Multigenerational wealth makes white Americans richer than black Americans

Black American wage disparity can be offset by education; but even though black American families — one parent, two parent, educated, uneducated, employed, unemployed — save more and spend less than their white counterparts, white families have substantially more wealth than black families — college-educated white adults have 7.2 times the wealth of their black counterparts.

In The Asset Value of
, researchers from Demos and Brandeis show that black families — who have been unfairly smeared as inadequate savers — are more fiscally responsible than their white counterparts. Lack of access to fair credit and the "retail deserts" of racialized, low-income neighborhoods mean that black families carry less debt and spend less than similarly situated white families.

Even where black families are able to take steps to bridge the wage gap with white families — attaining professional qualifications, moving to higher-income neighborhoods, securing high-wage employment, and forming two-parent families — these black families are substantially poorer than the white families who do the same.

The root of the wealth disparity is intergenerational wealth, inherited and given as gifts. In particular, the practice of redlining, predatory lending — and modern Jim Crow fines and shakedowns — means that black families have less to work with when giving their children a start in life. For example, the ability of white families to help their children with down-payments on homes gives the next generation longer to save.

So what does account for the racial gap in wealth? Traub admits that "we haven't fully penetrated the mystery." One powerful factor seems to be that whites are five times as likely as blacks to receive substantial gifts and inheritances, and the sums they get tend to be much larger. The money "can be used to jump-start further wealth accumulation, for example, by enabling white families to buy homes and begin acquiring equity earlier in their lives," the study says.

The result is that whites' wealth advantage—and blacks' disadvantage—gets passed down from generation to generation. Which means that forms of racial discrimination "that happened in the past, like redlining, continue to show up in bank accounts today," says Traub.

The Asset Value of
[Amy Traub, Laura Sullivan, Tatjana Meschede, & Tom Shapiro/Demos]

(via Marginal Revolution)