Staggering US wealth inequality heaps long-term harm on to minority children

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African American children are suffering long-term disadvantages as a result of vast and growing disparities in the wealth of US families, with Black families with kids having access to barely 1 cent for every dollar enjoyed by their white counterparts.

The shocking racial wealth gap between families, and its impact on Black and Hispanic kids, is revealed in groundbreaking new research by scholars on US inequality. It shows that the basic wealth levels of families from different racial and ethnic backgrounds have diverged to such a stark degree in the past three decades that the future prospects of children from lower-wealth groups are likely to be grossly compromised.

In 2019, the median wealth level for a white family with children in the US was $63,838. The same statistic for a Black family with children was $808.

Hispanic families with kids fare little better. They have a median wealth of $3,175, which equates to 5 cents for every dollar of wealth in an equivalent white household.

“A relatively small group of parents – mostly white – control the lion’s share of the wealth available to children,” the authors conclude.

Wealth is calculated by aggregating a family’s assets and subtracting from it their debts. The median for white families largely consists of the value of the homes they own minus mortgages, with additional wealth coming from savings and inheritance.

Among Black families homeownership is much less common, as are savings or inheritance, which collectively shrinks the median wealth to the paltry figure of $808.

The alarming findings are contained in Wealth Inequality and Child Development, a compilation of the latest research published by the Russell Sage Foundation. It lands at a critical time for the American child, with Congress debating the extension of a new stimulus package that has the potential to lift more than 5 million American kids out of poverty.

In March, the Biden administration introduced a child tax credit designed to help families with children caught in the poverty trap. It provides for $3,600 a year for every child under six, and $3,000 for older kids.

But the measure, which experts have described as transformational, expires after a year. Whether becomes permanent now depends on Congress as it grapples with the US president’s $3.5tn budget plan which, in its current draft, would extend the provision.

At stake is nothing less than the American dream, the aspiration popular among politicians of both main parties that anybody can make it no matter how modest their beginnings. Christina Gibson-Davis, a professor of public policy and sociology at Duke University who is co-editor of the new research, pointed to one of its central findings – that wealth inequality between American families has become so extreme that 1% of parents control 44% of all wealth held by households with children, while the top 10% control 82%.

“When the top 10% of parents control 82% of all the wealth in child households, that opens up opportunities and choices they make for their children that are not available to the bottom 90%,” Gibson-Davis said.

Such glaring disparities profoundly influence kids’ potential as they emerge into adulthood. They touch aspects of life that can make or break a child’s life, including the neighborhood they live in, the schools they attend, how secure they feel, how well they perform in exams, their behavioral record, and their health.

“Wealth is so stratified by race and ethnicity that it perpetuates that racial inequality into the next generation,” Gibson-David said.

The US stands out as an outlier compared with other industrialized nations in terms of both the approach to childhood taken by policymakers and governments, and the extent of inequality that flows from that. The new research looked at 14 industrialized countries, including Australia, Germany, Norway and the United Kingdom, and found that the US was exceptional in the extent of wealth inequality between children and older age groups.

Gibson-David, who edited the volume alongside Heather Hill of the University of Washington, said that the unique position of the US reflected the country’s political climate, which was notably less inclined to help children than other nations. “We’ve chosen to let the market determine wealth levels.”

The corollary of that decision, she said, was that “we are OK with having winners and losers in the childhood wealth lottery. White kids born to well-educated parents are going to enjoy relatively high levels of wealth – the vast majority of kids don’t have that luxury.”

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