Fact: The $147,000 median wealth of a white household is 41 times the $3,600 median wealth of a Black family.
Many Americans may believe that in the wake of the country’s first Black president, we had moved past race-based inequality. Many others may see the divide as the result of individual behavior choices, like getting an education or saving carefully.
As co-authors of the report “Ten Solutions to Bridge the Racial Wealth Divide,” we disagree.
Our research points to a multigenerational legacy of white supremacy in asset building and wealth concentration — a history that includes the African slave trade, Jim Crow and systematic discrimination in wealth-building opportunities right on up to the present.
That trend is getting worse, not better.
Between 1983 and 2016, the median net worth for Black Americans actually went down by 50 percent. Paired with a growing Latinx population that also lags far behind whites in household wealth, the U.S.’s overall median wealth trended downward over those decades, even as median white wealth increased.
These trends go hand-in-hand with the rigging of the overall economy. Over the last 30 years, the wealthiest 20 percent of households have captured almost 97.4 percent of all increases in wealth, leaving only scraps for the rest.
To repair these breaches — between Black and white, as well as between the rich and the rest — we must restore the wealth of communities that were literally used as a foundation of the nation’s wealth, while being prohibited from building their own.
It won’t be an easy task. But it’s by no means insurmountable.
Even though it’s hard to imagine a thoughtful discourse about reparations in the U.S. today, there are actually several useful precedents in our own history.
In 1988, President Ronald Reagan formally apologized for the U.S. internment of Japanese Americans during World War II and, under the Civil Liberties Act, paid $20,000 in reparations each to over 800,000 victims. Over $1.1 billion was initially allocated, with additional appropriations later.
In 1995, Florida provided restitution for a violent 1923 pogrom against Black residents of Rosewood, Florida, which included compensation and university scholarships for Rosewood descendants.
At the international level, Germany has paid over $89 billion in reparations to victims of the Holocaust. German officials continue to meet with groups of survivors and their advocates to revisit guidelines and ensure that survivors receive the benefits.
There’s no reason to believe a similarly viable program couldn’t be designed for Americans living with the ongoing effects of slavery, violence and discrimination. (Or, we should add, genocide. We believe there’s a similarly compelling case for reparations to America’s First Nations that deserves its own treatment.)
Understanding White Affirmative Action
For white people to understand the racial wealth divide requires some demythologizing of the dominant narrative of wealth creation.
In 1965, a century after the Emancipation Proclamation, African Americans were still largely excluded from programs that helped build middle-class wealth. In the decades following World War II, the U.S. made unprecedented public investments to subsidize debt-free college education and low-cost mortgages. These wealth-building measures benefited millions of households — nearly all of whom were white, and virtually none of whom were Black.
During these same years, people of color faced overt discrimination in mortgage lending and separate-and-unequal school systems throughout the United States. Barred from traditional forms of credit, African Americans were pushed into wealth-stripping scams like “contract for deed mortgages,” where a missed payment would lead to eviction and loss of all equity.
So, while many whites were able to board an express train to middle-class wealth between 1945 and 1975, people of color were left waiting for a train that never showed up. As a result of government subsidies, white homeownership rates steadily rose to as high as 75 percent in 2005, while Black rates peaked at 46 percent the same year — a 30-point gap that persists to this day.
Since then, subsequent generations of white families have been able to help their children buy homes and go to college through what sociologists call the “intergenerational transmission of advantage,” while Black families lacked the financial stability to do the same.
A major reason for the growing wealth divide, then, isn’t that white people “worked harder.” It’s that the government worked harder for them.
Still, prosperity is hardly shared uniformly by white Americans. Many white people, with little in the bank to show for their racial advantage, may not support the concept of reparations. If they never owned slaves — and neither did their ancestors — why should they, as taxpayers, have to pay?
The key point is that unpaid labor by millions of people of African heritage was a foundation of the social wealth in the United States. Immigrants with European heritage directly and indirectly benefited from this foundation of social wealth and white supremacy, even if they never had anything to do with slavery.
But that doesn’t mean all white people would bear equal responsibility for paying out.
Indeed, the reparations discussion today is taking place in the context of four decades of growing inequality. Real wages have been stagnant for over half the population of any race, as wealth has concentrated in fewer hands — who use that wealth to buy political power, tax cuts and regulatory favors that increase their wealth even further.
