The Wealth Gap in America

Americans, specifically women and people of color are commonly prevented from the ability to become wealthy. How and why does this happen?

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The issue of the wealth gap in America has been an issue throughout history and continues today primarily with women and African Americans. Discrimination against race and sex is the main reason for this imbalance and outdated stereotypes fuel the prejudice that defines what racism and sexism mean in todays society.

Owning a home is significantly more difficult if you are African American and while it was more difficult in the past, it has only gotten slightly easier. When wealth is passed from generation to generation and there wasn’t any to begin with, that leaves little opportunity for those individuals to build any.

“Homeownership is often viewed as the entree to the American dream and the gateway to intergenerational wealth. However, this pathway is often less achievable for Black Americans who post a homeownership rate of 46.4% compared to 75.8% of white families.” says Elizondo, et al.

Discrimination in housing was a large issue in the 1960’s when Black individuals were prevented from owning property in a primarily White neighborhood. When history continuously interferes between African Americans and homeownership, it makes owning property significantly more difficult for those people and their future generations.

Bluhm, et al suggests, “Further, through a federally-created practice known as “redlining,” Black Americans were barred from the low-cost Federal Housing Administration insurance-backed mortgages that their White counterparts received.”

People in White neighborhoods commonly thought that property values would go down if a Black family were to move in and that caused many realtors to drive them away from those areas. Making homeownership more difficult for a specific class causes that group to remain inferior to other groups. How can generational wealth grow, if that generation is secluded to low income areas and subprime loans even with good credit?

“This kind of racialized disadvantage has historical roots. Institutional forces, such as the National Housing Act of 1934, contributed to structural racial and socioeconomic segregation, limiting many black families’ housing options to those in D-rated neighborhoods, which are characterized by distressed housing stock, lower-income residents, and overall decline.” writes Noel, et al.

Wealth is also prevented with less education. The more education and training someone has, the higher their future income will be. However, if a group is prevented from receiving that schooling, then they’ll be guaranteed that low salary. Black children are more likely to be in high poverty schools.

“Growing up in such schools lowers children’s probabilities of graduating from high school and attending college—crucial ways to increase earning potential. As a result, only 24 percent of the black population over the age of 25 holds a bachelor’s degree or higher as of 2017—ten percentage points lower than the comparable white population.”

An additional way the wealth gap in America is affecting its citizens, is with the gender pay gap. The pay gap between men and women is less based on stereotypes than it was in the past, however there is one that has stayed with us and that is the idea that women are the caregivers and men are the money makers. A great deal of businesses have a sort of “motherhood penalty”, and this is when a couple decides to have children, the woman is expected to stay home which allows opportunities for the father to be promoted and advance his status in the company. The mother is also more likely to carry burdens like staying home with a sick child.

“At the very top of the income distribution for women, there is no motherhood penalty at all. But at the bottom of the wage distribution, low income women bear a significant and costly motherhood penalty.” explains Michelle J. Budig.

This separation between wealthy and poor is heavily preyed upon in many situations, but an employer’s ability to penalize a woman for choosing motherhood is easier if that woman is in lower class society. The cost of childcare is significant in this country and the wealthier you are, the more you’re able to afford. This provides more opportunities for a wealthy mother to advance in her career, while a mother with a lower income cannot afford childcare and needs to stay at home more often.

Blackwell, et al notes, “The unreasonably high cost of  childcare also pushes many women out of the workforce, particularly low-wage women whose earnings would barely offset the bill for day care or a babysitter.”

There is an expectation when it comes to motherhood that if a child needs care or if there is a parent teacher conference, for example, they are the ones to leave work and handle those situations. This causes women to have an unfair disadvantage but leaves men more opportunity to succeed and advance in their career. Many mothers make less than they deserve due to this conventional way of thought, causing more to live in poverty or low income areas.

The United States Census Bureau calculates, “For example, in 2018, 10.6% of men, and 12.9% of women lived in Poverty USA. Along the same lines, the poverty rate for married couples in 2018 was only 4.7% – but the poverty rate for single-parent families with no wife present was 12.7%, and for single-parent families with no husband present was 24.9%.”

The fact that the percentage of single mothers is almost double the amount of single fathers just shows that women are more likely to carry the role of caregiver. Until the stereotype that women are caregivers is eradicated and they are given fair opportunities to advance in the workplace, there can be no implication of an equal society.