Education Alone Can't Solve America's Racial Wealth Gap
Earlier this month, the United States marked the 50th anniversary of the Selma voting rights marches. While much has changed since, racial wealth gaps have persisted over the past 30 years and even grown since the Great Recession. Today the richest 10 percent of white families own 65.1 percent of the nation’s wealth.
In a new report (PDF), Brandeis University’s Institute for Assets and Social Policy (IASP) and Demos, a progressive think tank where I work as a researcher, investigate what it would take to close this gap. The report concludes that racial disparities in wealth are driven by public policy decisions and calls for “racially aware policies” that could help reduce America’s rising wealth inequality. This includes eliminating disparities in homeownership rates, college graduation and the return on a college degree as well as the wealth return on income.
Conservatives and centrist commentators often present college education as a near panacea to reduce the racial wealth gap. But the Demos/IASP report challenges this claim. It found that increasing graduation rates would reduce the wealth disparity between black and white people by only 1 percent and between Latinos and whites by 3 percent. There are many possible reasons for this. For one,students of color take out more in student loans than white students. The debt burden detracts from wealth-building opportunities over a graduate’s lifetime. In addition, people of color are less likely to get into the most selective schools and face discrimination in labor markets after graduation. As a result, black and Latino students do not reap the same gains from a college education as their white counterparts.
In fact, race is a far greater determiner of wealth than education. As Demos blogger Matt Bruenigpointed out last year, black college graduates have less wealth than white high school dropouts. Using a new model called the racial wealth audit, Demos/IASP researchers found that the racial wealth gap between white and black families would be reduced 10 percent if the returns on college education could be equalized. But that’s not nearly enough to close the divide.
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