Today, the wealthiest 400 billionaires in the U.S. have as much wealth as the entire African American population and over a quarter of all Latinx households combined. These same trends have eroded economic security for millions of white households, too.
The bill for reparations, then, can go first to the mostly white, ultra-wealthy Americans who’ve benefited most from this inequality. With that in mind, we propose several concrete mechanisms to fund a national Reparations Trust Fund.
The first is a graduated tax on wealth and inherited assets.
Sen. Elizabeth Warren, for instance, has proposed a 2 percent annual tax on wealth over $50 million, with the rate rising to 3 percent on wealth over $1 billion. Such a proposal would generate an estimated $2.75 trillion over the next decade.
A progressive tax on inheritances over $10 million, meanwhile, would also generate substantial revenue, almost entirely from extremely wealthy families that have benefited from generations of white advantage in wealth building.
Second, we propose hefty penalties on wealthy individuals and corporations that hide their wealth offshore or in complicated trusts to avoid taxation. Part of the austerity many of our communities face is the result of the estimated 8 to 10 percent of all global wealth that’s now hidden offshore. A tax on wealth and stiffer penalties on tax dodging would have beneficial impacts on the larger economy for all workers, not just those who face racial exclusion.
A third source of financing would be to redesign existing wealth-building subsidies. The current U.S. tax code provides over $600 billion a year in tax subsidies — such as homeownership subsidies and retirement savings programs — that are skewed dramatically to the wealthiest households. Shifting these expenditures toward wealth-building programs for low-wealth people, particularly those of color, would have a monumental impact.
In short, we have the method and the means to fund a reparations program. Only the political will is missing.
The Road to Reparations
The first political step toward reparations would be for Congress to create a national commission to wrestle with the legacy of slavery and propose a program of reparations and reconciliation.
Year after year, starting in 1989, Rep. John Conyers (D-Michigan) filed legislation to create this commission — HR40 — but it was never voted out of committee. (The bill’s name alludes to unfulfilled promises of “40 acres and a mule” made to formerly enslaved Africans in the late 1800s.) Rep. Sheila Jackson Lee (D-Texas) has carried on as the new lead sponsor since Representative Conyers’s retirement.
The commission could investigate many different forms of reparations. In his book, The Debt: What America Owes to Blacks, Randall Robinson talks about a wide range of ways that reparations could be used, including the funding of cultural institutions, community initiatives, direct cash grants and targeted wealth-building programs.
The commission could also determine eligibility. Scholars like William Darity Jr. argue that eligibility should be tied to those who can demonstrate they have ancestors who suffered from forced migration, exterminationist policies and slavery — not those who came to the U.S. voluntarily. For those who do qualify, the money could be paid in a lump sum.
A Reparations Trust Fund could also generate funds for specific wealth-building initiatives. Some options include:
Baby Bonds and Stakeholder Funds
Baby bonds, a mechanism to rebalance the historical injustices in family wealth, are federally managed accounts set up at birth for children and endowed by the federal government with assets that will grow over time.
One study suggested that, had the U.S. implemented a universal “children’s savings account” program in 1979, the white-Black wealth divide would have shrunk by 82 percent for young adult households.
These funds can be used to establish “stakeholder funds” when children reach adulthood to get an education, purchase a home or start a business. Additional funds could be targeted for matching savings programs, homeownership, business start-ups and other wealth building opportunities.
Sen. Cory Booker (D-New Jersey) introduced a 2018 baby bonds bill titled the “American Opportunity Accounts Act.” Senator Booker’s program would be universal, with every child receiving at least $1,000 at birth. After that, up to $2,000 per year would be added to the account based on family income, with lower-income families receiving larger deposits.
A recent analysis of a similar proposal by Columbia’s Center on Poverty and Social Policy suggested the policy could reduce the wealth gap between young, white households and young, Black households more than tenfold.
Affordable Housing and Homeownership
Homeownership rates are heavily skewed by race, with 73 percent of white households owning their home in 2018, compared to 42 percent of Black households. Three out of four neighborhoods that were redlined in the 20th century are still low-income, showing the long-term effect of residential segregation policies on cities.
