America's Growing Racial Wealth Divide Endangers Nation's Future Economic Health

Posted July 26, 2017

MP3 Interview with Dedrick Asante-Muhammad, director of the Corporation for Enterprise Development’s Racial Wealth Divide Initiative, conducted by Scott Harris

racialwealth

[This interview was originally broadcast on Aug. 24, 2016.] With a succession of sometimes shocking smart phone videos revealing widespread police violence targeting people of color across America and the parallel rise of the Black Lives Matter movement, U.S. corporate media has focused new attention on the issue of America's racial divide in policing and criminal justice. But rarely do journalists or politicians address the critical and related issue of racial wealth inequality.

Now a new study has been published putting into sharp focus the growing divide between the wealth of white, African American and Latino families, titled, “The Ever-Growing Gap: Without Change, African American and Latino Families Won’t Match White Wealth for Centuries,” The report, jointly published by the Corporation for Enterprise Development and the Institute for Policy Studies, “examines the growing racial wealth divide for black and Latinos households and the ways that accelerating concentrations of wealth at the top compound and exacerbate this divide. The authors also “consider the impact public policy has had in contributing to the racial wealth divide and how new policies can close this gap.”

Between The Lines' Scott Harris spoke with one of the reports' four authors, Dedrick Asante-Muhammad, director of Corporation for Enterprise Development's Racial Wealth Divide Initiative. Here, Asante Muhammad discusses the major findings of the report and the ways in which wealth disparity along racial lines affects the social fabric of America and its people. [Rush transcript.]

DEDRICK ASANTE-MUHAMMAD: Well, the overall point of the report – and I'll give you the kind of numbers that everybody used – is just that oftentimes when people think about race and racial inequality, they say well, "Look, America's made a lot of progress and it's true that things have changed from 50 or 100 years ago, and that thoes things may not be moving as fast as people would like on a path getting toward racial equality." And what this report is showing is that as it relates to racial economic inequality, that is not true. We are on a path to ever-growing racial economic inequality.

One of the numbers that is most often cited from the report is that if white wealth were to freeze, not grow at all, it would take over 200 years for African Americans to reach the average wealth of white Americans. It would take Latinos over 80 years to reach the wealth of whites, if wealth were frozen today for whites and kept growing at the rate that black-Latino wealth has been growing for the last 30 years. In 2013, African Americans and Latinos had wealth that was about $500,000 less than white wealth. And in 2043, 30 years from 2013, African Americans and Latinos will have about oa million dollars less in wealth, if they continue as they have been for the last 30 years. So we are on a path of great racial economic inequality.

BETWEEN THE LINES: Review for our audience, if you would, the causes of institutional inequality for African Americans and Latinos that includes a harsh look at mortgage lending policies, government benefits, pay discrimination and the like.

DEDRICK ASANTE-MUHAMMAD: What many people fail to realize is that the United States as a middle-class economy is not something that has been true since the founding of the country. It's really something that started post-Great Depression with the New Deal and World War II, and that America became a middle-class economy. It really was white America that became a middle-class economy with massive government investment that, again, you saw in the New Deal and in programs related to World War II, like the GI Bill, which greatly helped cover the costs of higher education. Connected in the GI Bill, too, is massive home ownership opportunities and what happened of course obviously at that time – you had great legal racial segregation. African Americans weren't able to take advantage of that in the same way – Native Americans, a smaller number of Latinos in the country also weren't able to take advantage of those opportunities.

And so, we had a fairly progressive economy where those who were at the bottom were growing at rates equal to, if not growing faster, than higher-income America. But then after the 1960s and the Civil Rights movement, and African Americans and people of color as a whole had fought to become more inclusive of government policy, we saw a lot of these government investments no longer existing or being cut back. And you saw an overall regressive economy.

So, there hasn't been an opportunity. America has never invested in the middle-class economy that was inclusive to all and that is one of the main reasons you see the great disparity that still exists today. We also see that for the last 30 years, America has been an economy where the rich get richer and the middle-class and lower-income are losing ground. And that's been affecting everyone and that has helped to solidify and strengthen racial economic inequality.

BETWEEN THE LINES: Tell us a bit about the policy prescriptions that your report recommends for reversing the growing inequality and specifically, racial inequality across the U.S.

DEDRICK ASANTE-MUHAMMAD: Let me first state that oftentimes people hear about these problems, and they think, well we don't have a whole bunch of money to help deal with this issue so there's really no way that we're going to have a policy prescription. But one thing that this report highlights is that America already invests over $600 billion a year in wealth and asset development. The problem is they invest that over half a trillion dollars a year in mostly wealthy people. So actually, America is spending over $600 billion a year in concentrating wealth among the richest. If we could take these different types of tax subsidies for homeownership, for even pensions and make sure that they actually go to much more so low- and moderate-wealth families, then we'd have a system where we're actually investing in those that need wealth development in helping to bridge wealth inequality overall and then have a very strong impact, particularly in the African American and Latino communities.

So we need to stop investing in greater inequality and make those investments go to great equality for all Americans, including African Americans, Latinos, Native Americans and Asian Americans who are low wealth.

See the "The Ever-Growing Gap" report and Racial Wealth Divide Resources at cfed.org. Update on July 28, 2017: CFED has been renamed Prosperity Now, found at prosperitynow.org

Related Links:



Subscribe and get Between The Lines' Weekly Summary in your inbox!