Despite years of work, racial income and wealth gaps remain. What can be done?

We are reminded this month, and every Black History Month, that, while we strive to be one nation indivisible, we do not achieve this end by erasing the contributions, experiences, and perspective of Black and Brown people. Two centuries of such erasure and the privileging of false white assimilation and incomplete mestizaje narratives have consequences for the racially inclusive future we say we seek.

The economic split between white, Black and Latino Americans remains stark, with Blacks earning 61 cents and Latinos 74 cents for every dollar earned by a white household. Whites have around ten times the wealth of Black and Latino people. Research shows that it would take Black people 288 years and Latinos 84 years for these racial wealth gaps to close.

These gaps have a huge impact on the lives of people of color. People who are able to inherit wealth from their families get a head start in paying for college or affording a new home, which leads to more wealth.

The causes of racial economic gaps

There is a tendency to think of these gaps as evidence of individual and group failings, but these gaps are the result of intentional policies:

• Slavery stole generational wealth from hundreds of thousands of families. The total cost of the damage done to enslaved people and their families is as much as $60 trillion. This money could have been used to purchase land and homes, or invested in businesses.

• Coordinated campaigns of violence and destruction broke up families and ruined lives. Black communities had wealth stolen from them through things like the Tulsa Massacre, which destroyed an entire, thriving neighborhood in Tulsa.

• Federal policies intentionally left out people of color, such as the GI Bill, which created the white middle class by helping World War II veterans buy homes and go to college. Yet most people of color couldn’t access those benefits because they were denied home loans or rejected from universities because of the color of their skin.

• Other federal policies actively worked against communities of color, such as the Federal Highway Act in the 1950s, which built highways through communities of color, closing businesses and destroying homes, leaving white neighborhoods unharmed.

The legacies of these policies allowed white people to accrue wealth over generations while making it harder for Black and Brown people to do so. There are also decisions still being made today that cause people of color to have less wealth than white people:

• Black homeowners often receive higher mortgage interest rates than white homeowners.

• Latino-owned businesses receive less funding than white businesses, partially due to higher-cost debt and fewer equity investments.

• Only about 2% of asset managers–people who make decisions at financial institutions about who gets a loan or investment–are not white men, which makes it harder for women and people of color to access the capital they need to grow their businesses.

The threat of racial gaps

If racial gaps in income and wealth continue to persist at these current levels, our nation’s economy will suffer as we become an increasingly diverse nation. This will lead to further inequalities and social strife, potentially threatening the foundations of American democracy.

Wealth helps individuals and families manage unexpected expenses or weather periods of unemployment. Without more wealth distributed across races, our economy will become much less secure. For example, Black and Latino adults are half as likely to be able to pay off an unexpected $400 expense as white adults.

Ways to close racial income and wealth gaps

My organization, Living Cities, is working to close these racial gaps in the US by helping people of color start and grow businesses, and purchase homes. This includes things like:

• Creating a capital investment fund that intentionally works with business owners of color to meet their unique needs. For example, we have invested in a “revenue based financing” model, which allows the business owner to pay back money as they earn it. This is a more flexible approach that has led to success with business owners of color.

• Working directly with city governments to understand the legacy of racist policies in their communities and designing strategies to overcome them, like creating parks and business developments in neighborhoods that may have been affected by highway construction.

Racial income and wealth gaps are daunting, but I know we can overcome them if we invest in these kinds of efforts and intentionally work to help all people in this country, especially people of color, thrive.