The United States is becoming much more racially and ethnically diverse. At the same time, it’s becoming more unequal in terms of wealth and income. These two trends are combining in an uncomfortable way: the wealth and income divide is happening along racial and ethnic lines.
The typical black household now has just 6% of the wealth of the typical white household; the typical Latino household had just 8%, according to The Racial Wealth Gap: Why Policy Matters
, by Demos
, a public policy organization promoting democracy and equality, and the Institute on Assets and Social Policy. [...]
While the disparity might seem only to be a problem for the economically disadvantaged families of color, it actually worsens political and economic outcomes for the entire country.
“Huge subsets of the population are excluded from accessing the avenues toward wealth,” says Catherine Ruetschlin, senior policy analyst for Demos, “and that is a problem for political stability. But it’s also a problem for economic stability. As we’ve seen in reports from big international finance organizations like the [International Monetary Fund] or World Economic Forum, increasing inequality is a source of increasing volatility, and wealth inequality means, when the economy hits a volatile patch, people don’t have the resources to withstand those shocks.” That, in turn, makes the economy more volatile, says Ruetschlin.