By Ryan Velez
According to Forbes, the entire country is headed towards a retirement crisis, but Black people stand to feel the sting even harder.
Data from the Urban Institute’s Nine charts about wealth inequality in America showed that the average white family had more than $130,000 in liquid retirement savings (cash in accounts such as 401(k)s, 403(b)s and IRAs) vs. $19,000 for the average African American in 2013, the most recent data available. Part of this is due to a growing wealth gap. The average wealth of white families in 2013 was more than $500,000 higher than that of African American families ($95,000). In 1963, the average wealth of white families was $117,000 higher than for Black families.
“The American dream has not happened for African Americans and Hispanics,” says Signe-Mary McKernan, economist, and co-director at the Urban Institute. “Retirement wealth is at the end of the cycle. A lot of things can happen along the way before you get there.”
“There is a pay gap when it comes to what African Americans earn when it compares to whites, even when you control for education,” says Rockeymoore. “We are starting with less.” To put this in perspective, the hourly pay gap has widened to the worst in 40 years, according to the Economic Policy Institute (EPI) — a roughly 27% difference in 2015. Whites earned an average of $25.22 an hour vs. $18.49 for Blacks, the EPI says. Declining unionization and failure to rais the minimum wage are major reasons why this is a problem.
“We need to be having forums addressing labor-market decisions,” Rockeymoore says. Blacks are earning less than whites and it is not a reflection of talents or skills, she notes. “It is a reflection of discrimination in the labor market. We talk about the gender-pay gap, but we need to talk about the racial-pay gap.” Making things even more difficult is a lack of financial literacy.
“Many African Americans have had no history of someone who was a grandfather or someone who gave them some level of financial education in that household,” says James Brewer, president of Envision Wealth Planning in Chicago and president of the Association of African American Financial Advisors. “So, one of the challenges is around some level of financial education.”