Wealth Gap Between African Americans And White Americans

It is a common belief that African Americans have low net worth because of things in their control, decisions in their life such as saving money, pursuing higher education, and having a strong family structure, with two parents, so children can succeed. African Americans are actually experiencing systematic economic inequality due to housing and labor market discrimination, things far out of their control. Because of this African Americans have consistently less wealth than white Americans regardless of age, income, or education and this leads to lower economic mobility, making it more difficult for African Americans to pursue higher education, start a business, change jobs and pay off debt as well as pass wealth onto the next generation. Additionally, African Americans are more likely to experience an economic emergency or go in debt, and less likely to have adequate funds. This creates a cycle of low wealth in which generations of African Americans are trapped. This cycle means African Americans have little control over their economic success and it is very difficult for them to combat economic inequality.

The first cause for African American economic inequality is discrimination in housing. African Americans are more likely to own their homes, live in nicer homes and apartments, and to live in safer neighborhoods. Additionally, The African American homeownership rate is currently 40% with the white homeownership rate at around 70%. These are the same homeownership rates from fifty years ago, when the fair housing act was passed. With almost half as many African Americans owning houses as whites it is clear that more needs to be done by the government in order to increase African American homeownership. Homeownership is an important source of wealth and stability for Americans and less African Americans owning good houses in safe neighborhoods is a key cause of economic inequality. A contributor to housing inequality is discrimination against African Americans when buying houses. During an in-person meeting with a sales agent, African Americans are more likely to be told that there are no homes available, more likely to be denied an appointment, and if told about homes, are more likely than their white counterparts to be told about less homes by about 9 percentage points. In another study, African American test renters experienced discrimination 61 to 80 percent of time. This discrimination occurred in the form of policies, misinformation about housing, and in appointments, applications and terms of contracts. Discrimination when buying houses can be detrimental to African Americans as housing can provide retirement benefits as well as make it easier to recover from economic emergencies. Housing is also wealth that can be easily passed down generations, and it allows African Americans amass wealth over time and eventually become wealthy. Finally, separation of white and African American neighborhoods, causes African Americans to have less good public resources nearby which can make it difficult to become economically stable. A 2001 study found that if a neighborhood is at least 15% African American, a white is unlikely to buy a house, even if it is a house that they were looking for. Additionally, Whites are less likely to rent or sell a house to African American person. Because less wealthy white people are living in African American neighborhoods, they tend to have poor hospitals, schools, housing and key job networks, all things critical to economic success. This can also explain why less white people want to live in neighborhoods with high concentrations of African Americans, because of how much worse the neighborhoods can be. Without government support, this cycle of African American neighborhoods getting poorer and whites not living in them will continue to get worse. Whites will not sell houses to African Americans and Whites and African Americans will live in seperate rich and poor areas.

Another cause of the wealth gap is discrimination when working and applying for jobs. 56% of African Americans claim to have been discriminated against while applying for jobs and 57% claim to have experienced discrimination revolving around promotions and equal pay. Additionally from 1990 to 2015, a study found white applicants received 36% more callback than African Americans, and this statistic did not change over the 25 years. Income is an important factor in wealth, and with African Americans significantly disadvantaged when applying for jobs, it becomes harder to generate wealth. With over half of African americans claiming to have experienced inequality when applying for jobs or asking for promotions and equal pay, it can become demoralizing to have to work harder than whites, to be equal economically. A common misconception held by many Americans is that a simple solution to escaping the wealth gap is to pursue higher education. While advanced degrees do increase income and wealth for African Americans, across all education levels, the wealth gap remains. Since 1990 African American unemployment rate has consistently been two times higher than the white unemployment rate, at all education levels. In 2017 African Americans with advanced degrees had higher unemployment rates that whites with only bachelor's degrees and African Americans with bachelor's degrees had unemployment rates similar to whites with only high school diplomas.

Finally, African Americans with at least a college degree had 30% less wealth than whites with only a high school diploma. This data shows that not only is there a gap between Whites and African Americans of equal educational attainment but African Americans are economically inferior to White Americans with less education than them. Another study even found that African American college graduates had lower incomes than White high school dropouts (rolling out). This shows how ineffective education can be for African Americans compared to Whites, due to discrimination in hiring and at the workplace. Low income makes it very difficult to build up wealth, and combined with low existing wealth and housing discrimination it is nearly impossible to achieve economic equality. Although African American and White American incomes are not extremely far apart, African Americans Continue to have consistently much less wealth, for reasons other than poor family structure and bad decisions when saving money. Despite more similar incomes, African Americans have not been able to amass wealth like white americans. In 2018 the median income for African Americans was $38,555 while the White median income was $61,349. Despite this African American wealth was $17,600 compared to $171,000 for White Americans. Even with over 60% of white income, due to inequality in housing and jobs, key factors in accumulating wealth, African Americans have about one tenth of the wealth of White Americans. This problem persists even at higher incomes and ages with African Americans in top one fifth of income having one third of the wealth of White counterparts, and in 2016 African Americans between 50 and 65 years old, near retirement have 10 percent of the wealth of whites same age. It is clear that the wealth gap is a problem across all demographics of African Americans, and it is thus caused by racist practices and implicit bias, affecting all African Americans.

Some other explanations for the wealth gap are that African Americans are irresponsible and have poor family structure, or African Americans don’t save money as well as whites. Although African Americans tend to have poorer family structure, it all roots back to housing and jobs. With less African American wealth, combined with discrimination, it is very difficult for them to get a good job and be economically stable. It is also more likely that they will be homeless and live in unsafe neighborhoods. All of these things lead to less marriageable African American men, for African American women to marry. Due to sexism, it is much harder for a African American woman to take care of a family by herself even if she is smart and works hard. Additionally, even married African Americans have only 2/3 wealth of unmarried whites Because of this, although African American family structure is a problem, it is not the cause of the wealth gap and is merely a symptom of housing and job inequality. Finally, another explanation is that the cause of the wealth gap is poor decisions when African Americans are saving money. After taking into account incomes and savings rates, African Americans save money just as well as Whites. A reason why most African Americans are still unable to amass wealth however, is the fact that African Americans are more likely to experience economic emergencies, yet due to less benefits from jobs and housing, are unable to pay of debt. Additionally during economic recessions, African Americans are first to be laid off and last to be recalled. Because of this, African American median wealth was cut in half after great recession, whites only lost one quarter of median wealth and, after great recession African American unemployment was 16% and white unemployment only 9%.

Despite African Americans efforts to save money, economic emergencies and recession are doing more damage to them than white and are stopping them from accumulating wealth. Since 1990, African Americans have experienced inequality in jobs as well as housing, which has led to a very large wealth gap between them and whites. Although the income gap is decreasing, a cycle of low wealth makes it very difficult for them to grow economically to the point where they are equal with White Americans.