Your Take: How the Racial Wealth Gap Hurts Children of Color

Illustration for article titled Your Take: How the Racial Wealth Gap Hurts Children of Color

A white acquaintance who grew up wealthy in the South in the 1940s had the family gardener's son, an African-American boy, as his earliest best friend. He remembers vividly what happened when he asked his mother if his friend could join them for lunch. She put the black child at a table in the kitchen away from the dining room where the family was eating and told her son never to invite his friend again. As they grew up, the possibilities and destinies for the two boys became more and more divergent, their friendship and their lives forced apart by laws and norms of the time that enforced racial separation.


We've come a long way as a country since then. But when it comes to wealth, there is still a massive separation between white American families and those of color, and that gap has real-life consequences for our nation's children — and, increasingly, for the future of America.

As we address the problem, it is clear that public policies, which have played a role in creating the racial wealth gap, must play a role in ending it.


Household wealth — what is owned minus what is owed — is important to children because it allows their parents to afford high-quality early education, save for their college tuition, help them with a down payment or leave them an inheritance. According to the latest data, black households with children hold only 4 percent of the wealth of white households. And things keep getting worse.

A new study from the Insight Center for Community Economic Development looks at U.S. households with young children. More than half of white families had incomes that were more than 185 percent of poverty levels and owned multiple assets, such as savings accounts, homes and investment portfolios, but only 14 percent of African-American families were similarly situated.

Following the same children over 13 years, it was found that the gap increased as the children grew older. In 1994 white households had $25,000 more in median wealth than African-American households, but by 2007 the gap had nearly doubled to $47,000 — enough to pay for one child's college tuition and fees for four years.

Besides not being able to afford college, an economically vulnerable child of color is less likely to be prepared for a postsecondary education. The Insight Center study connects the dots between levels of wealth and various markers of a child's readiness for school, using the Early Childhood Longitudinal Study, Birth Cohort, which followed the same 14,000 children from their birth in 2001 until age 5.


While children of all races began life with similar potential as measured by cognitive tests at 9 months, by the time they were 2, asset-poor children of color were already beginning to fall behind. By kindergarten, white children and children from some Asian ethnicities were scoring significantly higher on average than African-American, Latino, Pacific Islander and Native American children on reading and math readiness tests.

These disparities lead to diverging academic and economic opportunities as children grow older; the lower math readiness means that they will not be prepared for the science, technology and engineering jobs that are projected to be the jobs of the future. The importance of wealth is reinforced by previous studies that have found that in comparisons between children from families with high assets, racial differences in academic achievement disappear. This is not the case when comparing by family income.


The divergent possibilities and destinies of children based on race are particularly disturbing at a time when our nation's demographics are shifting under our feet. By 2042, when the children born in 2001 will be reaching middle age, the majority will no longer be white. Children of color in the "Recession Generation" are not well prepared to utilize their full potential as contributors to the future American economy.

Rather than a color-blind future in which children walk hand in hand, as Dr. Martin Luther King Jr. dreamed half a century ago, our society could be color-coded as our children remain separated, this time by the opportunities shaped by wealth. Using policy tools to close the racial wealth gap — government-supported, progressively structured child savings accounts and universal high-quality early education are two examples — will allow all of our children to join in a national effort to restore American prosperity and ensure our global competitiveness. We don't have any time to waste in getting started.


Meizhu Lui is director of the Closing the Racial Wealth Gap Initiative at the Insight Center for Community Economic Development. The Insight Center is sponsoring the 2011 Color of Wealth Policy Summit in Washington, D.C., on April 7.

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