It’s an age-old question – why African Americans who are seemingly doing the right things to achieve the American Dream, continue to fall short of accumulating what their white counterparts do?
Without question, Racial discrimination is a major factor when it comes to blacks “achieving power” in western civilization but according to an excerpt by Peter Coy, senior writer for Bloomberg Businessweek, discrimination is not the elephant in this room. The article states “It’s natural to assume that if blacks have less wealth it’s because they’re doing less saving — i.e., more of each dollar of income is going to consumption.
The opposite is the case, according to a Duke University study that reveals; “at every income level, blacks spend less than similarly situated whites, the Duke researchers found: “Retail desertification in racially segregated neighborhoods, restricted access to affordable credit for blacks, and consumer racial discrimination, we argue, result in lower overall spending for blacks at all income levels,” they said.
It is true, the wage disparities between blacks and whites can be reconciled by education, jobs etc. It is also true that regardless if a two parent, educated, employed African American family saves more and spend less, their white counterparts still have substantially more wealth. Quite disparaging because the obvious equalizers do not seem to be working.
What then is the driving force behind the racial gap in wealth?
It has been established that whites are 5 times more likely than blacks to receive substantial gifts and inheritances.
The money “can be used to jump-start further wealth accumulation, for example, by enabling white families to buy homes and begin acquiring equity earlier in their lives,” the study says. The result is that whites’ wealth advantage — and blacks’ disadvantage — gets passed down from generation to generation. Which means that forms of racial discrimination “that happened in the past like redlining continue to show up in bank accounts today.
The moral of the story is that the current instances of discrimination aren’t the most poignant issue in this context. The accumulation of wealth derived from century-old slave/free labour, that transcends generations is perpetually being passed down to beneficiaries in form of inheritance. The battle is not lost though, people of Color particularly African Americans can start to think about posterity funding. That means we will need to consume even less and save more so that we can start giving our children a “leg up” (so to speak). That’ll change the conversation generations to come.