Racial wealth disparities between Black and Brown Americans and White Americans remain significant, according to 2019 data from the Federal Reserve. For example, based on a 2019 survey, the median net worth of Black, Hispanic, and other nonwhite families were $24,100, $36,100, and $74,500, respectively, compared to $188,200, for White families.
With every financial downturn, the racial wealth gap widens. During the Great Recession (2005 to 2009) , the household wealth of Black and Hispanic families declined at more than double the rate of that of White families.
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During the most recent global pandemic, Latino and Black Americans represented the higher shares of job losses.
A more significant concern was highlighted by a 2017 report by the Institute for Policy Studies, predicting that the median Black and Latino household wealth is on a path to hit zero by 2053 and 2073, respectively.
There are many reasons to explain the widening racial wealth gap, but a more pressing concern is getting more wealth in the hands of Black and Brown communities to reverse the trend and create a more equitable society.
Support Workplace Pay Equality
Equal pay for equal work is still an unattainable reality for many people of color.
Research by the Pew Research Center shows that highly educated Black employees earn a much lower hourly wage than their White peers. For example, college-educated Black and Hispanic men earn $25 and $26 per hour on average vs. $32 for White men, and College-educated Black and Hispanic women earn $23 and $22, respectively.
Salary transparency is still uncommon in the workplace. While few companies publicly share their salary ranges internally or externally when posting jobs, most companies I’ve worked with are not as upfront and reserve that information for potential job candidates. Therefore, it’s essential to research before interviewing with companies to have an idea of the salary range. Sites like Glassdoor, Salary.com, or Indeed can help you obtain salary information for your occupation to help you negotiate your compensation at a new job or ask for a raise. Also, talking to people in your network can help you find additional information about a specific position.
A few years ago, I interviewed for a similar job as a coworker of mine and in the same department. She shared her salary with me but when it came time to discussing compensation with the job recruiter, the top part of the range was $15,000 lower than what was offered to my coworker. Having additional information gave me the confidence to ask for more than what was initially presented as the top of the range. Having open conversations about compensation is a great way to be an ally and help reduce the racial wealth gap.
If you’re not comfortable sharing exactly how much you earn, you can help narrow the gap by providing details such as whether you earn above or below a certain amount.
A common question that recruiters ask job candidates is how much they earn. Several states like California or New York have passed legislation to ban that practice, but it’s still allowed in most states. So if asked that question, consider not answering directly until you know the position’s salary range to avoid getting shortchanged.
Invest in Financial Education
While earning more can provide opportunities to improve a person’s financial situation, building wealth requires financial education. Homeownership is one of the most common paths to wealth. But according to the U.S. Census Bureau, at the end of 2020, 74.5% of White Americans owned their homes, compared to Hispanic Americans and 49.1% of 44.1% Black Americans.
If you’re a parent of Black and Brown children, gaining a financial education and raising your kids to be financially savvy young adults will set them up for
financial success. From books or personal finance podcasts to online financial literacy curriculums for adults and children, there are plenty of resources to assist individuals and families on their wealth-building journey.
If you are financially savvy, there are ways to get involved, if you’re ready to share your time or money with organizations dedicating resources to increasing financial literacy in underserved communities.
Tip: Free personal finance tools like Personal Capital can help you get clarity on your money. Once you aggregate your financial accounts to the secure online platform, you can see your total net worth, get a spending plan, analyze your investments, and track your progress toward long-term financial goals.
Support Minority-Owned Businesses
Being intentional about buying from minority-owned businesses is another way to put more hands in the hands of minorities. So is opening a bank account at a minority-owned bank.
Minority businesses are more likely to employ other minorities and invest in their communities. Supporting Black and Brown businesses not only helps the business owner create wealth for their families, but it can also help create jobs in the area and promote economic growth in Black and Brown communities.
For instance, studies show that Black-owned banks lend and invest in Black communities at higher rates than white-led financial institutions.
Another way to support minority-owned businesses, if you can afford to, is to invest in them. Access to capital is more challenging for African Americans and Hispanic-owned businesses. Minority-owned businesses were more heavily impacted by the pandemic and received less help from the Government. Black women are the fastest-growing group of entrepreneurs in the U.S., but they receive 0.27% of Venture Capital funding, and Latino women only receive 0.37%. Also, Black and Brown business owners have less access to financing for their business.
If you’re looking for ways to bridge the gap, community development financial institutions or CDFIs, provide funding opportunities in economically disadvantaged communities. With a platform like CNote, you can invest in a CDFI for as little as $5.
These are just some of the opportunities you can support that can help narrow the gap and create real change.
Personal Capital compensates Anne-Lyse Wealth (“Author”) for providing the content contained in this blog post. Compensation not to exceed $500. Author is not a client of Personal Capital Advisors Corporation. The content contained in this blog post is intended for general informational purposes only and opinions are of the author. Content is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.