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We can solve the racial wealth gap

‘Where is the money?’ abolitionist Maria Stewart asked in the 1800s. We’re still asking.

‘Where is the money?’ abolitionist Maria Stewart asked in the 1800s. We’re still asking.The Emancipator/Nadia Snopek/Adobe

Maria W. Stewart, an abolitionist, women’s rights activist, and also the first Black woman in America to give public political speeches, addressed the First African Baptist Church and Society of Boston in 1832. In her speech, later published in the Boston-based abolitionist newspaper The Liberator, Stewart spoke of the need for women to educate themselves. But she also noted that Black people cannot be fully free without finance.

“Do you ask, what can we do?” Stewart said. “Unite and build a store of your own, if you cannot procure a license. Fill one side with dry goods and the other with groceries. Do you ask, where is the money? We have spent more than enough for nonsense to do what building we should want. We have never had an opportunity of displaying our talents; therefore the world thinks we know nothing. And we have been possessed of by far too mean and cowardly a disposition, though I highly disapprove of an insolent or impertinent one. Do you ask the disposition I would have you possess? Possess the spirit of independence. The Americans do, and why should not you?”

The Emancipator/photo illustration

Life, liberty, and the pursuit of happiness were declared inalienable rights centuries ago. But those rights are as deeply tied to the ability to attain wealth as they are rooted in the words of the Declaration of Independence. And the stubbornly persistent racial wealth gap in America is proof that, for some, the American Dream has remained out of reach.

I was inspired to write the series “We Can Solve the Racial Wealth Gap” — in honor of Stewart’s words, “Where is the money” — based on my experience of coming out of graduate school with six-figure student loan debt. I remember talking to some of my classmates around graduation about what felt like an insurmountable financial hurdle, hoping to engage in a little group venting session.

But I couldn’t. None of my White friends in that conversation had student loan debt. Their parents paid their tuition.

That was the first time I really understood what the racial wealth gap was. I felt it. I worked hard, stayed in school, did what I was told to do to be successful. Yet my professional adult life began with me about $200,000 behind the starting line as compared with my peers.

Over the years, I watched them buy new cars, homes and vacation homes, and travel to exotic locations. Meanwhile, I bought decades-old used cars, rented apartments, and learned to travel on a shoestring. Despite holding similar professional titles, my net worth was a drop in the bucket of theirs. My hard work, and the hard work of my parents — who sent me to a private high school to boost my chances of having a bright future and helped me pay some of my grad school debt — was not enough. As I write this, I still have a five-figure student loan balance, although the light is beginning to appear at the long tunnel’s end.

I’m very lucky now to live well, within my means, and I have never known poverty. But I still have a fraction of the accumulated wealth of my White peers.

Origins of the racial wealth gap

There is a lot of data to support my story. The average Black American household has wealth of 12 cents to every dollar of the average White household, according to the Federal Reserve. In 2019, the median wealth of a White family was $188,200. The median wealth of a Black family? Just $24,100, according to a Brookings Institution analysis.

And the differences are not just between the haves and the have-nots. Even among the poorest, there is a gaping racial cleave.

Black Americans are far more likely to have little to no savings or safety net.

H. Hopp-Bruce/The Emancipator/Nadia Snopek/Adobe

Nearly 1 in 5 Black households has zero or negative net worth, compared with fewer than 1 in 10 white Americans, according to the Federal Reserve.

We know landownership, or the denial of access to it for Black people, has been the foundation upon which the wealth gap was built more than 400 years ago in America. The causes of this financial inequality date back to slavery, but these inequalities are not simply vestiges of long-ago discrimination that continue to ripple into the modern era. They have been reinforced, reintroduced, and reaffirmed time and again throughout history.

“So-called Black Codes were put into place,” says Lisa Rice, president and CEO of the National Fair Housing Alliance. Rice is an expert on the historic origins of the racial wealth gap who has testified numerous times before Congress on the issue. “The colonists denied the opportunity of people of color to access homeownership.”

Postbellum landowning restrictions, Jim Crow laws, redlining, gerrymandering, discriminatory lending practices, and employment discrimination served to create and preserve a racially unequal financial system. Today in Boston, the very city where Stewart spoke, lenders are denying mortgages to Black applicants at three times the rate of White applicants, according to a WBUR analysis.

Laws and policies that erected and perpetuated barriers to Black homeownership were built on a common theme, Rice explains.

“It’s a system of associating race with risk,” Rice says. “As Black people were moving into urban areas throughout the period of the Great Migration, they were being racially steered into certain areas that were perceived as being hazardous. Then, there began to be divestment and disinvestment in those areas. Banks leave. Businesses leave. Municipalities would not service those areas, and they would not invest in infrastructure.”

“It was all orchestrated,” Rice says.

From those roots grew a system where Black people continued to be held back: by student loans that disproportionately burden them with debt, a credit-reporting system that falsely treats Black people as inherently risky, and a lack of investment in Black businesses that keeps Black entrepreneurs from thriving — and from boosting the economy.

Racism? Oh, we’re all paying for it

Let’s be clear: Racism costs all of us. Every American. I don’t just mean it costs us our pride by casting a shadow on the bright, shining American story of exceptionalism we’ve been taught to tell ourselves.

I mean it more plainly: Racial inequality in our financial systems costs all of us — White Americans, too — actual cold, hard cash.

One study shows that racial inequality in the labor market alone sapped $51 trillion from the U.S. economy in the last 30 years.

So when I say we need to reimagine reparations, I don’t mean transferring wealth from one group to another, something critics are quick to decry as fundamentally unfair and backward-looking.

I mean repairing American systems to eliminate the built-in racism that perpetuates injustices like the racial wealth gap, and in the process, making those systems work better for all of us.

This series offers a number of solutions that a broad array of stakeholders — lawmakers, community members, banks, philanthropists, educational institutions, and more — can begin implementing today.

The solutions presented are not exhaustive — and there is no one-size-fits-all approach. Much like the 19th-century abolitionist newspapers that inspired The Emancipator, this series is meant as an invitation to all of us to envision a society where Black people can participate fully and equally, including in its financial systems. It’s a seed from which more innovative and out-of-the-box solutions may grow.

By breaking the cycle of financial discrimination rooted in the enslavement of Black people, codified through usurious and restrictive laws and policies, and perpetuated by the false notion that Black people are a bad financial investment, Americans can finally begin to realize the promise embedded in the Declaration of Independence. Only then can life, liberty, and the pursuit of happiness actually become an antiracist ideal.

Kimberly Atkins Stohr is The Emancipator’s senior columnist, and a senior opinion writer and columnist at The Boston Globe. She may be reached at Follow her on Twitter @KimberlyEAtkins.

Kimberly Atkins Stohr is a columnist for the Globe. She may be reached at Follow her @KimberlyEAtkins.