The Wealth Gap

Feb 25, 2021 | Finances, Prenuptial Agreements, Second Marriages

The wealth gap – it’s inevitable in any capitalist society, but in the United States, it seems to be especially driven by a racial divide. Let these numbers sink in; The median income for a white family was $188,200, compared to $24,100 for Black families, and $36,100 for Hispanic families, as reported by the Federal Reserve’s 2019 Survey of Consumer Finances, released in September 2020. Sadly, rather than getting better, things are only getting worse in the midst of COVID-19. The recession brought on by the pandemic has only continued to make the rich, like Jeff Bezos and Elon Musk, richer. According to USA Today, America’s 614 billionaires grew their net worth by a collective $931 billion.

Meanwhile, the virus hit minority communities especially hard thanks to the systemic lack of funding and resources to these areas. Keep in mind that of the United States’ population, 31% of Black individuals and 26% of Latino individuals work minimum wage jobs (Source: USA Today), often for less than $15/hour (dependent on the state). Yet,  Brookings reports that approximately half of all workers making less than $15/hour as a median wage were considered essential during the worst months of the COVID-19 pandemic. Needless to say, the pandemic took a toll on minority employees. While getting paid below the poverty line, these employees were expected to continue going to work, find care for their children, and risk their health by working public-facing jobs.

Let’s Start At The Very Beginning…

Like many of the issues facing the social and economic situations of millions of Americans, the wealth gap can be traced back to systemic racism. This country was not founded with the intention of letting minorities succeed. Though ironically everyone who inhabits the United States (with the exception of Native Americans) stems from a line of immigrants, the American infrastructure is notorious for its racism and xenophobia. While welcoming White Anglo-Saxon individuals onto the shores of Ellis Island, the same country was regularly unloading cargo ships full of Africans into the ports of southern cities lto be auctioned off and sold as slaves. Throughout American history, the advancement of the Black population has been stifled again and again by white men in power. After the 13th Amendment to the U.S. Constitution abolished slavery, Black people were still repressed by Reconstructionist efforts like the Grandfather Clause (to repress voting rights) and Jim Crow laws. Slavery was replaced with repressive economic institutions like sharecropping and indentured servitude, and Black students were generally not allowed admittance into predominantly white secondary schools. It would not be until 1964, in the era of the Civil Rights movement, that the Jim Crow institution of segregation was ended.  Headed by Martin Luther King Jr., the Civil Rights movement brought nationwide attention to the wealth gap, racial inequalities, and violence against minorities. The effects of these racist institutions do not just vanish overnight though.  Rather, they reverberate for generations and manifest themselves in the school-to-prison pipeline, the modern wealth gap, and police brutality, like that which spurred 2020’s Black Lives Matter protests.

Modern Racism Runs Rampant

Though we’ve in-depthly described historical racism towards Black Americans; Native Americans, Hispanics, and Asian-Americans have faced similarly blatant racism since the founding of the United States. Most likely, the narrative that you learned in school twisted the American narrative in favor of the white “Manifest Destiny” mythos, undermining the severity of systemic racism in American history. Unfortunately, history often repeats itself. Just in 2020, news broke about the abhorrent conditions that mostly Hispanic immigrants faced at U.S. Customs and Immigration Enforcement (ICE) detention centers. As reported on by TIME, “The NYPD reported that hate crimes motivated by anti-Asian sentiment jumped 1,900% in New York City in 2020.” Native American communities as a whole were generally disproportionately affected by the COVID-19 pandemic, with mortality rates at times twice as high as the rate among white Americans (source: U.S. News).

Securing A Future of Improved Racial Equality

So, what can be done about it now? Joe Biden, the recently elected 45th President of the United States, ran on the campaign promise of closing the racial wealth gap. While there is significant discourse about which of his campaign pledges Biden is actually living up to while in office, he has already signed four executive orders as part of his broader racial equity plan.

So far, Biden has signed into action:

  • An executive order that forbids the attorney general from renewing U.S. Department of Justice (DOJ) contracts with privately owned prisons.
  • A presidential memorandum that directs the Department of Housing and Urban Development (HUD) to investigate the effects of the Trump administration’s regulatory actions that “undermined fair housing policies and laws.” This memorandum also directs HUD to (based on the analysis of the findings) fully implement the Fair Housing Act.
  • An executive order that directs federal agencies to regularly engage and work on impactful initiatives with Tribal governments.
  • An executive memorandum directing the DOJ to partner with Asian American and Pacific Islander communities to prevent hate crimes in the midst of racism brought on by COVID-19. The initiative also directs the Health and Human Services Department and Covid health equity task force to consider issuing best practices for advancing “cultural competency” and sensitivity toward these communities.

The signing in of these various executive orders is a great start for the Biden administration, and certainly a major 180-degree spin from the hateful and racist rhetoric that the Trump administration preached. However, to effectively close the wealth gap, there’s so much more for us to do. Ending the privatization of prison systems is a major win, but the criminal justice system in America, as well as policing itself (a system that was founded from “slave catchers”) is in need of sweeping reform. The prison system is still sprinkled with the ongoing impact of the Nixon-era “war on drugs”, a federal campaign to end the illegal drug trade in America, which mostly served to incarcerate Black Americans on what, typically for a white person, would be minor drug possession charges.

Regarding equal and fair housing for minorities in America – this issue is just one branch of the greater problems of underfunded neighborhoods, and the longtime practice of placing minorities in “ghettos”, or areas of economic disparity. By systemically underfunding public resources like schools, etc. in these minority communities, children receive sub-par education, and are less likely to move onto secondary education. Contrary to the narrative that is often conveyed by conservative Americans, there is not more crime in these neighborhoods because these people are inherently more violent, but rather because the public infrastructures are set up to rob these children in minority communities of the opportunities that many white children have the privilege to receive, eventually ushering many into the school-to-prison pipeline.

Of course, the inequality in the educational system feeds into a hot button topic that is garnering a lot of attention right now – student loan forgiveness. While President Biden has been called on by several leading Senate Democrats to sign an executive order forgiving $50,000 in federal student loan debt per student, he recently bluntly stated that he, “will not make that happen” (via executive order, at least), and instead plans to forgive $10,000/individual, and do away with interest (all federal student loans are currently in forbearance through September 30, 2021). However, it’s also worth pointing out that student loan cancellation was left out of the American Rescue Plan, where it could have easily been written in as a clause.

So how does this play into the wealth gap?

Forbes explains it best, stating, “It’s no secret that the cost of college is climbing faster than American wages and the inflation rate, 8x faster, to be exact. Education is one area where Black Americans are hurting the most due to institutionalized racism-especially with student loans. Young Black adults take on 85% more education debt than their white counterparts, and that disparity compounds by 7% each year after the borrowers leave school, according to a recent study in the Sociology of Race and Ethnicity journal.

As we discuss the pressing issue of America’s wealth gap, it’s quintessential to remember the gender wage disparity that exists across the board, more prominently so for women of color. While the Equal Pay Act of 1963 and Civil Rights Act of 1964 protects women at a federal level, the pay gap between men and women greatly varies by state. Progress continues to be made but concerningly, the Institute for Women’s Policy Research estimates that wage parity will not be reached until 2059. We’ve pulled the below infographics from Business Insider to demonstrate just how prominent the wage gaps are between women of various races – highlighting the importance of intersectionality in third wave feminism.

Getting an affordable prenuptial agreement with HelloPrenup is one of the many ways that women can make their especially hard-earned money work for them. We are excited to see the ways in which the new administration continues to implement policies that will help to close the wealth gap, and improve racial equality.

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