It’s going to be a long haul for African-American families to catch up to where white families are today, economically speaking: exactly 225 years from now, if we’re being optimistic.
That’s according to a new report by the Corporation for Enterprise Development and Institute for Policy Studies, which estimates future wealth disparities among U.S racial groups using data from the Federal Reserve’s Survey of Consumer Finance (SCF). The total amount of money in the average person’s pockets, or their net worth, is obtained by adding up assets like housing, bank deposits, financial securities, insurance plan values, stocks and mutual funds, and equity, and then from that sum, subtracting liabilities like mortgage, consumer, and educational debts. (This measure is based on a 2014 working paper by New York University economist Edward N. Wolff, and doesn’t take into account the value of goods like cars, electronics, and furniture.)
Using that methodology, the authors calculated the net worth of racial groups for 30 years before 2013, and then projected those trends into the future. They found that the economic rift between whites and minorities is widening dramatically: By 2043, when people of color overtake whites as the majority in the U.S. population, blacks and Latinos will likely lag even further behind them, wealth-wise, than they do now. These two minority groups will have around $1 million less than whites, on average, compared to $500,000 in 2013:
Beyond 2043, the economic gap looks even bleaker. According to the authors:
If we continue at similar rates, even after an infinite number of years into the future, the racial wealth gap won’t close. If we do nothing, the racial wealth divide will just keep getting worse.
Even if white wealth is frozen at current levels and black and Latino wealth grows at the same rate it has been for the last 30 years, parity is a long way off:
If average Black family wealth continues to grow at the same pace it has over the past three decades, it would take Black families 228 years to amass the same amount of wealth White families [had in 2013]. That’s just 17 years shorter than the 245-year span of slavery in this country. For the average Latino family, it would take 84 years to amass the same amount of wealth White families [had in 2013]—that’s the year 2097.
There are pluses and minuses to using wealth as a measure of economic power, but the study’s urgent call to arms is not without basis. For a different economic scenario than the one forecasted here, it’s imperative to repair the damage caused by housing and lending policies that have encouraged and even required racial discrimination in the past, and stomp out the ones that continue to do so today. State and federal tax codes, which give the super-wealthy breaks for things like luxury condos and yachts, are among the current institutions that deepen economic disparities. The authors conclude:
It is clear from the past three decades that our vision for racial equity will be impossible to achieve if we continue perpetuating an economic system that fails to prioritize the ability of households of color to get by, much less ahead.