SEATTLE – According to a new study, it will take the average African-American family 228 years to accumulate the amount of wealth the average white family has today if current policies continue. It will take the average Latino family 84 years to achieve the same.
The “Ever-Growing Gap” report by the Corporation For Economic Development and the Institute for Policy Studies (IPS) looked at trends in household wealth for families from 1983 to 2013. Josh Hoxie, director of the Project on Opportunity and Taxation at IPS, said that widening racial gaps in home ownership and median incomes contribute to the overall wealth gap.
“The story we’re seeing around wealth,” Hoxie said, “is that this problem has been growing for decades and is going to continue for decades, unless we take serious action.”
In Washington state, median incomes for African-Americans are 33 percent lower than their white counterparts, according to a survey by the online research group WalletHub. The new report says the wealth gap is far worse. Median wealth for Hispanic- and African-Americans is about 90 percent lower than for whites nationwide.
Home ownership is one of the biggest ways families build wealth, Hoxie said, and minority families are far less likely to own homes as a result of years of discriminatory housing policies. He said an upside-down tax system has also contributed to the disparity, by putting money in the pockets of the disproportionate number of white homeowners.
“So, what we have is a system to incentivize wealth creation, which is a good thing,” Hoxie said. “However, the bad thing is that that system is currently benefiting people who are already wealthy, and contributing to the racial wealth divide.”
The minimum wage is another piece of the wealth puzzle according to the report. This year, Oregon lawmakers passed a minimum wage hike for the state, which separated the state into three individual pay zones. The Portland metro area saw the largest increase, to $14.75 an hour by 2022. Hoxie said a low minimum wage can hurt families who are simply trying to stay above water.
“When we don’t raise the minimum wage for a long time, it’s not just that people aren’t creating new wealth – they’re not creating a safety net to fall back on, on hard times,” he said. “They’re also going further into debt just to cover their basic expenses.”
Featured Image: In Washington state, African Americans’ median incomes are 33 percent lower than whites’. (Fibonacci Blue/Flickr)