50 Years After the March on Washington the Racial Wealth Gap Widens

The March on Washington was a seminal moment in American history. As we reflect on where we are 50 years later, after policy advances like the Civil Rights Act, Voting Rights Act, and Community Reinvestment Act, we still see vast wealth inequalities between white households and households of color.

Financial security can be boiled down into two parts: income, which allows households to pay the bills and feed a family, and wealth, which is the amount of money a household has in checking, savings, and retirement accounts, or invested in their home, business, or other asset. With sufficient wealth a family can weather job loss or unexpected costs without having to take out costly loans or fall into serious financial hardship. Enough wealth allows parents to send children to college without burdening them with lifelong student debt. Enough savings allows retirees to enjoy their golden years in dignity. Wealth is access to the American dream. And perhaps most importantly, wealth, and the financial security associated with it, can be generational as financially secure parents can put their children through college, help them with a first home’s down payment, or, in cases of an emergency or job loss, provide a monetary bridge over financially difficult times.

Today’s racial wealth gap between White households and Latino or African-American households is massive. In 2009, Pew Research found that White households have 20 times the median net wealth of African-American households and 17 times the median net wealth of Hispanic households.

Unfortunately, in the 50 years since the March on Washington the racial wealth gap has grown  by a staggering amount. A recent study out of Brandeis University following households from 1984 to 2009, found that the racial wealth gap grew 300% in 25 years. Perhaps the most disturbing finding was that for every $1 increase in average household income over the 25 year study, White households increased their wealth by $5.19, whereas African-American household only increased their wealth by $0.69. This highlights, in stark terms, the unequal access to critical wealth building tools for households and communities of color.

Illinois Policies to Close the Racial Wealth Gap

Illinois Automatic IRA Program: More and more seniors are retiring into poverty. Over 53% or 2.5 million Illinois workers lack access to an employer-based retirement account, the most effective and utilized way to save for retirement. Low-wage workers have even less access to employer-based retirement accounts, and providing that access will help close the gap. An Auto IRA program will give Illinois workers the tools they need to retire with dignity.

Universal Children’s Savings Accounts in Illinois: Kids with a Children’s Savings Account (CSA) in their name are 6 times more likely to go to college. The aspirational impact of CSA’s makes it potentially one of the most powerful ways to reduce the gap. A Universal CSA program in Illinois would open up a CSA for every child born in the state, seed it with a financial contribution, and provide a match component for low-income families. This would create greater opportunity for low-income communities and communities of color to save for their children’s education.

IABG has held several Racial Wealth Gap Roundtables in Illinois communities, where community leaders shared how the gap manifests in their community and learned about the policies that contributed to the Racial Wealth Gap and the policies, like those described above, that can close it. Our next roundtable will be on Chicago’s West Side. If you are interested in participating in that event or would like for us to hold one in your community please contact Lucy Mullany.