Moving Communities Out of Racialized Asset Poverty

While there has been a growing widespread discussion concerning economic inequality at the national level, there has been less focus on best practices to address it on the local level. 

Over the past three decades, a polarizing racial wealth divide has grown between White households and Black and Latino households. Since the early 1980s, median wealth among Black and Latino families has been stuck at less than $10,000. Meanwhile, White household median wealth grew from $105,300 to $140,500. Similarly, the proportion of all U.S. households with zero or “negative” wealth, meaning their debts exceed the value of their assets, has grown. Black and Latino families are much more likely to be in this precarious financial situation. Thirty-seven percent of Black families and 33% of Latino families have zero or negative wealth, compared to just 15.5% of White families. The stark racial wealth inequality in the U.S. makes it nearly impossible for the nation to advance past its long-standing ethnic divisions.  

Many recommendations to eliminate the racial wealth divide are hyper-focused on federal policy solutions because of the potential scale and impact, yet national policies can seem far removed from the community experience. There has not been a coordinated effort to take significant structural issues and contextualize them within regional or local political economies. In many cases, practitioners and advocates are unclear about what interventions can take place at the local level to help move the needle in their respective areas. 

Similarly, there is little understanding of geographic differences and the impact geography has on economic mobility. Communities of color might have similar economic weaknesses, but their different political economies, historical economic development and demographics could require curated resolutions. For example, Blacks and Latinos in a sunbelt city might have different needs than Black and Latinos located in a rustbelt city. Blacks and Latinos located in rural America might be similarly situated or drastically different from their peers in suburbia. 

The philanthropic sector should support a new analysis of racial wealth inequality at the local level and help facilitate knowledge sharing among practitioners and policy advocates in selected cities. Developing an estimated wealth benchmarks tool, using local economic indicators and national studies, is critical to non-profit and municipal leaders who seek to strengthen wealth-building opportunities in communities of color. Given their limited resources, a tool that can project wealth for groups where there is rarely wealth data like Native Americans and subgroups of major racial and ethnic categories like Blacks, Latinos and Asian Americans is critical to helping them make targeted interventions for the most disenfranchised. 

Rather than continuing to focus on racial wealth inequality as strictly a national phenomenon, the philanthropic sector can play a critical role in driving change at the local level by assisting CBO’s and local governments to leverage their strengths – their proximity to those in need. Local governments and community organizations can play an important role in testing local interventions (i.e. tax incentives and zoning policies), as well as, measuring the impact of state/national interventions to promote wealth. A more geographically focused understanding of racial economic inequality is not only critical to building a multi-tiered strategy for bridging the racial wealth divide, but it also outlines the community infrastructure necessary in the event of federal policy reforms.

Sabrina Terry is NCRC’s Director of Strategic Partnerships and Initiatives.

Photo by Sasha Freemind on Unsplash

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