May 25, 2016
Vishnu Sridharan, Senior Consultant with the Insight Center for Community Economic Development’s Closing the Racial Wealth Gap Initiative, criticizes Robert Reich‘s support for stand-alone policies that support savings programs as a solution to the widening wealth gap in the U.S.
Historically public policy decisions have favored certain communities over others. “As economist Beadsie Woo has written, wealth inequality is the result of “a long and shameful pattern of discriminatory policies — from redlining by federal housing authorities to disparate access to the benefits of the GI Bill.” In other words, the wealth gap is not driven by differences in individual behavior, but by public policy decisions.” Therefore, the solution to increasing inequality is to support policies that would have a structural impact, he argues.
Savings programs cannot address the structural and systematic inequality that had total government backing. For example, in 2011, White households had a median net wealth of $111,740, compared to just $7,113 for Black households. As such, if a median Black household saved $50 a month, and the White household saved nothing, it would take the black family over 173 years to even the playing field.
The first step toward correcting mistaken notions about race is to acknowledge that economic advancement in this country has always been color-coded. “While policies that facilitate savings can help keep more money in working families’ pockets, to make real progress on the racial wealth gap we need to focus on direct investments in those communities that have been denied economic opportunities throughout our nation’s history.
For instance, an analysis by the Institute on Assets and Social Policy concluded that if the Federal Government invested $60,000 in an account for children from low-income families, the net worth gap between African Americans and their White counterparts would narrow by more than 80 percent. These are the types of policies we need, said Sridharan.
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Organizations mentioned/involved: Insight Center for Community Economic Development (Insight Center)