The Racial Wealth Gap | How did we get here?

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Photo Credit: Ronald Wimberly

Yaay!  It’s Black History month and since I’m Black and talk about money, I’m required to write something profound on the racial wealth gap.

Despite it’s tendency to  trigger a tsunami of emotions like guilt, shame, anger, sadness and unsolicited opinions about upward mobility, digging into these subjects don’t bother me one bit.  Up until a few weeks ago, I had NO intentions on writing anything for Black History Month or anything race-related.

But after sitting on a few podcast interviews, having healthy dialogue with others and presenting at a regional in-person meetup, one thing is remarkably clear—most people don’t know about the racial wealth gap.

To be fair, I don’t just mean White people.  Most of the Black people that we’ve spoken to about this subject are clueless about this crisis and the events that have lead us to where we are today.  I was reminded by Mrs. r&R that I am one a few people she knows who are well versed, well-read, and actually passionate about the subject.

So why did I wait so long to talk more openly about this?  Author, James Baldwin said it best when he stated “To be a negro in this country and to be relatively conscious is to be in a rage almost all the time“.

With that said, I believe my avoidance of the subject was a coping mechanism. I’ve found that when you learn and understand the depth of inequality in this country, it has a tendency to weigh on you.  Not like one of those heavy X-ray blankets they lay on you at the dentist; more like a migraine that just never goes away.  

When you’re too woke, even taking a minute to step outside feels like you’re breathing in air brought to you by the makers of multi-century systemic oppression, Inc.

Nevertheless, over time the racial wealth gap has widened, we’ve become better skilled at engaging in these discussions and as a result,our fearlessness has blossomed— so here goes nothing.

In general, wealth is built in a handful of ways.  It’s either generated through a business, through real estate, through the stock market or passed on from generation to generation.  So let’s break those down brick-by-brick.  

In order to start a business, you need a handful of things

  1. a market (access to paying customers)
  2. capital (money to fund the business)
  3. skills (the know how and who to get it all done)

Historically, Black people have struggled to achieve or sustain these basic ingredients at large.  Access to customers is fairly easy since Black people live in a handful of major cities around the country. , but unfortunately many of these communities are poor which means your customers don’t have a lot of money to spend. Capital is hard to come by because banks don’t lend money to black entrepreneurs at the same degree or at the same cost as they do our white counterparts.  Lastly, education has been a challenge since Black Americans weren’t allowed to attend most major colleges in this country until the 1960s and 70s after Brown vs. The Board of Education (1954).

Sure, the internet has leveled the playing field in some ways, but Black Americans are more likely to have mobile only access to the internet vs. their white counterparts. Also, while entrepreneurship is best learned by “jumping in”, the stakes are undeniably higher for Black people since most of us have absolutely no parachute or safety net to catch us if we fail.

Even when there were signs of progress across the country where Black people were allowed to create and sustain thriving communities, they were either destroyed politically such as the case with Atlanta’s Auburn Historic District or they were victims to domestic terrorism like Oklahoma’s infamous Black Wall Street riot.  The result?

African Americans have become a group of risk-averse people with a high dependence on jobs and an over-reliance on education as a way to climb out of multi-generational poverty.

What about real estate?

Well, I could go as far back as the US westward expansion (1800s) from our original 13 colonies as “brave explorers” sought to expand our nation on the new frontier.  Basically, in exchange for their bravery, [which was highly supported by slaves] the pioneers who were willing to brave the new world were awarded free land.  That gift from the US government gave birth to towns, cities, states and eventually enterprises that have tipped the scale of power and influence in the favor of mostly White people.

Meanwhile, Blacks weren’t allowed to participate in this land grab and at best were given opportunities to tend to the farmland [aka sharecropping] that enslaved them.  Except this time, land was farmed in exchange for the veneer of safety, subpar shelter, security and a few coins for their goods.  When they couldn’t make ends meet, they then became indebted to their old masters and were forced to work for free.  Sound familiar?

But let’s fast forward to America post World War II and the New Deal (1920s – 1950s).  This is the moment big government programs were taking hold and laying the foundation for the re-development of cities, the laying of our highway system and the creation of suburbs as we know them today.  Much like the land grab of the previous century, many White Americans were given first dibs to affordable mortgages in areas that have naturally appreciated over the decades.  At large, that wealth was passed onto the next generation.  Black Americans…not so much?

Instead, it is well documented that Black Americans were frequently mislead by real estate agents and denied mortgages by bankers under the belief that property values would decline if Blacks were allowed in the neighborhood.  This, despite the actual evidence showing the opposite was true.

Since Blacks were willing to pay more for homes, the property values of neighborhoods actually rose when they were allowed to purchase.  The result?  Today, homeownership rates for Black Americans are roughly the same as they were in the 1950s.  How’s that for progress?

OK. Well what about the stock market?

In order to invest in the stock market, you need disposable income.  Sure, you could get really creative, pool resources, make sacrifices and invest in the long run but even still, you’re likely only going to pull together a relatively small amount of money. Simply put,

when you're poor and oppressed, it's really difficult to think about the distant future when you aren't sure how you're going to pay the bills next month. Click To Tweet

Even for those of us who are doing well, studies have shown there is still a significant wage gap between Whites and Blacks in the workplace, especially for Black men.  A recent report from the Equality in Opportunity Project stated the following with respect to unequal wages,

“Black and white men have very different outcomes even if they grow up in two-parent families with comparable incomes, education, and wealth; live on the same city block; and attend the same school.”

