Wealth Inequality Gap Widens

Wealth inequality between white families and African American families continues to worsen. According to a new study out of Brandeis University “[t]he wealth gap between blacks and whites has nearly tripled over the past 25 years, due largely to inequality in home ownership, income, education and inheritances . . . .” The largest driving factor in this inequality is in homeownership, more specifically, where homes are purchased as home appreciation is severely limited in non-white neighborhoods making it much more difficult for black families to gain value based on home equity and appreciation. On average, white families are able to purchase a home eight years sooner than a black family and often with larger down payments such that white-owned mortgages have lower interest rates. Further, predatory lending, particularly in the run-up to the mortgage meltdown of 2008, often targets minority communities. 

Additionally, white families benefit at substantially higher percentages than do black families when it comes to inheriting family wealth. “Among the families studied, whites were five times more likely to inherit money than blacks, and their typical inheritances were 10 times as large.” 

While the wealth gap has widened in the past two decades, the financial market crisis exacerbated the problem as African American and Latino wealth dropped by more than 50%, while white wealth dropped by only 16%. According to Pew: "The Pew Research analysis finds that, in percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites. From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households."