New Study: Racial Wealth Gap Worst in 25 Years

by Dr. Boyce Watkins, Syracuse UniversityScholarship in Action

A new study presented some disturbing, yet expected news about the sad state of economic affairs within the African American community. According to the study, the wealth gap between white and black Americans has become the widest that it’s been in the last 25 years. As it stands, whites have a wealth level that is 20 times greater than blacks, and 18 times greater than Hispanics.

Much of the drop in black family wealth is due primarily to the decline in home values and heightened unemployment during the great recession of the last three years. African Americans currently have the highest unemployment rates in America, with the most recent data listing the rate at 16.2 percent.

The wealth gap is the largest that it’s been since officials began tracking the disparities back in 1984. At that time, the gap was merely 12-to-1, implying that African Americans are worse off than they were in the 1980s, when Ronald Reagan promoted trickle-down economics, which destroyed black communities everywhere.

“I am afraid that this pushes us back to what the Kerner Commission characterized as ‘two societies, separate and unequal,'” said Roderick Harrison, a former chief of racial statistics at the Census Bureau. “The great difference is that the second society has now become both black and Hispanic.”

Another reason that whites are so much better off than blacks is because they are more likely to own stocks. The same Wall Street bankers who caused the recession were the first to be bailed out, leading to a quick recovery for those who owned securities. Whites are far more likely than blacks to own 401(k) and IRA plans, in addition to stock funds, with these assets accounting for 28 percent of their wealth. On the contrary, only 19 percent of black wealth comes from these assets.

Each time I notice how much worse off the black community has been during the last three years, my mind goes back to the statement by President Obama, in which he argued that the “rising tide will lift all boats” as it pertains to the economic recovery. The argument by the Obama Administration was that by dealing with the broader economy, African Americans would naturally benefit. At the time, there were those who expressed concern, given that this policy of ignoring economic inequality sounded a lot like a racialized version of trickle-down economics.

Since that time, black unemployment has risen by 150 basis points (14.7 percent to 16.2 percent), while white unemployment has declined (9.4 percent to 9.1 percent). Additionally, black family wealth has dropped to levels we haven’t seen since I was a little boy. Having so many Wall Street bankers on the Obama Administration economic team doesn’t add much hope that perhaps our government even remotely understands the complexities of deep and historic wealth gaps between blacks and whites in America.

Like a festering disease left untreated, racial inequality has resurfaced in America. Most interesting is that nearly every member of Congress and the Obama Administration has remained tone deaf to the issue, arguing that there are bigger fish to fry than the uncomfortable issue of race. The differences in composition of black wealth vs. white clearly implies that unique economic medicine must be used for varied segments of our economy. One cannot always treat two different illnesses in separate sections of the body with the same medication. Trickle-down economics didn’t work in the 1980s and it is not working today.

The Republicans will surely jump on this information, arguing that African Americans have little reason to support President Obama. The problem they have is that history clearly proves that they won’t do any better. Their opposition to Affirmative Action programs, opposition to labor unions and desire to hammer social security, in addition to their commitment to ruthless and uncompassionate capitalism implies that they would only worsen the wealth gap themselves. The great Republican hero, Ronald Reagan, is the one who sent our nation into the tailspin of deficit spending and greed that puts our country on the brink of its first default in history.

While Republicans have clearly declared themselves to be the party of the rich (or in their warped minds, “job creators”), the Democrats expect African Americans to line up in lockstep with every issue that matters to white liberals, but refuse to say a peep about the intense and persistent economic pain within black America. As a result, we have a black president who grants our community tremendous symbolism, but refuses to take a stand on racial issues because he knows that white liberals won’t like him anymore. As a result, he fills his cabinet with elitist Harvard cronies and ethically-problematic colleagues from Chicago whose only interest is to preserve power and manipulate our minds into showing up to vote for politicians who consider us to be an afterthought.

The evidence clearly shows, without question, that black people are not better off under Obama. It is up to the Obama Administration to provide evidence to the contrary, rather than hoping that their political foot soldiers will discredit anyone who speaks up on the issue. The rising tide is NOT lifting all boats, so we need a better solution than that.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and founder of the Your Black World Coalition.  He is also the author of the book, “Black American Money.” To have Dr. Boyce commentary delivered to your email, please click here. 

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32 responses to “New Study: Racial Wealth Gap Worst in 25 Years

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  8. stop spending money with these people and watch what happens.

  9. J

    The alternative to Obama is another Reagan wannabe.

    White people will disagree and argue but they support one another.

    When Black people start supporting each other that gap will start to close.

    Much of the attacks against President Obama are veiled attacks against Black leadership.

    Instead of Black people supporting Obama we join in these attacks (many of us have a problem with Black leadership too…when we are not ‘the leader’) under the premise of “he’s not doing enough for Black people”.

