Racial Wealth Gap Widens Dramatically

A Heller School professor discovers that the wealth divide between white and African-American households is not only broad, but broadening.

Tom Shapiro
Mike Lovett
Tom Shapiro

Director of the Heller School's Institute on Assets and Social Policy (IASP).

The economic chasm between America’s white and black communities is old news, says Tom Shapiro, director of the Heller School’s Institute on Assets and Social Policy (IASP). In fact, in a 2008 report titled “Economic In(Security),” Shapiro and his research team found that three out of four African-American and four out of five Latino households were at risk of falling out of the middle class. But it wasn’t until last spring, when IASP released its latest report detailing a wealth gap between whites and African-Americans that quadrupled between 1984 and 2007, that dozens of major media outlets — from CBS, CNN and ABC News to the New York Times, BBC and Huffington Post — reported the news with alarm.

In a long front-page feature, The New York Times profiled Tyrone Banks, from Memphis, Tenn., whose personal story represented the decades of gains that had “vanished” for the city’s black households. The Boston Globe’s Derrick Z. Jackson lamented that even though America had recently elected its first black president, a “terrible, silent segregation” of wealth remained below the surface, while The Seattle Times decried the “inequality of the American dream,” and the Guardian of London posed “a $95,000 question: Why are whites five times richer than blacks in the U.S.?”

The $95,000 figure reflected the report’s wealth gap in 2007, compared to $20,000 in 1984. The numbers proved eye-opening even for Shapiro. “I was surprised, actually, to see it more than quadruple in a generation, following the same sets of families,” Shapiro says. “Previous data could only get at cross-sectional information. This newer longitudinal approach allowed us to explore the dynamics of race over a broader swath of the life course.”

The new figures ran counter to a prevailing public assumption that things had been improving for families of color over the past several decades. “Even with improvements in education, jobs and wages, and homeownership, the wealth data give audiences a very different perspective,” Shapiro says.

Now that he has the public’s attention, Shapiro says IASP will produce a follow-up series of reports on why the wealth gap has widened so much. “We’ll focus on the explanatory causes, which have policy implications, and not simply whether the gap is growing or shrinking,” Shapiro says. And, in turn, perhaps it will lead to a solution for this gaping problem.

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