The graphic shows a pic on the left with a glass that is full across from a glass that only a quarter full. Next to the pic is a statement: Racial Wealth Gap: Racial differences in household wealth between Black and White Americans represent historical and present-day inequities in the U.S. These inequities signal a negative impact on long-term economic security for Black Americans.

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The current racial wealth gap in the United States poses a significant threat to Black Americans and the United States economy as a whole. Wealth is critical for economic growth and mobility.  It provides the resources necessary to finance education, home purchases, investments, business startup, etc. The correlation between parents’ wealth and their children’s wealth is strong.  Parental wealth facilitates the intergenerational transfer of wealth to children. The intergenerational transfer of wealth makes up a significant part of total wealth.

Household wealth increases the likelihood that children will graduate from college, which increases employment earnings. Families without access to the generational benefits of wealth accumulation face harm from its absence.  Family wealth boosts the potential for further wealth. The benefits of wealth accumulation and economic security to health and psychological well-being.  Conversely, the impact of negative wealth can increase the likelihood of physical and mental health challenges and can also affect the ability to pay for high-quality healthcare. 84 percent of total wealth in the United States comes from White Americans, who make up only 60 percent of the population.  Black Americans represent four percent of the wealth and makeup 13 percent of the population. 

Research indicates that the racial wealth gap will continue to increase without policy intervention. Structural solutions via policy are critical when it comes to addressing racial wealth disparities that impact economic security.  Solutions might include things like policies that mitigate discrimination and bias in housing and employment.

Wealth can be difficult to measure.  Racial identity is also becoming more challenging to measure over time, with many individuals increasingly identifying as being more than one race.  As the United States becomes increasingly more ethnically diverse, a continued racial wealth gap harms all Americans.

Click here to check out the U.S. Treasury Department’s blog post on the racial wealth gap.

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