Abstract
Racial disparities exist in many aspects of social and economic life in the United States. One of the more persistent and potentially damaging disparities is the racial gap in wealth. In this chapter, we (a) explore why communities of color remain behind in asset accumulation, (b) introduce blueprints for individual and collective strategies for building wealth in communities of color, and (c) provide three brief case studies. We acknowledge that it has taken generations to create the current racial wealth gap in the United States and it will not go away quickly. Yet, it is still possible to reduce the number of people living in asset poverty and improve economic security among communities of color. Individual-level strategies and assets discussed in this chapter include investing a portion of Earned Income Tax Credit refunds, Individual Development Accounts, retirement savings, real estate, and estate planning through a trust or family endowment. Collective-level strategies and assets discussed include shared risk pools for insurance, housing cooperatives, investment clubs, worker-owned and microenterprise cooperatives, Community Development Corporations, venture capital entities, and foundations. We note the need for “gap-closing methods” that collectively implement these strategies on a large scale and make suggestions for how this might happen.
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Notes
- 1.
Wealth is measured at total assets minus total liabilities/debt. Assets are the sum of financial assets (such as bank accounts, stocks bonds, and 401 ks/IRAs) and nonfinancial tangible assets (such as homes and real estate, businesses, and vehicles). Liabilities include both unsecured debt (such as credit card balances) and secured debt (such as mortgages and vehicle loans).
- 2.
In the late 1960s, community groups in Chicago’s Austin neighborhood coined the term redlining referring to the redlines lenders and insurance Companies drew around areas they would not offer loans and other services, especially inner city neighborhoods likely to attract people of color (see Hillier 2003).
- 3.
See http://www.nyc.gov/html/ofe/html/policy_and_programs/saveusa.shtml for more details.
- 4.
Theses agricultural cooperatives are primarily based in South Carolina, Mississippi, Georgia, and Alabama.
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Acknowledgment
We gratefully acknowledge the assistance of Tiffany Trautwein and Breanna F. Goff.
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Shanks, T.R.W., Boddie, S.C., Wynn, R. (2015). Wealth Building in Communities of Color. In: Bangs, R., Davis, L. (eds) Race and Social Problems. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-0863-9_4
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