The realities of the racial wealth gap may be even starker than we thought. According to a new study from the Institute for Policy Studies and the Corporation for Enterprise Development, it will take the average black family 228 years to reach the same level of wealth that white families have today.
Using data from the Federal Reserve's Survey of Consumer Finances (which last came out in 2013), the study shows that over the past 30 years, the average wealth of white families has grown by 84%. That's three times the growth rate for the black population (and 1.2 times the rate of growth for the Latino population). Here's the table:
If these rates hold for the next 30 years, the average wealth of white households would increase by more than $18,000 per year, while Latino and black households would see their respective wealth increase by about $2,250 and $750 per year, the group found.
This is despite the fact that by 2043, people of color will constitute a majority of the U.S. population.
"Despite the progress of the civil rights movement, white households have been pulling away from households of color, particularly black and Latino households, for decades," the study's authors write. "Today, the lingering effects of generations of discriminatory and wealth-stripping practices have left Latino and black households owning an average of six and seven times less wealth than white households."
The researchers place the blame for these trends on U.S. government policies, citing things like the exclusion of farmworkers and domestic workers—who were predominately people of color—from coverage under the Social Security Act of 1935, and the exclusion of a number of tip-based professions predominantly held by black workers—such as servers, shoe shiners, domestic workers and Pullman porters—from the first minimum-wage protections enacted as part of the Fair Labor Standards Act of 1938.
Such discriminatory policies continued through the Federal Housing Authority's "redlining" practices that created segregated neighborhoods, and through racist application of the 1944 G.I. bill, which was created to provide low-cost home mortgages, low-interest business loans, and tuition assistance.
The government continues to discriminate against people of color today through the tax code, the researchers say, because the wealthiest families now reap the greatest benefits from it.
"An overwhelming amount of the spending done through the tax code goes to white households at every income quintile," they write. "More specifically, if we look at households in the highest income quintile (those earning $103,466 or more), whites accounted for 79% of (those) filers, while blacks and Latinos made up only 6% and 7%, respectively. That’s particularly important given that filers in the top income quintile were also found to take greater advantage of high-value tax benefits, which cost the government hundreds of billions of dollars each year."
Here's a table the researchers created showing the imbalance in benefits from the current state of the tax code.
As for Asian-Americans, the researchers say that while data show they have already surpassed white households in median income, by grouping Asian Americans and Pacific Islanders into the same racial category, "our ability to truly understand the state of Asian economic security is greatly hampered by aggregated Asian economic data." And there is almost no data on the state of Native American finances, they write.
To close the racial wealth gap, the researchers call on the next president to direct a government-wide audit to "rigorously assess all major economic policies and programs, across all relevant federal agencies, to understand how these policies are affecting the racial wealth divide."
They also call for a cap on mortgage interest and real estate tax deductions, and to redirect the savings from such a policy toward promoting primary homeownership.
Finally, they call for the creation of a wealth tax, as French economist Thomas Piketty has proposed, that would redistribute income from ultra-wealthy people to poorer ones.
"Lawmakers should explore the creation of an annual net worth tax on wealth over $50 million or a similarly high threshold, at a low rate of one to two percent. Annual net worth taxes have existed in other OECD (Organisation for Economic Co-operation and Development) countries and are part of a constellation of policies to reduce concentrated wealth and generate revenue for opportunity investments," they write.
Of course, Donald Trump on Monday proposed eliminating the estate tax (called the "death tax" by its opponents), which would have the exact opposite effect.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.