The Pew Research Center produced an article in December 2014, reporting that the wealth inequality by race has grown since 2007. The wealth of white households was 13 times the median wealth of black households in 2013 compared with eight times the wealth in 2010.
The contributors that impact these outcomes include home ownership which fell 6.5% for minorities compared to 2% for white households and within the minority households the median income fell 9% compared to 1% for non-Hispanic white households.
The economic recovery has evidenced that financial assets have recovered in a greater way that real property has not. Typically, African Americans are not as willing to invest in the financial securities markets. And, in many African American communities, the real property values have not recovered in the housing market at the same level as many of the white communities.
The approach to bridge this gap has to be multilevel. The economic development has to be multi-prong. There should be a strategic approach and a commitment to things in a different way. The desire to close the gap must be a unified effort and handled on diverse fronts.
Real Property is an asset that is often lost through the generational transfer in the black community. While there has been a reduction in the value of the property within the black communities, the increase in the acquisition of property through inheritance has been neglected. Many properties have been lost to families due to reverse mortgage foreclosures and inadequate tax planning. As real property typically increases in value over time with regular maintenance, planning for the inherited property with a goal to increase generational wealth can be a family commitment.
Income disparities can be countered through entrepreneurship and small business development in the black community. Statistics show that there is a very clear earning gap. It has been cited that black men make 72 cents to the dollar, as compared to white counterparts, and black women make 85 cents to the dollar as compared to their white counterparts. There are many reasons that have been cited for this disparity. Entrepreneurship and small business development have been one answer to the pursuit of job creation that honors the work that is being performed. This does not take into consideration the limitations that an institutionally racist process will impact on the ability to access capital and contracting opportunities. Yet, within the company or organization, a black employer can employ black staff and will not typically diminish his or her value simply by the color of his or her skin.
Diversified financial investments should be incorporated into the overall strategic financial plan. Many black families that are working to gain economic strength don’t feel as if they are in a position to risk the loss of investments in the stock market or other financial opportunities. This limitation that is based on fear or lack of education has limited the capacity of the great reward. The lack of a safety net of financial savings that may have been acquired through the employment or inheritance creates a limitation.
Without great risk there often cannot be great reward.
We need to be educated on taking and mitigating calculated risks that will support the propelling of the financial growth that begins to bridge the wealth gap. The racial wealth gap is not just about one person or one family. It is the limitation of the community that collectively impacts the property values and the overall wealth. It cannot be transformed as individuals but as a community.
Collectively we can do much better than any of us can do individually.
We all play a role in bridging the gap; first by embracing the realities that plague our community, and second, by bringing our talents, time and resources to the table. Let our talented team help you develop a sound strategy. Start today by answering a few brief questions!