Illustration of an upset, poor woman on a scale, portraying the racial wealth gap
Money Things

Debt & the racial wealth gap facing Black communities

Money Things

Debt & the racial wealth gap facing Black communities

Black communities face widening financial inequities, but there is hope.

You may have heard about the racial wealth gap, but you aren’t sure what it means. Well, overall it means the difference in median wealth for households of different racial identities. White households possess more wealth than minority groups, such as Black, Latinx, and indigenous households.

You may be asking, “How bad can it be?” In many ways, it may feel like everyone is doing a bit worse right now, not just Black communities. But looking at the numbers, the wealth gap between white Americans and Black communities in the US is staggering.

According to the Brookings Institute, in 2019, white households had a median worth of $188,200 compared to Black households who only had a median net worth of $24,100. In other words, white households held 7.8 times the amount of wealth as Black households. This isn’t a recent development either. This gap has been present for decades, if not centuries. So let’s talk about some of the factors that led to this current reality.

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  1. Why is there such a wide racial wealth gap?
  2. But what can I do to help address the racial wealth gap?

Why is there such a wide racial wealth gap?

To keep things short, we’re only going to talk about four main areas here: enslavement, redlining, student loan debt, and incarceration.


During US chattel slavery, enslavers accrued large amounts of wealth from those in bondage. In 1860, the 4 million enslaved people would have been valued at approx. $4 billion in total. In today’s money, that’s approx. $42 trillion! The enslaved themselves never saw the wealth they generated.

After the Civil War, it took only a generation or two for once-wealthy white families to regain their monetary status. Meanwhile, Black families struggled amidst increased racial terrorism and lacked opportunities that their white counterparts could rely on. Enslavement set the stage for the vast disparities we see today.


At its core, redlining was (and is) designed to keep wealth out of minority neighborhoods. During the Jim Crow era, this was literal. Black neighborhoods would be outlined in red ink (hence the name) as a warning to mortgage lenders. This kept Black residents from building credit, or for applying for new suburban homes that were being built post-WWII. These homes often built wealth for the burgeoning middle class, but Black families were denied these opportunities.

We can see the effects today, where the homeownership rate for Black families is 44% compared to 73.7% for white families.

Student loan debt

According to the Education Data Initiative, Black college graduates in the US owe, on average, $25,000 more in student loan debt than their white counterparts. And four years after graduation, 48% of Black students owe an average of 12.5% more than they borrowed.
To put this into perspective, on average, single Black women with a Bachelor’s degree are $11,000 in debt, while married Black women in their 30s with a Bachelor’s degree are $20,000 in debt. So while Black women are the most educated demographic in the US, they earn significantly less money for the work that they do. While education is seen as a pathway to greater economic opportunities, for Black communities, it often is another form of debt that limits wealth growth.


Black people in the US are incarcerated in state prisons at nearly five times the rate of white Americans. And while Black communities only comprise 13% of the US population, Black people account for nearly 40% of the US prison population. With such heavy focus on policing Black neighborhoods, and strict limitations on the employment opportunities for felons and ex-convicts, large swathes of Black communities are limited from addressing the already large financial disparities facing them.

Median wealth for Black and White households

Line graph showing a household wealth comparison by race
Brookings Institute article, “The Black-white wealth gap left Black households more vulnerable,” December 2020.

But what can I do to help address the racial wealth gap?

Support, donate, join

Do some research on your area to see what organizations are around. And all of them will take some kind of help. You can write letters to prisoners, donate extra dollars to mutual aid networks, or even take on a role if you’re able.

The financial disparities for Black communities are often systemic in nature. However, in order to combat systemic racism and policies, it takes people, working together, to make the changes for a better tomorrow.

Be an advocate in your community

Systemic, however, doesn’t mean there’s nothing you can do. There’s always work that can be done on an individual level. Be an advocate for your Black co-workers, highlighting their accomplishments when possible. You could also speak about disparities with your team or leadership and how to address them.

Or if you notice disparities in your neighborhood, talk about them with your neighbors, or even members of your local government. Others may have noticed the same things, but didn’t feel confident enough to talk about them. Keep conversations going and use your voice to be an advocate.

Don’t stop learning & sharing

Inequities continue to exist for Black communities because those with the power to make changes often find themselves ignorant of the realities. Or they wonder if their presence can really change things.

The truth is, we all have the power to change our world. The more you educate yourself, the more you push yourself to embody the lessons of the past. And the more you embody those lessons, the better equipped you’ll be to not only avoid the same mistakes, but how to add to new solutions.

The opinions we expressed in this post are for general informational purposes only and are not intended to provide specific advice or recommendations.