Culture

Elizabeth Warren Wants To Close The Racial Wealth Gap — Here’s How


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Despite a crowded primary field, Massachusetts Senator Elizabeth Warren is steadily gaining ground in the polls, even surpassing progressive darling Senator Bernie Sanders in two recent measures of candidate popularity. She’s doing so not by relying on pithy soundbites or going tete-a-tete with President Donald Trump in a battle of insults. Rather, she’s built her campaign around releasing detailed policies. From an ultra-wealth tax to comprehensive education reform, Elizabeth Warren has a plan.

Warren’s latest policy roll-out came on the morning of June 14, just ahead of a weekend forum with the Black Economic Alliance which will be broadcast by BET. Warren announced her policy to eliminate the racial wealth gap on Twitter, stating, “The racial wealth gap tilts the playing field against entrepreneurs of color, holding back our economy. The government helped create that wealth gap, and the government has an obligation to address it.”

Unlike her plans to tackle student loans or her LGBTQ rights policy, the racial wealth gap isn’t exactly at the forefront of the public consciousness — but it should be. Here’s why.

What is the racial wealth gap?

In her announcement, Warren said of the racial wealth gap, “On average, Black, Latinx, Native American, and other minority households have significantly less wealth than white households.” But what exactly does that mean?

First, there’s a difference between income and wealth. According to the Duke University Center on Social Equity, “While income primarily is earned in the labor market, wealth is built primarily by the transfer of resources across generations, locking-in the deep divides we observe across racial groups.” So we’re talking about the long-term ability to make money and create intergenerational economic security when we talk about wealth.

As for racial differences in wealth, according to a joint policy paper from Brandeis University’s Institute for Assets and Social Policy and public policy organization Demos, “[I]n 2011 the median white household had $111,146 in wealth holdings, compared to just $7,113 for the median Black household and $8,348 for the median Latino household.” (There’s no mention of Native Americans in this paper, but according to Racial Equity tools, the wealth gap for Indigenous people might be even worse than it is for Black and Latinx Americans: “We do not know how much Native Americans have in assets because so little data has been collected, but their poverty rate is 26% compared to 8% for whites.”)

What contributes to the racial wealth gap? There are three main components:

  • Homeownership
  • Education
  • Labor markets

Homeownership.

Nothing builds wealth in the U.S. quite like owning a home. But the story of homeownership for people of color is the story of discriminatory practices like redlining, wherein government surveyors in the 1930s marked “hazardous” neighborhoods in red, deeming them credit risks largely due to residents’ racial and ethnic makeup. Loans in those redlined neighborhoods were “unavailable or very expensive, making it more difficult for low-income minorities to buy homes.” These discriminatory loans were institutionalized by the Federal Housing Administration. And though redlining was made illegal by 1968’s Fair Housing Act, studies show that not only are previously redlined neighborhoods still predominantly populated by racial and ethnic minorities, but that redlining still persists as a practice.

According to the Washington Post, “A study by the National Fair Housing Alliance found that real estate discrimination was pervasive in at least a dozen major metropolitan areas, including the District.”

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