    So do we think Bachmann or Pawlenty or Mitt Romney will do more for Black people?

    The slave owner and the colonialist used divide and conquer tactics to keep their subjects in mental bondage.

    Dr. Boyce, when will we start supporting one another?

    -J

  10. Renee

    Dr. Wakins, I always love reading your articles. It brings me comfort to know there is an intelligent and objective individual who rationally dissects important issues in black America. I usually agree with 85% of your observation. I’m so bombarded with sensationist journalism from so-called news sites, even News One, The Root, and TheGrio – sites that appear to slowly convert to the inane nonsense and craziness that has dominated our political/news culture. I don’t even bother with cable news at all as I try to find independent outlets online that address the concerns of not only black America, but America and the international community as a whole. I wish so much there were more minds like yours. I still support President Obama and understand he is facing a difficult challenge in the world of Washington politics. While I agree with every point you made, we both know the President is aware of the facts of gross disparity between blacks and whites as well. I see it from this angle, the President has to navigate the troubled currents of Washington politics so carefully to not piss off anyone, especially white, somewhat liberal voters because he need them for the next election. Democrats always assumed blacks will vote their way and are usually right. And any attempt by Republicans to use this information to gain black voters is an insult to any black person’s intelligence, especially after witnessing the heighten level of hate and racism within that party. It’s not fair of what is happening in the black community in regards to wealth disparity, unemployment, and etc. While I assumed it has been addressed in a very subliminal manner within Obama’s economic team, the fact is these issues are not considered relevant when dealing with folks in Washington.

  11. Propaganda. Another black crab in the barrel. Leave my President alone. You can’t blame President Obama for lazy n!ggers with no work ethic. Asians have been coming to the States for years with nothing more than one set of clothes and a dream yet have managed to accrue more wealth than multiple generations of Blacks and Whites combined! Stop whining and get off your a$$es!

  12. OK Boyce: So what else is new. I am confused; when and under what star have Black Folks thought that our race was AMERICAN? We really need to check ourselves. Just because we have a few, High Net Worth NEGROS, doesn’t, or should I say, hasn’t changed the AMERICAN WAY
    when it comes to Black Folk. Yes, the strategic plan has always been about owning ASSETS that pay an income stream without labor, aka, WALL STREET. It’s not rocket science. The very said part about it is; we all contribute to WALL STREET EVERYDAY, just by the way we live. PLease, check out my Investment Wrap from 3 years ago, YOUTUBE: learntoinvestnow. I am trying to get this message out to our Black communities.Thank you Boyce, for stating the facts. Why are we still living in the back alley, when we are paying for WALL STREET? Those of us who knows, let’s do the right thing!Say it loud…! Peace, Kiwan Renee Gore, Investment Educator- Oakland,CA

  13. Puhleeze…Dr. Watkins! Reagan is the cause of all your problems? If there is so much racism out here in America, why are there so many affluent blacks. such as yourself? Is there some organization that decided you could become a finance professor and live a middle-class or upper-class lifestyle but some other black person could not?
    All you did was criticize and blame white Republicans and
    Reagan! Where is the blame for FDR, who created minimum wage laws that are at least partially responsible for the egregious unemployment numbers for black youth who never get an opportunity for that first job leading to becoming a productive citizen? Where is the blame for LBJ and the Great Society programs that have not exactly created a great society for many blacks but rather has made them dependent on welfare and food stamps, increased illigitimacy dramatically, and destroyed black families?
    And what solution do you offer? Black people should stick together? And, do what? The best thing Barack Obama could do for his own reelection, for black Americans, and for the United States would be to give up his commitment to socialism and try freedom…personal & economic.

  14. Butler

    You know, there are some blacks that aren’t rich who are republicians? There’s also blacks out there who doesn’t look at life as a victim? We all have the power to create our own wealth!

  15. Theressa Wesley

    I’m sure the republicans will immediately manipulate this data as evidence that the Obama administration is not addressing the increasingly desperate predicament of blacks, knowing all along that they would be like the wicked slave masters if they were in charge. Meanwhile, hopefully, black people will persevere and continue to help our stricken people to continue in hope and hard, hard, hard…work. I still maintain that miraculously, we will overcome. I still believe that God didn’t bring us this far to leave us

  16. Darnell Simmons

    It’s very frustrating observing the genocide and path towards extinction of African Americans. As a 52 y/o African American male, I’m shocked and appalled to near disbelief at the conditions of my community. I never saw it coming.

