Juneteenth, which commemorates the end of slavery in America, usually comes with cultural celebrations and reflections on how slavery, racism and discrimination have negatively affected Black communities.
While it’s appropriate that these activities occur, Juneteenth celebrations tend to focus on its social ramifications and not nearly enough on the economic and financial disparities that cripple Black households across the country.
4 Stats That Illustrate the Racial Wealth Gap
- Median wealth: $24,500 for Black households, $250,400 for white households
- Wealth of more than $1 million: 5 percent for Black households, 20 percent for white households
- Zero or negative net worth: 23 percent of Black households, 8.6 percent of white households.
- Home ownership: 38.6 percent for Black households, 70.2 percent for white households
Source: U.S. Census data
Because Juneteenth symbolizes freedom, changes to public policy must be made and action taken to close the racial wealth gap and dispel the myths about Black America’s relationship with money that keep us from progressing. Juneteenth needs to be a catalyst for building equity and financial empowerment, not just about educating others about the significant contributions that Black people have made throughout history.
Wealth, or net worth, is the difference between what families own, for instance savings and checking accounts, houses and retirement savings, and what they owe on credit cards, student loans, mortgages and other kinds of debt. Yet wealth is vastly unequally distributed across the United States and has left Black Americans vulnerable and exposed.
Why the Racial Wealth Gap Exists
Data on the racial wealth gap and disparities shows frustrating stagnation. This persistence is a direct result of centuries of policies that have systematically disadvantaged Black America’s ability to build, maintain and pass on wealth over generations. Between 2019 and 2022, median wealth increased by $51,800, but the racial wealth gap increased by $49,950, adding up to a total difference of $240,120 in median wealth between white household and Black households, according to Federal Reserve data. This problem spans decades.
All of this is not by accident. Federal and state policies have systematically facilitated the deprivation of Black Americans, beginning with the exploitation of Africans during slavery, progressing to systematic oppression in the Jim Crow South and culminating in today’s institutionalized racism. Black Americans are unable to overcome financial hurdles.
The pandemic only worsened the overall financial state of Black Americans. Wealth allows households to weather financial emergencies such as an illness in the family. So the lack of financial security, combined with disproportionate exposure to the deadly coronavirus because our jobs did not allow us to work remotely, was especially detrimental to the Black community. We have had to rely more on savings, which are limited already, to cover both medical emergencies and the economic fallout from being laid off in greater numbers than white households.
A majority of Black households are cash poor and unable to endure an emergency expense as we aren’t paid the same as our white counterparts. This income disparity has prevented us from being able to invest, pursue education opportunities to better our financial status, start a business, buy a house and even participate in the political process.
In addition, households that have wealth are able to donate time and money, which thereby influences the policies that are important to their communities. Black households have been left out of this equation, yet Congress has not devoted enough attention to both the physical and economic harm that has brought about a crisis for Black communities.
How to Create Financial Equity for Black Americans
So how do we achieve financial independence for all? A lot of it starts by understanding how money works and being financially literate as it relates to the system. Without the correct financial education, chances are you will have low credit scores, unmanageable debt and other financial problems. Learning about money can happen in your home, at school, churches, with friends, and online through various apps, news outlets and podcasts.
The Black community has an urgent need to understand wealth-building tactics such as investing in stocks and mutual funds, plus ways to earn passive income and make your money work for you. This is not always taught during conversations around the family dinner table, but it needs to become common knowledge so we can prosper.
There also needs to be a foundation and initiatives in place to help Black communities build trust in the financial system. This is key to closing the racial wealth gap. Throughout history, Black people have been discriminated against by banks and lenders that have blocked ways to build generational wealth.
The U.S banking system, created when slavery was still legal, deliberately excluded Black Americans for more than a century, and then employed discriminatory practices such as redlining and subprime lending. No wonder many Black Americans hesitate to engage with banks.
And seeing as it’s National Homeownership Month, purchasing homes and getting a fair mortgage has prevented Black Americans from being able to improve their financial situations. Banks must find ways to instill confidence within our communities. This can be done by building relationships with churches and nonprofits in the Black community as well as partnering with minority depository institutions.
Congress, regulators and policy makers will ultimately be responsible for shrinking the racial wealth gap through implementing actual infrastructure changes. They have to stop perpetuating inequalities and mitigate them entirely. Black Americans need new products and services designed for our needs. We do not need any updates to the ones that are not designed for us.
The federal government needs to follow through with building and expanding on several existing proposals that can help Black Americans gain more wealth across. This includes the housing market, funding Black-owned businesses, specifically Black-owned financial service companies; providing equal paying jobs in the public and private sectors; eliminating discrimination in financial services; and generating better access to higher education.
Eliminating the disparities between Black and white wealth is a generational undertaking. It’s one this country must tackle to ensure the pursuit of happiness, and financial freedom, for all.
