That rising tide sank half the boats

The racial wealth gap results from historical and contemporary factors but the disturbing fourfold increase in such a short time reflects public policies, such as tax cuts on investment income and inheritances which benefit the wealthiest, and redistribute wealth and opportunities. Tax deductions for home mortgages, retirement accounts, and college savings all disproportionately benefit higher income families. At the same time, evidence from multiple sources demonstrates the powerful role of persistent discrimination in housing, credit, and labor markets. For example, African Americans and Hispanics were at least twice as likely to receive high cost home mortgages as whites with similar incomes. These reckless high cost loans unnecessarily impeded wealth building in minority communities and triggered the foreclosure crisis that is wiping out the largest source of wealth for minorities.

This figure shows two important findings.

1. The great wealth produced in this period accrues primarily to highest income whites, and

2. Job achievements cannot adequately predict family wealth holdings given the huge disparities in wealth between whites and blacks in the same income categories. While those who begin the period with roughly similar incomes would be expected to have the same opportunities to build wealth, the differences in accumulation by race remain stark even accounting for income.

Most notable is the large gap in wealth among the highest income whites and blacks. By 2007, the average middle income white household accumulated $74,000, whereas average high income African Americans owned only $18,000.