    Where are all the great minds? Why is it that after all these years of success of Black Folks and our acquired wealth that more of us are doing worse than in the 80’s? Why is the prison system the new Jim Crow? And despite evidence of horrific, abysmal statistics regarding the African American community, we cannot seem to put in place a strategic efficient plan to solve these crimes against humanity? “Best Practice” is a science, The information is readily available to solve these issues. Why Not?

    Wasn’t it MLK who suggested the problem with slavery wasn’t as much the slave masters and overseers as it was all the others who stood by and did nothing?

  17. Darnell Simmons

    It’s very frustrating observing the genocide and path towards extinction of African Americans. As a 52 y/o African American male, I’m shocked and appalled to near disbelief at the conditions of my community. I never saw it coming.

    Where are all the great minds? Why is it that after all these years of success of Black Folks and our acquired wealth that more of us are doing worse than in the 80′s? Why is the prison system the new Jim Crow? And despite evidence of horrific, abysmal statistics regarding the African American community, we cannot seem to put in place a strategic efficient plan to solve these crimes against humanity? “Best Practice” is a science, The information is readily available to solve these issues. Why Not?

    Wasn’t it MLK who suggested the problem with slavery wasn’t as much the slave masters and overseers as it was all the others who stood by and did nothing?

  18. Thomas F. Moffett

    Dr. Watkins: I’m white, but you always energize me to work harder for justice. I try to be positive – but not sugar-coat reality – or try to find someone to blame. What can I do to put some audacity and just plain guts into the “progressive” people of all colors who quickly gave up hope in the face of the onslaught of wealth-backed conservatives and wishy-washy people supposedly in the middle? Mainly what I do is show up personally every chance I get to show that most Americans are willing to pay our fair share – to say that America is not yet broke, but will soon be if we let the NO TAX people hold us hostage – and to say in the spirit of Martin Luther King, Jr., Ghandi, Ali, and many others – military empire will not bring peace and security. When we arouse hope in the millions of our brothers and sisters too occupied in the struggle to survive to bother with their vote – only then will President Obama or any other leader truly make this a nation of freedom and liberty for all. I am optimistic and appreciate your keen analysis, as well as what you do to organize in opposition to violence against weak and helpless individuals. Tom Moffett, Louisville, KY

  19. Theressa Wesley

    I’m sure the republicans will immediately manipulate this data as evidence that the Obama administration is not addressing the increasingly desperate predicament of blacks, knowing all along that they would be like the wicked slave masters if they were in charge. Meanwhile, hopefully, black people will persevere and continue to help our stricken people to continue in hope and hard, hard, hard…work. I still maintain that miraculously, we will overcome. I still believe that God didn’t bring us this far to leave us

    Leave a Reply

    Amen!
    Enter your comment here…

  20. This study reveals what many of us always knew — there is a large and widening wealth gap among Blacks and Whites. Now we know that Hispanics have moved ahead of us. How can this be? In a word “unity” — or a lack of unity in securing our progress.

    Blacks have progressed on “islands of progress” — generally isolating those who beneffitted from upward mobility from the rest of us. What we have seen in this recent recession is that the positions many attained on these islands of progress was tenuous and their gains were swept away by the economic storm.

    We must learn to solidify our gains through support and collaboration, or we will be forever relegated to the underclass in this society.

  21. I think you have an issue with President Obama because he won’t be the Black man that “YOU” want him to be. The President must deal with issues that affect all americans. If that issue is racism, he will get to it.
    Since you like talking about racism, you should think about this. Some rich Black people don’t have poor Black friends. How many poor Black friends do you have? How many poor Black people have you talked to in the past three days? How many projects have you visited in the past month or year?
    Rich Black people should spend time giving back to our community and continuing the legacy instead of talking about President Obama.
    Why don’t you talk about all of those racist immigrants of color who are hired in place of Black people? That’s racism. But you probably think they are Black! You are beginning to sound like “Hannity”.

  22. Nadine Hendrickson

    Let’s just make sure we re-elect President Obama for a second term. Then he will be “free” to do the right thing…and he will!

  23. Pingback: New Study: Racial Wealth Gap Worst in 25 Years « The Industry Cosign

  24. Samkfly

    I usually enjoy reading what you have to say on any issue and am often enlightened. I also agree with you more than not. When it comes to President Obama I feel that rather than criticize him, we all should help him. He tries to be bipartisan but no matter what he does the Republicans do not approve because they are bent set in making him look like a failure and to be frank so are you. We, the public should be more supportive of our president and know that he had the best interest of the public at heart. I don’t agree with everything he had done or said but truly feel that we will see the real ‘Obama’ in his next term. He is playing it safe now. He cannot cure all the ills of America in one term. He had my vote then and he will get it again.

  25. Benjamin

    I agree. I also respect President Obama. What we need to do is let him know that in order to get our votes (which he needs to get reelected) he needs to stand up and adress these issues.

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