For many years, racial wealth inequality has been well-acknowledged in research and policy circles. The disparity in assets and loans between white and black households in the United States has been an ongoing and chronic issue. Although racial and economic disparity is a fundamental aspect of the United States, many Americans tend to be unaware of it (The U.S. Inequality Debate, 2022). Inequality, on the other hand, is a drag on economic progress and encourages political instability. Since affluent households spend less of their money than poorer households, consolidated income and wealth decrease the amount of demand for goods and services (The U.S. Inequality Debate, 2022). Hence, the reduced chances for low-income families can harm the economy. Yet, it can be argued that racial wealth disparity, based on institutional and systemic racism, has the most substantial negative consequences for the well-being of disadvantaged minorities.
First, one should ensure that the evidence of racial wealth disparity is solid. One of the most credible sources that can bring light to this issue is the Board of Governors of the Federal Reserve System. The Federal Reserve analyzes financial system vulnerabilities and engages in domestic and international activities to guarantee that the system maintains a flourishing economy for US individuals, communities, and enterprises. To fulfill this function, the Federal Reserve collects and evaluates the most considerable amount of financial data in the US, which is why information from this source is the most accurate that one can find. According to Aladangady (2021), an author of FEDS Notes, which are less technically oriented versions of Federal reports, in the US, the ordinary Black and Hispanic or Latino family earn around half the amount as the average White home. Moreover, such a family typically owns only less than a fourth of the net worth of the country’s wealth. Thus, it is safe to assume that the issue of racial wealth disparity is present and pertinent.
Next, there is a significant reason to believe that the racial wealth disparity comes from and is caused by the history of systemic and institutional racism. For example, such an opinion is supported by the Ford Foundation Professor of History, Race, and Public Policy at the Harvard Kennedy School. Namely, Khalil Muhammad argues that the origins of discrepancy may be traced back to the Colonial era when Europeans settled and conquered North America (Mineo, 2021). The process was initiated when European colonizers took Native Americans’ lands and enslaved Africans, prohibiting them from engaging in the market and reaping the benefits of their labor. Racism became a socio-economic requirement to capture workers and land for wealth production, and this did not shift significantly until the mid-twentieth century. African Americans ultimately achieved full citizenship with the Voting Rights Act, but this did not reduce inequality since the reasoning at that time neglected to account for how profoundly structural the problem had become. The misunderstandings have made obtaining broad public support for programs to close the inequities difficult. Thus, the historical roots of racism account for wealth disparity nowadays.
One of the most devastating consequences of structural racism and the ensuing economic inequality is reduced access to education for disadvantaged minorities. Many academics believe that education is the key to closing the financial gap (Oliver & Shapiro, 2019). However, the US government’s attitude toward education has had an influence on the educational chances of low-income youth who are predominantly Black or Hispanic (Mineo, 2021). Rising inequality has resulted in significant disparities in educational materials and skill development between high-income and low-income households, as well as income-based residential and educational discrimination. As a result, inequality threatens the promise that public education in the United States gives children an equal shot at a better quality of life than their parents. Therefore, the inability to pay for education and the lack of public universities affect future job opportunities for minorities, influencing their future well-being.
The other sphere which is primarily affected by economic inequality is healthcare, which is the immediate need of every person. Disparities in the American healthcare system disproportionately affect individuals of color and other disadvantaged groups. While the Affordable Care Act’s coverage expansions have accelerated progress toward universal health coverage, the high price of many coverage alternatives means that access to affordable health care remains an issue (Herman, 2022). Moreover, some states refuse to provide Medicaid help to their population (Herman, 2022). These disparities lead to healthcare insurance gaps, unequal treatment access, and lower quality of life in particular groups. African Americans continue to have extraordinarily high rates of disease and disability and a reduced life expectancy (Herman, 2022). Thus, inequality in wealth results in direct damage to the health of minorities.
Finally, the mentioned influences are preserved and remain pertinent for several generations, significantly affecting the future of minority households. Namely, the most evident sources of wealth disparity are manifested in residential segregation, discrimination in housing, and labor market bias (Mineo, 2021). In turn, when low-income people migrate to lower-poverty areas with the support of subsidized housing and other assistance, the recurrence of poverty over generations is likely to be reduced (Mineo, 2021). Therefore, the public policies aimed to reduce racial inequality lower the risk of wealth disparity in future generations, which confirms that the existing system with no interventions fails to complete this.
However, there are still opponents of the opinion that racial wealth disparity’s impact is severe and must be prevented. According to Horowitz et al. (2020), multiple Americans believe that employment exporting to other nations, the taxation system, and educational system difficulties contribute significantly to economic disparity in the US. Many, however, point to personal issues, such as different life choices, as well as some people working better than others (Horowitz et al., 2020). Nevertheless, the response to such an argument would be the previously described data regarding the existing discrimination in opportunities for education and job positions. Namely, the poor housing options and health problems caused by economic disparity result in a lack of university access. Afterward, the lack of education might be the reason for unemployment in low-paid jobs, as well as workplace discrimination. Thus, whatever hard the minorities might work to gain wealth, their financial prerequisites and institutional racism prevent them from acquiring the same economic position as non-minorities.
To conclude, racial wealth disparity is prevalent in the US due to historical racism. It remains an urgent issue because of the systematic consequences of such roots fixed by institutional racism. As a result of the inequality, minorities have lesser access to education and healthcare and are consistently discriminated against in housing and labor markets. In turn, these disproportions of opportunities ensure further economic disadvantages, which, despite the argument about personal life choices, are due to structural societal reasons.
References
Aladangady, A. (2021). Wealth inequality and the racial wealth gap. Board of Governors of the Federal Reserve System. Web.
Herman, J. (2022). Racism, inequality, and health care for African Americans. The Century Foundation. Web.
Horowitz, J. M., Igielnik, R., & Kochhar, R. (2020). What Americans see as contributors to economic inequality. Pew Research Center’s Social & Demographic Trends Project. Web.
Mineo, L. (2021). Racial wealth gap may be a key to other inequities. Harvard Gazette. Web.
Oliver, M. L., & Shapiro, T. M. (2019). Disrupting the racial wealth gap. Contexts, 18(1), 16–21.
The U.S. inequality debate. (2022). Council on Foreign Relations. Web.