BLOG 5:Wealth inequality between blacks and whites worsens-Alex Plummer

According to the following article, the income inequality divide between Caucasian and African American individuals continues to grow. The author cites inequalities in home ownership, income, education, and inheritances as contributing factors to said problem. Researchers from Brandeis University followed 1,700 families over a 25-year time span, in hopes to identify how their work and educational experiences affected their accumulated wealth. Within each racial group the average families wealth increased from 85,000 in 1984 to 236,500 in 2009. And the typical net worth of African American families was 28,500, while Caucasians estimated to have 265,000.

They attribute home ownership as the major driving force. Home value and appreciation over time is sparser in non-white neighborhoods. Increasing the difficulty for minorities to build equity. Caucasians on average are able to buy homes eight years earlier than African American families and are able to pay larger upfront payments.

The research also states that when it comes to pay increases Caucasians are more likely to save the increase, while African Americans more often use the money in emergencies. For some inheritance can be a contributing factor to ones wealth. Caucasians are five times more likely to inherit money than African Americans and at a 10 times larger amount.

When it comes to higher education on average Caucasians graduate with 64% debt. Where as four in five African Americans graduate with large amounts of debts, due to loans. Thomas Shapiro, the research conductor and a director at the University, claims that the economy cannot sustain its continuous growth with such a large-scale inequality between wealth.

This is a global social problem because all of the contributing factors the author stated have caused a large effect on a number people. A gap in income is not simply a worldwide problem between the rich and poor but also between ethnic groups. The racial majority is generally prone to receive more societal benefits and receive more opportunities than minorities.

http://money.cnn.com/2013/02/27/news/economy/wealth-whites-blacks/index.html?iid=HP_LN#