The wealth gap between blacks and whites has quadrupled over a generation, according to a recent study by Brandeis University’s Institute on Assets and Social Policy.
Excluding home equity, white families now have a median net worth of $100,000, up from $22,000 in 1984. African-American families have a net worth of $5,000, up from around $2,000. One in four black families has no assets at all, CBS Money Watch.com noted.
Other key findings in the study:
* The wealth gap increased more than four times, from $20,000 to $95,000
*Middle-income white households had greater gains in financial assets than high-income African-Americans; by 2007, they had accumulated $74,000, whereas the average high-income African-American family only owned $18,000
* In 2007, one in ten African-Americans owed at least $3,600, almost doubling their debt burden since 1984
Years of deregulation that lead to an increase of high-cost loans is reportedly indirectly responsible for the gap. The data shows that black families depend more frequently on credit and other costs of high debt, the L.A. Times reported.
“Our study shows a broken chain of achievement,” said Thomas Shapiro, director of the Institute and co-author of the study. “Even when African Americans do everything right – get an education and work hard at well-paying jobs – they cannot achieve the wealth of their white peers in the workforce, and that translates into very different life chances.”
Shapiro told the BBC that he was shocked by how wide the gap is.
“Even in my most cynical and jaded moments, I didn’t expect that outcome over one generation,” he said.
Segregation in the housing and mortgage markets and subprime lending are largely driving the gap, Shapiro said. He suggested that more protection for consumers are needed.