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Actions Closing the Racial Wealth Gap Through Financial Wellness
Key Takeaways
- The racial wealth gap is a result of systemic biases and barriers.
- To close the gap, change is needed at a policy level.
- In addition, financial wellness programs can help.
America’s racial wealth gap is a culmination of decades of systemic biases and structural barriers that have adversely impacted Black Americans. The need for change is dramatic with the typical Black household having one-eighth the wealth of a typical white household.
While structural barriers must be addressed, much can be accomplished in the meantime by finding other ways to help Black Americans increase their assets and minimize their debt.
Student Loan Debt. A college degree can be critically important to building a financially successful career, but student loan debt can delay the lifelong process of building wealth just as people are starting out in their careers.
Homeownership. Owning a versus home contributes to wealth creation, but decades of discrimination in housing and credit markets have limited Black families’ access to homeownership.2
Investing. Investing in the financial markets, and especially the stock market, has historically been a tremendous way to build wealth, and many Americans today invest this way through defined contribution retirement savings plans such as 401(k)s. Yet, only 35% of Black families own an IRA or participate in a workplace DC plan, compared to 57% of white families.3
The growing availability of financial wellness programs in the workplace can help Black families in becoming investors as well as homeowners and help to reduce student debt. Offering workplace financial wellness programs may not eliminate the racial wealth gap, but it may help to narrow the gap. That makes employers part of the solution to one of our nation’s most pressing challenges.
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To learn more, read Closing the Racial Wealth Gap Through Financial Wellness .
You may also be interested in Paid Family and Medical Leave: Helping to Close the Racial Wealth Gap opens in a new window or Paid Family and Medical Leave: Opportunity for a Public-Private Partnership opens in a new window.
Footnotes
- 1 2015-2016 academic year.
- 2 Brookings, “What the Great Recession Can Teach Us About the Post-Pandemic Housing Market,” March 29, 2021, https://www.brookings.edu/ research/what-the-great-recession-can-teach-us-about-the-post-pandemic-housing-market/. opens in a new window
- 3 Employee Benefit Research Institute, “The Status of American Families’ Accumulations in Individual Account Retirement Plans and Differences by Race/Ethnicity,” Issue Brief No. 521, March 11, 2021.
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