What We Miss When We Talk About the Racial Wealth Gap
His reluctance to treat family structure as a causal factor is similarly puzzling. He notes that married Black households have an average wealth of two hundred and thirty thousand dollars—more than three times that of their unmarried peers—but resists drawing the obvious conclusion. The gap is not merely about differences in saving habits. Perry acknowledges that fifty-seven per cent of Black children do not live with their fathers, but hurries past the long-term consequences of that fact. A growing body of research in child psychology and economics links adverse childhood experiences—violence, instability, parental absence—to poorer performance in school, reduced emotional well-being, and lower lifetime earnings. In a paper titled “The Trouble with Boys,” the economists Marianne Bertrand and Jessica Pan find that boys in particular suffer most acutely: they are more likely to act out, fall behind, and fail to recover.
Perry concedes that “there are economic benefits to marriage,” but cautions that focussing on it “diverts attention from eliminating the discrimination that extracts wealth and makes marriage less likely.” As with education, he treats wealth not as an outcome but as a precondition. Having decided that wealth disparity is the foundational cause of all others, Perry presents a remedy that’s scaled accordingly: a reparations program that could cost as much as fourteen trillion dollars. The proposal comes with a handful of other guarantees to Black Americans. “What is owed,” he writes, includes lower energy bills (facilitated in part by “the installation of programmable thermostats”) and “a single-payer system that provides universal care without significant cost sharing.”
There are, to be sure, books on the subject that offer more rigor and depth. “The Color of Money: Black Banks and the Racial Wealth Gap” (2017), by Mehrsa Baradaran, a law professor at the University of California, Irvine, is a sharp, historically grounded critique of the idea that segregated institutions—Black banks, in particular—ever meaningfully closed the racial wealth gap. “Black economic power and autonomy had a natural appeal in the face of segregation and racism,” she writes, but the strategy has been “an anemic response to racial inequality” and has yielded “virtually nothing” in terms of long-term convergence. Economic power, she argues, cannot thrive in isolation. Bank of America, she notes, began as the Bank of Italy, serving working-class Italian immigrants in San Francisco—its eventual success made possible by integration into the broader financial system. “Full racial integration will eventually remove pockets of blight, crime, and deprivation across the country,” Baradaran writes. “We must shed the destructive myths that separate can be equal, that a segregated economy will reach prosperity on its own.”
Baradaran, like many others, ultimately endorses reparations, including in the form of direct cash payments. A similar line of reasoning appears in the legal scholar Bernadette Atuahene’s new book, “Plundered: How Racist Policies Undermine Black Homeownership in America” (Little, Brown). Drawing on legal analysis and deep ethnographic work, Atuahene investigates a quietly devastating episode in Detroit: the city’s illegal overassessment of property taxes in the years following the 2008 financial crisis. Thousands of poor Black homeowners—many living in the only properties that they had ever owned or stood to pass down—were driven into foreclosure. The result was a deepening of the already stark wealth divide between Black residents of the city and white residents of the surrounding suburbs. Atuahene adopts a definition of racism in the mold of Ibram X. Kendi’s: any policy or practice that sustains racial inequality. Though her study focusses on a single city, she insists that “predatory governance is an American problem”—one that operates quietly, bureaucratically, and often legally, across jurisdictions. Unless these policies are exposed and eradicated, she warns, the wealth gap will continue to fester, unnoticed but widening all the same.
If you take these diagnoses seriously, reading them from the vantage of our current political moment is enough to invite despondency. Reparations, long proposed as the only measure proportionate to the scale of racial plunder, look increasingly like a political, economic, and legal non-starter. Donald Trump, now returned to the Presidency, would never sign such a bill. Republicans in Congress would never pass one. Even California, a wealthy blue state with a Democratic supermajority in the legislature, is balking at the anticipated cost of state-level reparations. The conservative majority on the Supreme Court, for its part, regards the Constitution as color-blind—an understanding that leaves little room for policies explicitly tied to race.
Even a groundswell of political will seems unlikely to sweep these obstacles aside. In 2020, America underwent what many called a racial reckoning, sparked by the mass protests organized under the Black Lives Matter banner. But the effects, in retrospect, feel ephemeral. Many police departments that saw their budgets slashed have had those funds hastily restored amid a rise in violent crime. Corporate pledges to meet diversity targets and back D.E.I. initiatives have, in many cases, been quietly shelved—or publicly reversed—in deference to shifting political winds. Joe Biden, elected in 2020 on a platform that stressed racial equity, made little progress on that front. Trump was not merely reëlected in 2024; he won the popular vote outright, and doubled his support among Black voters, winning sixteen per cent. One begins to understand why pessimism has always been the shadow companion of critical race theory.
