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Brydge Ethics: Why is there a racial wealth gap & how can we close it?

In 2015, the median net worth of a Black family in Boston was $8. Yes, just eight dollars. That same year, the median net worth of a white family in Boston was $250,000.


Across America, the staggering racial wealth gap is a result of decades of housing discrimination that have inhibited the social and economic mobility of Black Americans.


We're breaking down the racial wealth gap, how it came to be, and how it continues to disproportionately affect black and brown Americans today.


What is the racial wealth gap?


The racial wealth gap is the difference in median household wealth between white and Black Americans. This disparity can be traced all the way back to slavery, 400 years ago.


In Boston, for example, nonwhite households have only a fraction of the net worth attributed to white households. While white households have a median wealth of $247,500, Dominicans and U.S. blacks have a median wealth of close to zero. Of all nonwhite groups for which estimates could be made, Caribbean black households have the highest median wealth with $12,000, which is only 5 percent of the wealth attributed to white households in the Boston MSA.



This is not only appalling - it's absolutely wrong.


Why is there a racial wealth gap?


The racial wealth gap between Black and white families is predominantly due to homeownership. For middle class Americans, home equity makes up around 63% of wealth.


In Boston, most whites—79 percent—own a home, whereas only one-third of U.S. blacks, less than one-fifth of Dominicans and Puerto Ricans, and only half of Caribbean blacks are homeowners.


Real estate racism, banks, and the government have systemically denied homeownership to Black Americans, which has inhibited Black families from accumulating wealth.


In addition to exclusionary homeownership, segregation limited education opportunities for Black Families. Jim Crow laws restricted the jobs and professions that Black Americans could pursue. Many Black Americans were excluded from the Social Security Act and the G.I. Bill of Rights which inhibited social and economic benefits for generations.


What policies caused the racial wealth gap?


After emancipation, Black Americans were robbed of the opportunity to own land and grow generational wealth. Black families did not receive the "40 Acres and a Mule" promise. During the Great Depression, FDR's New Deal incentivized homeownership by giving mortgage credit to white Americans. However, the Federal Housing Administration (FHA) wouldn't insure mortgages in "undesirable" Black and brown neighborhoods. This was called redlining––the FHA drew city maps around Black and brown neighborhoods to cut investment and public services. Black Americans were denied mortgage loans and were unable to buy homes outside of their designated redlined areas.




The racial wealth gap today


While redlining is now illegal, the damage from those policies is still felt today. Black families who weren't able to own houses were never able to accumulate generational wealth.