Study shows wealth gap between whites and African-Americans continues to widen

Years after the civil rights movement, racial inequality continues to deepen.

The wealth gap between white and African-American families has nearly tripled over 25 years, according to a study released by the Institute on Assets and Social Policy at Brandeis University.

Although African-American family income has increased over time, white families have accumulated much more wealth. By tracking families, the study found that the gap between white and African-American family wealth increased from $85,070 in 1984 to $236,500 in 2009.

Many Americans still believe that racial inequality is related to individual behavior, choices, character, marriage and child bearing, says Thomas Shapiro, IASP director. But homeownership has been the biggest cause of racial wealth disparity, followed by income, the study found. In the past 25 years, education has failed to be the great equalizer that many expected. 

Owning a home has largely benefited white families because they're more able to have family financial assistance for down payments, have easier access to credit and buy homes years earlier than African-American families. As a result, their home equity has increased, providing more wealth and financial security.

In contrast, the study found, African Americans are more recent homeowners who tended to have high-risk mortgages and to be more vulnerable to home foreclosure.

The nation has long-standing roots in racial discrimination in hiring, training and promotion, and in the past 25 years, that has made it harder for African Americans to build income and have a financial cushion, fueling racial inequality, the study says.

Although more African Americans are going to college, fewer finish with a degree than white students. The skyrocketing cost of education is contributing to the racial gap in college completion, Shapiro says. Among graduates, more blacks than whites are weighed down by student debt.

The Great Recession has worsened the widening wealth gap. The bursting of the housing bubble followed by the economic crisis and unemployment caused African Americans to fall further behind, says Rakesh Kochhar, a researcher at the Pew Research Center. They were more likely to be unemployed and had to draw down on existing savings to make ends meet.

In recent years, black Americans have been less likely than whites to have a workplace retirement plan, according to new research by University of California, Berkeley. They rely more heavily on Social Security than whites, and poverty rates among black seniors was 19.4%, compared with 9.4% for the general senior population between 2008 and 2010, says the UC Berkeley study.

It will be hard to close the racial wealth gap without broad changes, IASP says. Among other things, it suggests that policymakers and advocates come together to develop more affordable and high-quality education and diverse neighborhoods -- eliminating the persistence of residential segregation.