The racial wealth gap garnered increased attention during the past year as the racial justice movement spread across the country and the pandemic disproportionately harmed people of color. The restaurant, hospitality and tourism sectors, which were hit the hardest economically, have a higher percentage of non-white workers than other industries.
Chuck Self, chief investment officer and chief operating officer at iSectors LLC in Appleton, says discussing the wealth gap is nothing to shy away from. The gap continues to grow, but if it could be narrowed, the overall economy would strengthen, making life better for everyone. Beyond economic reasons, reducing the wealth gap is also the right thing to do.
How big is the gap? The median wealth level for a white family is $175,000, while it’s $15,000 for Black families and $16,000 for Hispanic families, Self says.
“The wealth gap has been this way forever and if anything, it’s growing,” he says. “The major cause is that white families have had several generations to build up wealth. For example, Europeans were given land in the Midwest and West, but that isn’t something that happened for Black families despite promises at the end of the Civil War.”
The late economic start for Black people also can be tied to educational attainment. Self says family wealth is essential since it can be used to pay for education, which is another way families can improve their standing, since people with higher levels of education tend to have higher-paying jobs than those with a high school diploma alone.
Self says reducing the wealth gap will not be easy, but one way to start would be to give every American child $1,000 at birth.
“From there, the amount the child receives annually is linked to the family income. A poor family may receive $2,000 that next year, while Bill Gates’ kids get $50,” he says.
As Black people and other people of color grow their wealth — whether it’s through education or programs — spending will increase, leading to increased economic demand and an overall economic lift, Self says. “Economic growth for families can only mean better things for the country,” he says.