Addressing the Wealth Gap in the United States- Part 3

By Tracey Madden-Hennesey

What is the impact of inequity on wealth?  Recent data analyzed and published by The Institute for Assets and Social Policy (IASP) of Brandeis University, indicates that a substantial racial wealth gap exists in the U.S., perpetuated by history and policy created (intentionally or not) that drives or retains assets in certain sectors of communities (largely White and more affluent) and away from others (particularly poor Black and Hispanic populations).

Given New Britain’s focus in applying an equity lens to Collaborative Problem Solving, this research is of particular interest.  Dean Starkman, in a 2014 review[1] of the IASP research indicated the wealth gap is largely attributed to post civil war policies that favor those with assets.  The roots of the gap, according to the Brandeis researchers, can be traced to policies that address home ownership, earnings and inheritance, education access and inequality.[2]  The racial wealth gap between White and Black families has now ballooned to more than $236,000 and its growth doesn’t appear to be slowing.  CFED (Corporation for Enterprise Development) indicates it will take more than 200 years for populations of color to close the gap.  In prior posts, the impact of differences in housing equity values and education access were cited as central to widening the wealth gap.  Labor markets, including anticipated salaries and benefits, are a significant contributor to the wealth gap.  Twenty percent of the gap’s growth is directly attributed to labor market factors over the last twenty-five years; and unemployment which decreases family wealth, contributes an additional nine percent to the gap.[3]

Research indicates that Black and Latino families can expect to earn less than white families annually. “While the typical white family makes $50,400 a year, the typical Latino family makes just $36,840 and the typical Black family has an annual income of just $32,028.”[4]  In addition, people of color are less likely to be employed in positions that also provide benefits, including healthcare, paid leave, and retirement.  Given this, families of color are more likely to pay out of pocket for health care and less likely to save or invest. 

cash, coins, money

Research further indicates employment discrimination, despite being illegal, persists.  “White workers, with or without, a high school degree out-earn their Black and Latino counterparts.”[5]  Segregation, negatively impacting Black or Latino access to professional networks which could provide opportunity, also is a factor.

Sullivan and her partners recommend three labor market strategies to change the trajectory of the racial wealth divide[6]:

  • Establish a direct federal job creation program. Although Connecticut (and New Britain) observe decreasing unemployment, rates for people of color are twice that of their white counterparts.  The unemployment rate for Hispanics in New Britain according to the census is (14%) compared to the city’s rate of 7%.  A federal hiring program, including summer youth employment, targeting communities where unemployment is high, could raise incomes and shrink the gap.
  • Raise the minimum wage. Black and Latino employees disproportionately work in low wage industries and would benefit most from an increase in the minimum wage.  Greater earned income over a lifetime would improve the wealth outlook for families of color.
  • Make it easier to organize. Historically, labor organizing has increased connectedness between jobs and important benefits.  Greater access to sustained healthcare and retirement benefits will increase the likelihood that more individuals can save towards their future.

Sullivan and her research partners conclude that policies over time have created the racial wealth gap, to significantly reduce it requires steps to “equalizing the rate of return” on investments.  Policies that decrease housing segregation and increase home values; improve college graduation rates without significantly requiring taking on debt; and improving access to jobs that earn a sustainable salary and are accompanied by benefits are critical to a more equitable society.


[1] Starkman, “The $236,500 Hole in the American Dream,” New Republic, June 30, 2014,

[2] Sullivan, Laura, et al; “The Racial Wealth Gap; Why Policy Matters,”, NY; IASP, Brandeis University; 2015.

[3] Sullivan, pg. 24.

[4] Sullivan, pg. 24-25

[5] Sullivan, pg. 26

[6] Sullivan, pgs. 30-31