The large and growing wealth gap separating white and black families is the product of stubborn barriers that disproportionately consign African Americans to less-valuable real estate and lower-paying jobs, according to a new study.
A long-term examination of the financial lives of black and white Americans revealed that African Americans typically face a subtle but persistent opportunity gap that has served to widen financial disparities remaining from a long history of overt discrimination, according to a report released Wednesday by Brandeis University's Institute on Assets and Social Policy.
The report, which researchers called the most detailed look ever at the roots of the racial wealth gap, is drawn from the life experiences of nearly 1,700 working Americans between 1984 and 2009. That quarter-century was an era of significant racial progress in the country. The black middle class expanded, black college graduation rates tripled, and black elected officials moved into a broad range of public offices, including the presidency.
Despite that progress, the wealth gap between whites and blacks nearly tripled among study participants, going from $85,000 per family in 1985 to $236,500 in 2009. Overall, the median net worth of whites in the study was $265,000 in 2009, compared with $28,500 for blacks.
A broader survey done by federal officials has found even larger disparities, with blacks having a nickel of wealth for every dollar of wealth owned by the median white family.
The report's authors said black families in the study group rarely benefited from inheritances and gifts to help them make down payments on homes. The result was that black families typically bought homes eight years later than whites did, giving them less time to build equity. Meanwhile, even when they were able to buy a home, the typical black family did not see that property appreciate as much as the typical white family did.
One reason, the authors said, was that blacks frequently moved into predominantly black neighborhoods, where few whites shopped for homes, limiting the sales market and depressing prices.
"The racial wealth gap is the civil rights agenda for the 21st century," said Thomas M. Shapiro, the report's lead author and director of the institute at Brandeis. "It is a concrete way of assessing where we are as a society when it comes to racial justice."
Researchers found that because they typically live so close to the financial edge, African American families were not able to leverage much wealth creation from pay raises. Whites were able to generate more than $5 in new wealth for each new dollar of income, while blacks generated 69 cents of new wealth for each new dollar of income. Shapiro said the difference was largely because blacks had to use the new income to douse financial emergencies rather than invest it.
Still, the biggest driver of the wealth gap between whites and blacks remains homeownership, researchers said.