Other perspectives from the social sciences offer more room for hope. William Julius Wilson, an eminent sociologist at Harvard, has long argued that the persistence of Black economic disadvantage is not solely a function of present-day racism but also the result of large-scale economic transformations that, while not racially motivated, have had racially disparate effects. The decline of American manufacturing, the rise of globalization, and the shift toward a service-based economy that disproportionately rewards college graduates have all contributed to the stratification we now see. To ignore these structural forces, Wilson suggests, is to misdiagnose the problem—and to risk prescribing the wrong solutions.
Ellora Derenoncourt, the economist whose work traces the racial wealth gap back to 1860, has also studied why progress stalled in the past sixty years. Along with colleagues, she identifies three key reasons. First, income convergence between Black and white Americans largely halted. Second, Black wealth is held disproportionately in housing rather than in financial assets or businesses, meaning that stock-market booms—which have become a hallmark of the post-Reagan economy—widen, rather than shrink, the gap. Third, a persistent savings gap between Black and white households compounds over time. According to their models, unless these underlying conditions are addressed, even reparations on a vast scale would offer only temporary relief. “Within the next 30 years,” they write, “this gap would increase by 30%, and divergence would continue over time.” A separate study, published by the Federal Reserve Bank of Cleveland, reaches a similar conclusion. Analyzing returns on capital, intergenerational transfers, and wage trajectories, the study’s authors find that “equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap.” They also test the effects of a direct redistribution—basically, a helicopter-drop of wealth. The result? “Equalizing wealth without changing the earnings gap has no long-term effect on the wealth gap.”
These findings complicate the dominant narrative that has taken shape in the past decade: that the Black-white wealth gap, built on a foundation of historical injustice, serves as a kind of permanent sentence. This view—widely circulated in works like Ta-Nehisi Coates’s “The Case for Reparations,” published in The Atlantic, in 2014; Richard Rothstein’s best-selling book “The Color of Law,” from 2017; and the Times Magazine’s 1619 Project, launched in 2019—holds that past policies of exclusion and dispossession, especially in housing, created a self-perpetuating cycle of inequality which can be broken only through proportionate intervention. The taproot of this story is often identified with the infamous redlining maps created by the Home Owners’ Loan Corporation, or HOLC, a New Deal agency established in 1933. According to this account, HOLC maps codified residential segregation, denying African Americans access to home loans and, in turn, the chance to accumulate generational wealth through property ownership. The solution, in this framework, is remedial state action commensurate with the original harm.
But the historical record isn’t so clear-cut. The HOLC maps were not widely disseminated at the time, and the agency itself was relatively equitable in its lending. It was the Federal Housing Administration—established a year later—that proved more systematically discriminatory, encouraging lenders to use racial covenants and steering loans toward white-only suburbs. Still, during the thirty-three years between the founding of HOLC and the passage of the Fair Housing Act, in 1968, the Black-white wealth gap continued to diminish. Moreover, redlining was not uniquely applied to Black neighborhoods. Many of the areas assigned the worst rating—D, for “hazardous”—were filled with recent immigrants of Italian, Slavic, or Jewish origin. In a review of HOLC maps across seven cities, the urbanologist Alan Mallach found that, at the time they were drawn, the vast majority of residents of redlined areas were white ethnics. These communities faced discrimination and hardship, yet many of their children outpaced their parents economically. Recent work by the economists Leah Boustan and Ran Abramitzky shows that this pattern of upward mobility continues among the children of immigrants today, including those from poor countries like Guatemala and El Salvador. The contrast is telling. In 2007, Black and Hispanic families had roughly the same levels of median wealth. Fifteen years later, Hispanic wealth had doubled; Black wealth had risen by only half.
A rejoinder to the project of decomposing the racial wealth gap into its constituent parts—the marriage gap, the business-ownership gap, the education gap, the income gap—is that each of these, too, is a reflection of racism, both past and present. To search for color-blind remedies is, therefore, a fool’s errand. As a theory of history, this is powerful; as a guide to policy, however, it’s frustratingly limited. Take education, one of the most powerful predictors of income. There is no question that separate and unequal schooling created vast disparities in educational attainment. But when today’s racial achievement gaps are attributed to more nebulous forms of discrimination—like implicit bias in standardized testing—the explanatory force begins to wane. The solutions that many voices for racial justice have espoused tend to be moral or psychological in nature: decolonizing curricula, reëducating teachers, raising public awareness of structural inequity. These measures are often abstract, and resistant to scale, let alone rigorous evaluation.
Consider, instead, the possibility that many of the racial achievement gaps we observe today reflect not only race but class—the reality that American society is increasingly divided into islands of affluence and disadvantage. The evidence for this is growing. Childhood exposure to concentrated poverty has lasting effects, across time and across racial categories. It hinders cognitive development, educational attainment, and long-term earnings. These forces shape the lives of children on the South Side of Chicago and in Appalachian hollows, in Native reservations and in borderland colonias alike. And if concentrated poverty damages all children, then deconcentrating and reducing it should benefit all children.
