How Are Black People Building Wealth in the World Today?

The racial wealth gap is a long-standing and persistent disparity that keeps Black households from achieving their full economic potential.

This wealth gap is not an accident but rather the result of centuries of malign social policy that has systematically disadvantaged Black Americans and their ability to build and maintain wealth. Only a progressive reorientation of this policy can close the gap.

Education

Education is vital to a person's wealth and can help them become more productive. However, education is also something that varies significantly from person to person.

Despite this, the main objective of education is to develop knowledge, skills, and understanding, and it can help people become more responsible for their own and others' welfare.

For African Americans, education symbolized freedom and a way to build a better life in a new world free from slavery. They also saw it as a means of protecting themselves from fraud and exploitation.

As a result, many black people were eager to learn. During Reconstruction, many black communities built and maintained schools.

These schools were often small and simple, but they served the needs of their community. For example, Tolson's Chapel served as a church and a school for local blacks in Sharpsburg, Maryland.

Another reason education became important for blacks was because a college degree could open doors to higher-paying jobs. But it didn't always happen that way.

 Black and white families are staggering, with the average black family having one-eighth of the wealth of the median white family.

The problem of racial inequality is far more profound than income inequality, said Harvard economists Richard Murnane and John Schmitt in a recent paper. Moreover, even for students with a college degree, the wealth gap is still significant.

During the 2020 pandemic, it will be critical for health systems to address the disproportionate number of cases of coronavirus in black communities. But, according to experts from Penn Medicine and Children's Hospital of Philadelphia, the impact of the pandemic may worsen existing racial wealth and education gaps by reinforcing racial disparities that already exist in our society.

Work

Wealth can make it easier for black people to get a job, save money and invest in a business. In addition, it can help to protect households from economic crises, provide opportunities for career advancement, and give African Americans more power and influence in their communities.

But, as you can see, accumulating wealth is not easy. It requires hard work, thoughtful planning, and careful management of your finances. And for black people, it's a much more complex task than for whites.

The most common way black people build wealth is through work, such as a job in the public sector, an entrepreneurial venture, or small business ownership.

Moreover, a secure job with good wages and benefits can provide a significant security measure for black workers and their families. But, many black workers face systematic barriers to accessing high-paying jobs, including labor market discrimination and a lack of training or career advancement opportunities.

For example, despite the growth of the private sector over the last two decades, a recent McKinsey report found that black workers earn about 30% less than white workers. This is a big difference when you consider that the typical black household has more than $200,000 in wealth than a comparable white family.

Looking for the best strategies requires a broad scope of policy interventions. These policies need to focus on reversing centuries of exploitation and discrimination against black people and securing tangible assets and debt relief for African American households.

Health

Health is a fundamental determinant of wealth, and achieving financial stability is a critical component of health and well-being at home and abroad. Many people with low wealth cannot cover unexpected medical expenses or funeral costs, leading to an increased risk of poverty and poor health outcomes.

Health systems are well-positioned to help Black patients, staff members, and neighborhoods build wealth. They can do this through several strategies:

Maximizing income by paying all employees a living wage and providing free tax preparation services; decreasing debt and increasing savings through tailored financial counseling, investment products (e.g., Children's Development Accounts or "baby bonds"), and partnerships with local Black-owned small businesses; building communities' capacity to acquire goods and services through procurement; and investing in public benefits programs that can support basic needs.

The authors suggest that health systems can also intervene directly to help Black staff and patients learn core financial management skills, such as budgeting, savings, and investment. This could be done through a structured plan.

In addition, they propose that health systems shift a percentage of their annual spending to Black-owned suppliers. This would represent a significant commitment from health systems to support Black wealth building.

To further this work, they recommend that healthcare providers collect and report race and ethnicity data on all patients. They argue that this information is essential for ensuring equitable access to care. They also encourage hospitals to reassess policies that create barriers for healthcare providers to gather and report this information, including those that are discriminatory or stigmatizing towards certain groups.

Finances

An essential tool for building wealth is financing. Finances enable people to invest in long-term goals, like retirement savings. They can also be used to save on taxes. In addition, financial investments earn interest, which means that the more money you put into your savings, the more you can make over time.

However, even if you put the same amount of money into your savings each year, you will only become rich after a while, and you will need to work on it for a long time.

It is, therefore, important that people learn how to manage their finances. This includes understanding the value of time, budgeting your income, and making intelligent decisions about saving and investing.

For example, if you put $100 in your savings account every year and earn 5% interest over 25 years, that money will grow to $340! The same can happen when you invest your money in long-term savings accounts and stocks.

In this way, wealth accumulates more for the person who started it! This makes it essential for everyone to know how to invest their money and earn interest.

This can be done through 401ks, SEP IRAs, Traditional IRAs, or other tax-advantaged savings programs. You can also put your money in a savings account or CDA for your children, designed to help families build up assets and save for the future.

The racial wealth gap is a symptom of centuries of policies that systematically disadvantaged Black Americans' ability to accumulate and pass on wealth. Policy interventions that effectively reduce the aperture need to focus on reversing these barriers and ensuring that structures supporting wealth accumulation deliver equitable outcomes.

Family

In America, family is often conceived of as the unit that provides stability for children and is a source of enduring social and emotional support. The American family structure has long been a subject of intense debate. Still, many scholars have agreed that an intact family best serves child development with two parents.

However, growing up in an intact family alone is not a guarantee of success for black and white young adults. For example, cross-sectional analyses of data from the National Longitudinal Survey of Youth reveal that growing up in a non-intact family reduces college graduation odds for black and white young adults by 60% and 40%, respectively.

Nevertheless, growing up in an intact family makes an essential difference for black and white young adults on three significant outcomes examined in this brief: child poverty, education, and incarceration. We also find that a higher probability of flourishing on these outcomes is associated with having an intact family. However, the association between family structure and one primary product, college graduation, is weaker for blacks than whites.

This wealth gap is not just a result of age, household structure, education level, income, or occupation; it is also shaped by structural racism.

Structural racism has negatively impacted the United States and is significantly damaging to Black Americans. The country's legacy of racial discrimination, unequal access to quality education, concentrated poverty, and ongoing experiences with racial prejudice are some factors contributing to the disproportionately high child poverty rates among Black Americans. Combined with the COVID-19 pandemic, which has disproportionately impacted Black Americans, these barriers create a dangerous cycle of poverty and a lack of economic opportunity for many Black Americans.

The racial wealth gap is a long-standing and persistent disparity that keeps Black households from achieving their full economic potential.

This wealth gap is not an accident but rather the result of centuries of malign social policy that has systematically disadvantaged Black Americans and their ability to build and maintain wealth. Only a progressive reorientation of this policy can close the gap.