homes means that less people can build home equity and pass it onto their children.
Home ownership rates in the St.Louis region indicate that the ability to own a home is widely different based on race. Corinne Ruff, the economic development reporter of the St. Louis Public Radio, reported that in St.Louis County, a little over 80 percent of white people own a home, and less than half of black people do, according to data from the St.Louis Fed. In the city, 65 percent of white people have a home, but only 35 percent of black people do.
The more wealth one has, the easier it is to build more, Ruff said in her report. Home ownership is the top factor that drives the growing wealth gap between white and black people, not only in cities like St.Louis.
Buying a house, or even a car, is one way Americans can build their wealth. In fact, it’s the biggest way for Americans to build individual wealth. Because the United States is commonly referred to as “the land of great opportunity”, people can make big accomplishments if they try their best. Most Americans, especially black people, work really hard every day to make achievements in life.
When there’s a lot of wealth inequality, we have less stability and we have people exposed to these things like eviction and food insecurity that we don’t want anybody to have to go through.
— Selina Miller
Finally owning a home is a difficult task, but it’s more difficult for people in black and brown communities than in white communities. White families tend to have more wealth, so they are ultimately given more power to achieve goals that involve money. Half of Americans carry two percent of the nation’s wealth, however money is distributed largely unevenly across the nation, and poorer communities are facing more pressure in terms of their ability to own a home, receive good education, and healthcare.
Someday, the growing wealth gap between whites and blacks must peak, so that all Americans can easily own a home in the future. Before the peak is reached, leaders must find a solution to combat this problem and ensure that whites and African-Americans can have the same home equity in terms of wealth.
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