Wealth Gap Awareness: Why It is Important
The wealth gap has become a serious issue in our society, and it is something that affects us all. Despite the fact that the size of the wealth gap varies, one thing remains clear though: It exists and we need to do something about it!
The Urban Financial Services Coalition wants to close this divide by raising awareness about how we can address systemic problems that perpetuate the wealth gap so people of color have equal opportunities for financial stability and economic empowerment. We hope you will join us!
In this article, we will discuss the wealth gap and why it is so important that we have this conversation. However, before we start, we need to define what the wealth gap is.
Wealth vs Income:
There are two ways to measure wealth: net worth and income. We all know what income is, but let’s break it down a bit more because the average person may not understand what exactly net-worth means.
Net Worth refers to your total assets minus liabilities or debts. This includes everything you own that has monetary value including housing equity, checking and savings accounts, retirement funds, stocks, bonds, etc.
Wealth does not include income or monthly expenses like your mortgage or rent. Net worth is a broad number that represents how much you are worth when all assets (what you own) minus liabilities (debts).
Wealth Gap Facts:
Here are some facts about the wealth gap you might find interesting. Did you know that in 2006 white families had seven times more median net worth than black or Hispanic families? Alternatively, that over a 30-year period, between 1984 and 2009, the racial wealth divide grew by $75 trillion? The average African American household has $19,000 in wealth while the average white household holds over $100,000!
In addition, if we go back to 1984 and look at families with a head of household under 40 years old there was virtually no difference between African Americans’ median net worth and whites’. Nevertheless, by 2009 that number had dropped from just over $20K to less than $17K.
What is causing the Wealth Gap?
Now that we know what wealth and wealth gap are, let us talk about what is causing it.
In this section, we will look at some of the causes that contribute to the wealth gap. Many factors play into it but here are three common reasons why African Americans have less average net worth than whites Americans:
– Access to higher-paying jobs with better benefits and more opportunities for advancement.
– Racial discrimination in the workplace. Black families are more likely to be denied home loans, credit cards, and other forms of financial assistance that many white Americans take for granted. In addition, even if they do qualify for loans it may not be at the same interest rates as whites because their income is lower than average so creditors can charge them more.
– Inheritance is an important part of the equation because white households are five times more likely to receive large gifts or inheritances that help them increase their wealth compared with black families.
The Systematic Problem: Why It Matters!
If you’re reading this, there’s a good chance you’ve heard the terms “systematic problem” and “white privilege.” But what do these words really mean?
Systemic is defined as a principle or system that affects how things work throughout an entire organization, community, or society. In this case, we are talking about systematic problems within our justice system, educational institutions, government agencies, and other systems in America that perpetuate the wealth gap.
To be more specific, let us look at some examples of systematic problems that are affecting African Americans and their ability to accumulate wealth:
– The school-to-prison pipeline refers to how students who get in trouble or break the rules in schools are treated very differently based on race. Black children make up 16 percent of the student population but are 40 percent of students arrested.
– Joblessness is another problem that affects the African American community at a much higher rate than any other ethnic group in America, leading to an unemployment rate almost twice as high as whites’ do. Moreover, when they do find work it is typically for lower pay and benefits plus fewer opportunities for advancement, which leads to higher unemployment rates.
– The criminal justice system has also contributed to the wealth gap by incarcerating men at much higher rates than whites, which means they are not able to earn money and provide for their families even if they were working. Plus once released from prison it’s very difficult for them to find employment due to discrimination in the workplace. All of these examples are systemic issues that perpetuate the wealth gap. Although people created them, it is easy to see how institutional racism has played a role in creating this problem and why awareness is so important!
As Citizens, what can we do to reduce the Wealth Gap?
Education is Key!
The first step that people can take to help close the wealth gap is by learning more about it. If you are reading this blog post, then chances are you have already begun your journey of knowledge and awareness!
However, there are many other ways we can educate others and ourselves about the wealth gap:
– Read articles, news stories, and statistics online or in books. There is a lot of information out there that you can find on your own but also through nonprofits like United Way who have resources to help educate yourself and others!
– Attend seminars, lectures at schools or organizations that are available to the public.
– Follow thought leaders on social media who are writing about this topic and share their posts with your network!
Once you know about the wealth gap, what is your next step?
The most important thing to do is take action because awareness alone will not change anything. The only way we can close the wealth gap and truly make a difference in people’s lives is by making it personal so that every one of us is making a conscious effort to reduce it in our day-to-day lives.
Here are some ways that we can take action:
– Talk to your friends and family members about the wealth gap.
– Ask yourself, “What am I doing that contributes to the problem?” Here you will be able to challenge yourself to be open-minded!
– Support organizations like those who are making a difference in people’s lives through their financial education programs so they have access to the resources to build their own wealth.
If we are going to make a difference and reduce the wealth gap, everyone must be involved–and you can be part of this solution!
By now, you should have an idea about what the wealth gap is, its cause(s), and some things we can do to close it. As American citizens, we have a responsibility to make sure that we are all aware of this wealth gap and taking actions to reduce it. Awareness is important, but the only way we can truly make a difference in people’s lives is by taking action!
Thank you for reading our blog post today about Wealth Gap Awareness: Why It’s Important! We hope you liked this blog post and learned as much as we did! Please feel free to share it with your friends so they can learn too.