The Inclusive Economy
Asset-Building and the Racial/Gender Wealth Gap
By Inemesit Imoh on 06/08/2012 @ 02:30 PM
Perspectives from the National Council of Negro Women’s National Convention
On Thursday, May 24, I participated in a workshop at the National Council of Negro Women (NCNW) 55th National Convention. The workshop panel entitled Exploring Public Policy Solutions to Narrowing the Race/Gendered Wealth Gap also featured NCNW Executive Director Avis Jones-DeWeever and James Carr, Chief Business Officer of the National Community Reinvestment Coalition.
Each of our presentations highlighted aspects of the growing racial and gender wealth gaps--the differences between the median net worth of individuals of different racial and ethnic groups, and between men and women. Ms. Jones-DeWeever framed the conversation by explaining the history of the racial and gender wealth gaps and how both grown substantially as a result of the recession. Mr. Carr explained the origins of the foreclosure crisis and how deeply it impacted communities of color. Finally, I spoke on the various other dimensions of the wealth gap, particularly around the inability of people with disabilities and young adults to invest in themselves.
Attendees brought up several issues that impact their communities:
- The lack of sustainable employment and income in communities of color makes it extremely difficult for households to consider saving and/or investing in themselves.
- The foreclosure crisis has devastated minority households’ primary source of wealth, homeownership, and has greatly set back the decades of progress minorities had made to improve their economic mobility.
- Young people of color with low-income and low-wealth families face difficult decisions for their college education—high levels of debt or no college at all.
The discussion among presenters and attendees revealed that the racial wealth gap is a significant problem that impacts people of color on a daily basis and also limits opportunities for long-term wealth building. Throughout the conversation, attendees emphasized their interest in identifying public policies that can help narrow the wealth gap. Some of those include:
Employment and Wages
When high quality jobs are not available within a community, many people turn to self-employment and entrepreneurship. These small businesses are often supplementary sources of income for workers whose traditional jobs aren’t sufficient to make ends meet. There is a successful national network of service providers who help these business owners maximize their income, grow their businesses, and achieve their entrepreneurship goals. The federal government and many states provide some support for this field, but could do more. In particular, research demonstrates that providing technical assistance to businesses that are not finance-ready is a particularly important intervention, but also difficult to support through private donations and fee-based service delivery. Governments should therefore provide more for technical assistance and training targeted at new entrepreneurs.
Owning your own home has long been considered the hallmark of the American Dream. Families must have access to services that help them make this dream a reality. Families with limited means could qualify for an individual development account program in their area, which are matched savings programs designed for low-income households to save and purchase an asset, including a first home. Research has found that IDA programs can improve homeownership outcomes for low-income households.
A college education is a proven tool in improving someone’s economic security and mobility. Research shows that savings is a powerful strategy for increasing the likelihood that students will attend and complete college. One way to make college more affordable for low-income students is to create incentives for them to save in tax-free 529 college savings accounts. Several states have already taken steps to encourage college savings for young residents within their state. In addition, when paired with a savings account, financial education gives children and young adults a stronger and more tangible chance to test financial decisions. CFED has examined how states use their public education systems to improve personal financial literacy and lists financial education policies and standards by state.