Wealth Inequality and the Race Gap

Wallethub released its report on race inequality and America’s wealth gap. It’s getting much worse (as you can imagine) and they also released the areas with the biggest and smallest racial wealth gaps (check that out below!) There is also some interesting commentary from experts that they have gathered as well.

With black Americans having a median household wealth of $14,100, compared to $187,300 for non-Hispanic white households, the personal-finance website WalletHub today released its report on 2024’s States with the Biggest & Smallest Wealth Gaps by Race/Ethnicity, as well as expert commentary.

To measure the wealth inequality among racial groups in the U.S., WalletHub compared the 50 states and the District of Columbia across 21 key metrics, ranging from the median household income gap to the unemployment rate gap.

Best vs. Worst 

• The highest median household income gap is four times higher in the District of Columbia than in Hawaii. 
   
• The highest homeownership rate gap is three times higher in North Dakota than in the District of Columbia.
   
• The highest poverty rate gap is 13 times higher in the District of Columbia than in Hawaii. 
   
• The highest uninsured rate gap is 22 times higher in Maryland than in Hawaii.

Why do you believe the income gap by race has increased tremendously in the past decade?

“Race matters in determining access to education and employment opportunities which are related to income. Members of historically disadvantaged groups, like black people in America, are less likely to have access to quality education and more likely to face discrimination at every phase of the employment process.”
Lori Latrice Martin, Ph.D. – Associate Dean; Professor, Louisiana State University

“I believe the income gap has increased tremendously in the past decade because wages, cost of living, and inflation have not kept up with one another. A review of the Bureau of Labor Statistics most recent data also shows a disproportionately high number of people of color working in social service and service occupations where wages tend to be lower. Couple that with the reality that Americans are saving less than they have in over a decade, then you begin to see the many elements that might lead to an increased wealth and income gap.”
Luchara Wallace, Ph.D. – Associate Dean; Director, Lewis Walker Institute for the Study of Race and Ethnic Relations, Western Michigan University

Can entrepreneurship programs for minorities help alleviate the wealth gap?

“For those individuals who have the financial capacity, knowledge, and needed resources to engage in entrepreneurial pursuits, those programs can and do benefit them. Those opportunities, however, are not readily available for the vast majority of African Americans because of the absence of the resources and business skills that are required to begin and sustain these efforts. For racial minorities who possess the capital to invest, those enlarged program efforts will certainly benefit them due to their superior equity positions, but this reality does not exist for the vast majority of African Americans.”
Irving L. Joyner – Professor, North Carolina Central University, School of Law

“Entrepreneurship programs that aid people of color in creating small businesses can lead to increased wealth for the entire community by attracting jobs and media attention to a particular area and/or business field. However, these types of initiatives are often only successful if their policies and outreach are based on information collected from the community and when crafted in conjunction with community members. Programs need to address the particular opportunities and challenges of a community such as area business growth, educational resources, local living wage, housing costs and availability, child-care options, and public transportation. A holistic approach to creating entrepreneurship programs will likely have the highest possibility for success.”
Hephzibah V. Strmic-Pawl, Ph.D. – Consultant and Director, Support Ella Baker Day

What types of programs and initiatives should public policy officials focus on to curb inequality?

“Some programs and initiatives that public policy officials should focus on might include how we might address financial literacy in our communities and schools. There is a misperception that everyone needs to make a lot of money to live a safe and secure life. For many, it is a matter of developing a healthy relationship with money. However, some methods we could use to curb inequality from a public policy perspective might be linked to how we address the costs of items we all need such as medical care, prescription drugs, gas, utilities, etc. Those are areas that impact us all regardless of race or socioeconomic status. Policy shifts in those areas could have a lasting impact on income inequality and the wealth gap.”
Luchara Wallace, Ph.D. – Associate Dean; Director, Lewis Walker Institute for the Study of Race and Ethnic Relations, Western Michigan University

“Inequality of income is shaped by a large number of factors such as employment opportunities, wages, educational opportunities, accessible health care, affordable housing, transportation options, hyperincarceration, and more. No one magic bullet should be the focus. Policymakers, politicians, local organizations, and local communities need to work with each other to determine which factors might be the most helpful to address in their area. However, on a broad level, targeting affordable housing is key. Gentrification, extreme rent prices, and lack of housing [are] problems in both urban and rural areas.”
Hephzibah V. Strmic-Pawl, Ph.D. – Consultant and Director, Support Ella Baker Day