According to a new analysis from the Corporation for Enterprise Development and Institute for Policy Studies, it would take 228 years for African-Americans to accumulate the same amount of wealth whites have now if current policies remain in place.
The estimate is part of a study the two groups released this week on the racial wealth divide in the U.S., highlighting the growing disparity between Americans of color and everyone else, the policies that contributed to a widening divide and proposals to help reverse the trend.
CFED and IPS looked at 30 years of data from the Federal Reserve’s Survey of Consumer Finances, which includes information on Americans’ balance sheets, income, pensions and demographic characteristics.
Over the past 30 years, they found the average wealth of white families has grown by 84%, three times as fast as the rate for African-American families and 1.2 times the growth rate for Latino families.
That wealth divide had narrowed in the years leading up to the Great Recession, but has since expanded in the wake of widespread foreclosures and job losses that hit the African-American and Latino communities particularly hard, said Dedrick Asante-Muhammad, the director of CFED’s Racial Wealth Divide Project.
“We’re not going in the right direction,” he said.
The groups attribute the divide primarily to tax policies aimed at helping households build wealth, save for retirement, buy a new home, start a business or pay for college—policies they say primarily benefit wealthy families, not low-income communities.
It’s not just a problem for communities of color, CFED and IPS warn. By the year 2043, people of color will make up a majority of the U.S. population. By then, the wealth divide will have doubled, from roughly $500,000 on average in 2013 to more than $1 million, and many more American families will be in financial distress—a prospect that does not bode well for overall economic growth, the authors said.
“That is one of the greatest economic crises the country is facing—well, it’s not facing,” said Emanuel Nieves, government affairs manager at CFED and one of the report’s authors.