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Forbes Reports Black Family on path to Net Worth of Zero

 
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Forbes Reports Black Family on path to Net Worth of Zero
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shadow777



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Post Forbes Reports Black Family on path to Net Worth of Zero Reply with quote
Forbes Reports Black Family on path to Net Worth of Zero

Watch Video>>>>>>

https://www.youtube.com/watch?v=MRWCbOalzxs


or read it in print, so that you can see the charts>>>>>



Black and Latino Households Are on a Path to Owning Zero Wealth
Tuesday, September 12, 2017

About three months ago, Jay-Z released his 13th studio album, 4:44, in which he aimed to give the listeners “a million dollars' worth of game for $9.99.” Among the pieces of advice that Jay-Z provides listeners throughout the album, some of the most noteworthy focuses on the virtues of owning assets and building long-term wealth that could be passed down to the next generation. While Jay-Z is well on his way to passing down a solid financial foundation to his children (Forbes estimates his net worth is $810 million), everyday Black families aren’t nearly so lucky.

According to our new report released today, The Road to Zero Wealth, families of color are on track to see their median wealth hit zero within our lifetime, making the prospects of transferring wealth to the next generation difficult or impossible. The research featured in the new report looks at median household wealth and excludes durable goods like cars, appliances and electronics. When we remove these from our calculations, a typical Black family has just $1,700 in owned wealth—1.3% of the wealth owned by a typical White family ($132,000). And, the lack of wealth facing Black families isn’t just isolated to them; Latino families fare just barely better, with their median wealth standing at only $2,000.

road_to_zero_wealth_timeline_1_small.png

In fact, if the median household wealth trends of the past 30 years continue (during which time Black and Latino families have seen their wealth decrease by a full 75% and 50%, respectively), by 2020, Black and Latino families are projected to lose an additional 18% and 12% of wealth they own today, respectively. Then, by 2024, Black and Latino households at the median are set to lose an additional 10% of their wealth. For those keeping count, this means a 20-30% decrease for the already low level of wealth held by each community today. In stark contrast, during this same timeframe, White households are projected to see their median wealth rise by five percent over where things stand today.

road_to_zero_wealth_timeline_2_small.png

This perplexing lack of wealth has not only left many Black and Latino families unable to pass something down to the next generation, but it has left many unable to reach the middle class where they could comfortably build wealth to someday leave to their children. In fact, if the middle class were to be defined in terms of wealth, as my co-authors and I argue it should be, we find that Black and Latino families in the middle of the income distribution (those earning between $37,201-61,368) would need to earn 2-3 times more than White families just to enter the middle-class. Looking across the entire income spectrum, we find that only Black and Latino families in the highest income quintile (those earning $104,509 or more) have enough wealth to be considered part of the American middle class. By comparison, White families earning $37,201 and up have enough wealth to firmly be part of the middle class ($86,100). Just as startling, even having a college degree isn’t enough to guarantee middle-class wealth for most Black and Latino families; only those with advanced degrees have enough wealth to be considered part of the middle class. By comparison, only those White households without a high school diploma are locked out of the middle class.

As bad as all of these findings are, they pale in comparison to the fact that median Black and Latino household wealth is, right now, on a path to hitting zero. If things are left as they are AND if the policies put forward by the president and Congress have no impact on the racial wealth divide—two big IFs—by 2053, Black household wealth is projected to bottom out. That’s just 10 years after our country is projected to be comprised of a majority of people of color. Twenty years after Black households reach this nebulous milestone, in 2073, Latino household wealth would also hit zero. For those who might think 2053 or 2073 as a really long time from now, consider that a Black or Latino child born into a median-wealth household today would see their household wealth hit zero by the time they’re 40 or 60 years old.

road_to_zero_wealth_graphic_small.png

Although the racial wealth divide might seem like a problem that is only a concern for households of color, the reality is that this problem has already impacted all of us and will continue to do so well into the future. Case in point? Since 1983, just as Black and Latino wealth have gone down and White wealth has gone up, overall household wealth has decreased by nearly 20% (from $78,000 in 1983 to $64,000 in 2013). If the wealth chasm between communities of color and White households continues to grow unabated into the future, by 2043, overall median wealth would decrease by another $11,000.

So, what can we do about all of this (at least beyond listening to the advice that Jay-Z and others have offered about building long-term wealth)? In short, we must start by reversing course through the same vehicle that got us here in this place: federal policies. Instead of continuing with the status quo, which provides White households and the wealthy with more opportunities to build wealth, we must invest in the wealth-building potential of low-wealth households of color. That means not only creating more opportunities for parents of color to pass something of financial substance down to their children, but also providing those children with an opportunity to build their future nest eggs as soon as they’re born. It also means increasing incomes and savings for low-wealth households, so that they have the foundation to not only build wealth, but also to save for a rainy day and for retirement. Finally—and just as important—change will require protecting the wealth that low-wealth households work so hard to build and maintain against wealth-stripping practices.

The time to act on this issue is now. The longer we wait, the bigger this problem is going to get. If we continue to 2020, 2024 and beyond without intervention, then the racial wealth divide and its impacts will undoubtedly become a defining and unfortunate feature of our lives for generations to come.

AUTHORS
Emanuel Nieves
Senior Policy Manager
Mon Feb 05, 2018 2:12 am View user's profile Find all posts by shadow777 Send private message Send e-mail
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