In addition to impact of income inequality on individual families, the racial wealth gap has increasingly dire implications for the overall economy if, as the authors project, the majority of Americans aren’t able to enter the middle class:
If the racial wealth divide continues to accelerate, the economic conditions of black and Latino households will have an increasingly adverse impact on the economy writ large, because the majority of U.S. households will no longer have enough wealth to stake their claim in the middle class.
The report emphasizes the severe economic disadvantage black Americans had throughout the 20th century as the middle class grew. While the G.I. bill offered millions of veterans and their families access to home ownership, higher education, and business loans, the authority of individual states to implement the bill with little oversight led to “pervasive racial discrimination in which service members of color were more likely to be denied access to a range of benefits that greatly expanded the American middle class.” Meanwhile, black Americans have been subjected to redlining and other discriminatory practices, creating a vicious cycle in which households are refused credit as a penalty for living in low-income areas—in turn making it impossible, in many cases, to move into the middle class.
To combat the growing racial wealth divide and to keep it from resulting in a further-weakened middle class, the study urges, among other things, a correction of the country’s “upside-down” tax structure in which the government would “stop subsidizing those who are already wealthy and start investing in opportunities for low-wealth families to build wealth.”
“The growing racial wealth divide documented in this report is not a natural phenomenon, but rather the result of contemporary and historical public policies that were intentionally or thoughtlessly designed to help White households get ahead at the expense and exclusion of households of color,” the report reads. “Although public policy has been a significant contributor to the divide, the good news is that public policy can also help to close the divide.”
Article Appeared @https://www.commondreams.org/news/2017/09/13/racial-wealth-gap-leading-almost-nonexistent-middle-class