Women of Color, Wealth, and America’s Future
The wealth gap is almost insurmountable to Americans who have historically been prevented from climbing the wealth escalator -- the ability to translate income into assets. While disparities of the income gap are often deemed the sole indicators of injustice within the U.S. economic system, accruing wealth is perhaps the most significant and most overlooked disparity among wage earners.
On Tuesday, June 8th, the Insight Center for Community Economic Development hosted Women of Color, Wealth, and America’s Future, a webinar that explored the income and wealth gaps, focusing on race and gender. Five women experts shared their findings: Meizhu Lui, Director of the Closing the Racial Wealth Gap Initiative; Mariko Chang, Ph.D., Principal Researcher; Melany de La Cruz, Assistant Director of the UCLA Asian American Studies Center; Janis Bowdler of the Wealth Building Policy Project; and Sarah Vermillion, Vice President of the First Nations Development Institution.
Meizhu Lui began the discussion by examining the disparities of wealth amongst America’s families. According to Lui, the greatest distinguishing factors of an individual’s wealth are their gender and/or race, as illustrated by the juxtaposition of a White family’s household median net worth with that of a Black or Latino family.
Her data essentially undermines the American dream of achieving economic self-sufficiency by disproving the myth that hard work inherently generates wealth and success. Furthermore, the so-called “golden ticket” to wealth and success – education – proves to be a means to no end. Women’s pay gap over a lifetime of work, as shown through the cumulative gap by educational level, rises from $270,000 with no high school diploma to $713,000 with a BA or more. Simply put, women’s educational advancement, on average, does not yield a similar rise in earnings, as comparable to men.
Moreover, when we review the top 10 wealthiest individuals in the United States, we find that they are all, not surprisingly, White. Although there are a few women amid this august group, they are all beneficiaries of or heiresses to the Walmart fortune. This reinforces the simple truth that the largest indicator for individual wealth is -- you guessed it – inheritance.
Dr. Mariko Chang highlighted the difficulties that single parents, divorcees, and widows face as a result of our society’s glorified definitions of marriage and family. In reality, roughly half of all households are non-married and nearly half of all marriages end in divorce. In fact, women spend the majority of their lives being single rather than married. Many women outlive their husbands, subjecting them to decreased pension benefits or debt accrual; widowhood is certainly not a financial windfall for most. Because, on average, women outlive men, accumulating wealth is crucial for economic security in retirement.
Why aren’t women building assets and accumulating wealth? They are more likely to be custodial parents and support more people on one income. They have less disposable income to save or invest, which makes them much less likely to access the “wealth escalator.” That’s because the wealth escalator is made available through fringe benefits--forms of compensation given to employees in addition to regular pay, like health/life insurance, pensions, bonuses, and stocks. Further, Social Security payments to older women, their principal source of income, reflects their lower wages and time taken out of the workforce to raise children and care for aging parents. This is particularly the case for women of color.
Single women, and particularly single women of color, are also subject to discrimination when it comes to owning property. At every income level, women of color are more likely to receive subprime home loans (which are categorized as being at the highest risk level and therefore come at much higher costs than prime loans). In 2007, women of color were 1.5 to 2.5 times more likely than white women to sign on for high cost home loans. The disparity increases as income increases. This costs lower income borrowers, on average, $50,000 - $100,000 more on a 30-year mortgage.
Key ethnicities were left out of much of the proceeding statistics. Because they represent such a small percentage of the population, data for Asian Americans and Native Americans have historically been lacking, especially when controlling for gender. There is also a common perception that Asian Americans are wealthy, and are oftentimes on an economic par with their respective White counterparts. However, when controlling for regional home prices and other socio-economic factors, Asians have significantly less wealth than Whites. Furthermore, Native Americans are distinctly poorer than Whites and also have different conceptions and definitions of “wealth.”
The presenters offered a handful of possible policy recommendations to close the wealth gap and open the wealth escalator to all. These included: collecting robust, disaggregated data; providing financial education for women entrepreneurs; creating community-based financial planners; improve employment opportunities for women of color in living wage jobs; supporting the National American Economic Advisory Council Act of 2010 (S. 3331), which will create an advisory council for Native American communities to consult, coordinate, and make recommendations to the Executive Office of the President, cabinet officers and federal agencies in order to improve the substandard economic conditions in American Indian communities; supporting self-employment/micro-enterprise.
Finally and at a more systemic level, the presenters urged Americans to change the way they think about financial literacy and education, and to seek professional advice, which is the most effective way to change financial behavior.