That gap in net worth -- $95,000 -- is enough to put two kids through college and one through medical school (counting tuition at public universities), say the study's authors, calling the situation "a broken chain of achievement." And the gap in wealth accumulation is wide at all income levels, including the top tier.
"Even when African Americans do everything right -- get an education and work hard at well-paying jobs -- they cannot achieve the wealth of their white peers in the workforce, and that translates into very different life chances," said Thomas Shapiro, director of the Institute and the study's lead author.
The big question, of course, is why? Shapiro concludes that the main fault lies in discrimination and the economic policies of the last quarter century. Here is a look at some of the forces that contributed to the wealth disparity.
- Predatory lending. We already know those sub-prime mortgages created a problem for the credit markets and the entire economy when it all came crashing down in 2008. But those loans were disproportionately pushed on African-American families -- even those who could qualify for and afford better mortgages with lower interest rates.
- Wealth-begets-wealth policies. Families that start with more money have access to better financial products, including tax-favored savings vehicles and less expensive credit. Furthermore, they have more opportunities to make money on their money. White families that started with more assets could afford to save more, invest more, and earn more.
- Bank deregulation. The study's authors say bank deregulation led to more payday lenders, check cashing stores and other expensive ways to access credit, and fewer consumer-protection controls. African-American families, starting with fewer emergency assets, were more driven to high cost loans in times of emergency. That problem is even worse now, the study's authors suggest, concluding that more consumer protections are needed. Coincidentally, isn't the Senate debating that financial reform bill this week? Just sayin'.
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