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Report: Decades Needed to Close Racial Wealth Gap

New numbers show the wealth gap between black and white families would take more than 220 years to close, if current economic policies continue. (iStockphoto)
New numbers show the wealth gap between black and white families would take more than 220 years to close, if current economic policies continue. (iStockphoto)
August 12, 2016

BISMARCK, N.D. - If current trends continue, a new study said it would take the average African-American family 228 years to accumulate the amount of wealth the average white family has today. It will take the average Latino family 84 years to do the same. The "Ever-Growing Gap" report, by the Corporation For Economic Development and the Institute for Policy Studies (IPS), looked at trends in household wealth for families from 1983 to 2013.

Josh Hoxie, the director of the Project on Opportunity and Taxation at the IPS, said widening racial gaps in home ownership and median incomes are part of the overall wealth gap.

"The story we're seeing around wealth is that this problem has been growing for decades and is going to continue for decades, unless we take serious action," he said.

In South Dakota, African Americans' median incomes are about 38 percent lower than whites', according to a survey by the online research group WalletHub. The new report said the wealth gap is far worse, with median wealth for Hispanics and blacks about 90 percent lower than for whites, nationwide.

Hoxie said home ownership is one of the biggest ways families build wealth, and minority families are far less likely to own homes after years of discriminatory housing policies. He said an "upside-down" tax system has also contributed to the disparity, by putting money in the pockets of the disproportionate number of white homeowners.

"What we have is a system to incentivize wealth creation, which is a good thing," he added. "However, the bad thing is that that system is currently benefiting people who are already wealthy, and contributing to the racial wealth divide."

The report said the minimum wage is another piece of the wealth puzzle. Hoxie said a low minimum wage can hurt families who are simply trying to stay above water.

"When we don't raise the minimum wage for a long time, it's not just that people aren't creating new wealth, they're not creating a safety net to fall back on, on hard times," he explained. "They're also going further into debt just to cover their basic expenses."

Brandon Campbell, Public News Service - ND