Wednesday, February 10, 2016

ProPublica: Debt and the Racial Wealth Gap

Income inequality is a top policy issue in America. The middle class are no longer the majority and falling behind financially. Meanwhile, the percentage of affluent families and poor families have increased. The racial wealth gap is an even more pronounced problem in America. According to ProPublica, even small debt has an enormous price on the well-being of black families:
IF you are black, you’re far more likely to see your electricity cut, more likely to be sued over a debt, and more likely to land in jail because of a parking ticket.

It is not unreasonable to attribute these perils to discrimination. But there’s no question that the main reason small financial problems can have such a disproportionate effect on black families is that, for largely historical reasons rooted in racism, they have far smaller financial reserves to fall back on than white families.

The most recent federal survey in 2013 put the difference in net worth between the typical white and black family at $131,000. That’s a big number, but here’s an even more troubling statistic: About one-quarter of African-American families had less than $5 in reserve. Low-income whites had about $375.

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