If you’re thinking that this is where Black women can step up, then you’re right and they have.  While Black women also face their own versions of wage inequality, they’ve fought to earn college degrees at a record pace and now, Black women are the breadwinners of over 80% of Black households.  Unfortunately, a good chunk of those gains are eroded by student loan debt as Black women graduate with more than any other group.

So in summary, when you’re Black, it’s tough to start and sustain a business, opportunities in real estate have historically not been accessible to you, you earn less for the same work and likely no wealth has been passed down to you from previous generations.  You add to that the other list of issues plaguing our communities like imbalanced incarceration rates, preventable illnesses, police brutality and before you know it, you’re staring at the Mt. Everest of inequality that must be climbed to gain comparable levels of wealth

It’s no surprise that “70% of Black Americans believe strongly in purchasing life insurance compared to less than half of the general population” according to Black Enterprise.  It’s easy, affordable and arguably a last ditch effort to break the cycle.  We also believe strongly in the role life insurance plays in generational wealth building but we know that to rely solely on it, is to rest the future of our family on a one-legged stool.

Now before the “boot-strap bullies” get all up in arms with other stories of immigrant communities that found a way to get ahead in this country despite challenges, let me say this.  No other group of people experienced what African Americans have on American soil.  The only group that comes close are the Native Americans who also deserve their fair share of respect, support and/or reparations for what they’ve endured.

That’s not to say that self-accountability doesn’t play a role in the crisis but until the playing field is level, self-accountability as a standalone tactic is limiting.   It’s also important to note that Latino communities deal with many of the same issues as we do and as far as I’m concerned, we’re all in this together.

All of the above and more are the seeds of the racial wealth gap we see today.

Every injustice, every head start, every rigged system and every deliberate tearing down of progress are to blame for why White Americans have 10X the wealth Black Americans have.

So where does this leave us?  What can we do?

Well, those are pretty big questions and I’m no expert on public policy but I do believe it starts with awareness.  The more we all know, the easier it will be to empathize and to recognize injustice as it’s happening.   But for our family, the past is nothing more than fuel to push us forward.  We believe in this [FIRE] movement and it’s ability to provide a blueprint, not just for a better life, but for social justice.  The more financially free men and women we have, the more hands we’ll have at our disposal to untie the knots that have held us back for centuries.

Til next time. Stay woke.


  1. Like you said knowing your past is fuel for the future
    My white friends don’t get it and my blacks friends don’t want to hear it.
    I also don’t know how to fix this from a Macro level from a micro level it is up to you to make it happen like MLK said the oppressors don’t give up ther power willingly it must be taken

    • Lead by example. We’ve learned that others need to SEE it to believe it. So show them, one decision, one act, one investment at a time.

  2. I just came across your blog. Nice post. It got me thinking about the specific events where whites violently destroyed and attacked Black economic institutions and businesses. For instance, what about the ubiquitous destruction and confiscation of Black businesses and wealth following reconstruction? Or the destruction of Black Wall Street in 1921 (Tulsa)? What lasting effects did these events have on long term investments, investing, and wealth accumulation? Keep up the great work!

    • Yes, there is a long list of deliberate acts designed to tip the playing field in the direction of a few. The lasting effects are easily quantifiable but the damage to the mindset is really where it hurts most. So many of us have been poor for so long that any other way of life is truly a fantasy.

  3. Thank you for raising awareness and breaking down the facts. It’s interesting, I am the main breadwinner of my household for right now (happily I might add), but not by choice. I feel that if I weren’t forced to step up for my family then I would’ve never done my research and decided to break the cycle of poverty. I’m determined to help as many people as I can get on the financial freedom chain.

    • Love it! Way to embrace the unexpected and turn it into a game-changer for you and your family. Keep gettin’ it Mama!

  4. This is a tough subject to swallow particularly when we realize how systemically the system is baked to disadvantage black people, starting with the roots of slavery right up to today’s injustices that are ongoing. The whole system has to change from the bedrock, to stop treating blacks and Native Americans as less than. That has to start with identifying how broken the system truly is.

  5. Ah thank you for writing this! I was having a conversation a few days ago where the racial wealth gap came up, and I brought up some of these points, but you’ve said it way better than I did (especially since I’m white and certainly benefit from the racism that’s been rooted in the system since the beginning). I will definitely be pointing people to this post!

  6. Will definitely be saving this post to share as you’ve said this better than I ever could (and rightfully so). It’s amazing though how even in light of cold, hard facts so many White people in particular do their damndest to pretend they didn’t just hear it.

  7. Thanks for this. My hope is to bring that same legacy wealth that others have enjoyed for centuries into my family and to encourage others to do the same.

    Thanks for all you contribute to the community.

  8. Thank you for beginning this discussion. The fact is, asset inequity leads to so many other issues related to health (mental and physical), community composition and belonging, exposure to adverse events and compounds, and frankly, transgenerational concepts of of self, power, and possibility. The only way we will be able to truly overcome it is to begin to address it out in the open. Big steps.

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