A comprehensive approach like the “American Housing and Economic Mobility Act,” introduced by Sen. Elizabeth Warren (D-Massachusetts), would ameliorate these historical injustices and address the current crisis of affordable housing. Among other things, it would provide down payment assistance to first-time homebuyers living in formerly redlined or otherwise officially segregated areas.
These loans could be similar to the subsidized home mortgages that built the white middle class after World War II, but targeted to those excluded or preyed upon by predatory lending.
Universal Public Policies
In addition to investments targeting the African American community, broader progressive policies to empower the working and middle classes would also have the impact of reducing the racial wealth divide. These are just a few of the increasingly popular ideas we studied.
Guaranteed Employment and Significantly Raising the Minimum Wage
Black and Latinx workers are twice as likely as white workers to be among the “working poor,” meaning they have a job, but that job doesn’t pay enough to cover basic living expenses.
What’s required isn’t just more jobs, but more good jobs that pay a living wage. A federal jobs guarantee would ensure universal job coverage for all adult Americans and eliminate involuntary unemployment. It would offer existing workers a viable alternative to jobs with low wages, inadequate benefits and undesirable working conditions. Like the Depression-era Works Progress Administration and Civilian Conservation Corps, the work would be directed to create and improve our nation’s physical and human public infrastructure.
Increases in income alone won’t bridge the racial wealth divide, but they would help. Plus, the income from a federal job guarantee would limit the racially disproportionate exposure to predatory finance resulting from low paychecks and unemployment.
Medicare for All
Poor health outcomes are inextricably tied to race in the United States. As the leading cause of bankruptcy, the high cost of health care continues to put low-wealth families at risk — especially the people of color who account for more than half of the 32 million non-elderly Americans without health insurance. Medicare for All removes this burden at the point of delivery.
About 10 million U.S. families lack bank accounts. People of color are particularly vulnerable to being unbanked, as are rural populations, the very young and the elderly. The postal service is uniquely positioned to provide essential, low-cost financial services to these families, sparing them from exposure to predatory lenders.
Many reparations proposals include funds for institutions that educate and commemorate those who struggled against oppression. These are just a few of many possible ideas to institutionalize cultural knowledge about violence and discrimination toward African Americans throughout U.S. history.
Endowments for Historical and Cultural Institutions
Reparations funds could provide one-time capital endowments to create and sustain museums and exhibits that teach the history of slavery and its aftermath, such as the National Museum of African American History and Culture and the National Museum of the American Indian, both operated by the Smithsonian Institution.
National History Education Programs
Alongside Germany’s reparations to families impacted by the Holocaust, there have been significant investments in education about the history of the Holocaust. The “Facing History and Ourselves” curriculum is now used in thousands of U.S. high schools. A similar investment should be made to disseminate the history of African Americans to all segments of society.
Historical Monuments and Markers
Throughout Germany, there are historical markers informing people about the legacy of the Holocaust. Over 30,000 commemorative bricks have been installed outside homes where Jews, LGBTQ people, Roma and other targets of the Nazi regime lived prior to their deportation to death camps. German residents have daily reminders of this history through what are called Stolperstein, or “stumbling stones.”
In the U.S., the National Park Service has a designated site for the Trail of Tears, marking the 1838 forced eviction of the Cherokee from their homelands. Similar markers and exhibits could illuminate other hidden history.
For instance, the recently opened National Memorial for Peace and Justice in Alabama commemorates the 4,400 victims of lynching and mob violence between 1877 and the 1950s. Other historical markers could mark buildings such as the U.S. Capitol (built with enslaved labor), sites of lynchings, and organized pogroms and riots, such as the 1924 attack on a Black business district in Tulsa, Oklahoma.
This would be particularly important for the broader education of those who were privileged by racially discriminatory policies.
Toward a Deep Process
We as a society have yet to address, apologize, and atone for the original sin of slavery, and the continuing legacy of racism in this country. (Nor, we should say again, for the genocide of Native Americans.)
To continue to ignore the legacy of slavery and discrimination requires a debilitating denial — even for white people whose ancestors arrived from other lands in more recent times, and especially for those at the top of the wealth pyramid. The idea that we can simply “forgive and forget” is impossible, given the deep and pervasive ways that racism permeates all aspects of our economy and society.
For centuries, economic rewards have been allocated based on the level of melanin in our skin. We’ll never repair this legacy without a deep process that includes material reparations.