African Americans Are Missing Ten Trillion Dollars of Wealth

In order to provide economic security for the formerly enslaved, African Americans were famously promised 40 acres and a mule. It never materialized.

Today, African Americans require about $10 trillion to provide a base of economic security. 

Collectively, African Americans own just 4% of the nation’s total wealth. For the median Black family, that comes out to just 2%of what the median White family owns.

For African Americans to own a share of the wealth proportionate to their 13% of the population, they’d require another $10 trillion of wealth.

The simplest way to build that equity isn’t education — Black people with college degrees often earn less  and have less wealth than Whites without them. Nor can it be to continue on as if things will get better with time. Between 1983 and 2016, the median Black family saw their wealth drop by more than half after adjusting for inflation. The median White families, on the other hand, saw their wealth increase by a third. The Black/White racial wealth divide is growing over time, not decreasing.  

Instead, there’s a growing consensus that a direct cash infusion is required as part of the efforts to bridge the racial wealth divide that began in slavery. The first African American billionaire, Robert L. Johnson, recently called for a $14 trillion transfer to Black Americans for that very reason. 

Long term and consistent cash infusion could make a world of difference for wealth development, particularly for a community whose median household income is only $40,000. 

One idea? A 20-year injection of $20,000 annually to every African American who can identify an enslaved ancestor in the United States. For those under the age of 25, their $20,000 a year could be placed in an individual development account. 

A back of the napkin estimate puts the cost at $16.5 trillion over 20 years. In this age of trillion-dollar economic bailouts, this cost is not a serious obstacle. 

As Modern Monetary Theory is persuasively arguing, deficit spending that strengthens the economy more than pays for itself. Yet as we work to advance inequality by lifting the bottom we should also put some pressure on the very top where an astounding share of resources are concentrated. Reparations should be linked to a fundamental repair of the toxic inequality in the broader U.S. economy.

In fact, reparations could be significantly funded by breaking up this concentrated wealth. As highlighted in a recent report I co-authored, (“White Supremacy is the Preexisting Condition”), hundreds of billions a year can be generated through a small wealth tax on multimillionaires, financial transaction taxes on Wall Street trades and other mechanisms. These funds could be used not solely for reparations, but a broad array of progressive programs — from Medicare for All to a universal jobs guarantee.

To develop sustained economic security, the country’s economic system must be turned right side up. Economic growth can no longer be allowed to leave most of the American population behind. Universal health care, guaranteed income and job, and expanded homeownership opportunities would ensure that all Americans have a much better chance at economic stability. 

The hard truth is that the United States — and its economy — is based on a White supremacist concentration of wealth and resources. To end this disparity, which rears its head in everything from the racial wealth divide to police brutality and mass incarceration, a massive redistribution of wealth and resources is required. 

That means an expansion of universal programs as well as targeted programs like reparations for groups like African Americans and Native Americans, who have also suffered tremendously from this White supremacist system.

As Dr. King noted during his 1964 Nobel Peace Prize address, “There is nothing new about poverty. What is new, however, is that we have the resources to get rid of it.” That’s even truer now in the 21st century, but the question in 2020 is the same as it was in 1964: Does our nation have the will to move toward racial equality by ending economic inequality?

Dedrick Asante-Muhammad is NCRC’s Chief of Race, Wealth and Community.

Photo by Simone Fischer on Unsplash

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