WaPo and the Wealth Gap

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<![endif]–>In a plug for this week’s Color of Wealth Policy Summit, the Washington Post features an op-ed by Meizhu Lui of the Insight Center for Community Economic Development in Oakland, CA on the shockingly-expansive racial wealth gap in the U.S. This subject is Asset Building 101: A broad income gap means many families cannot get by, while others are plenty comfortable. The even-broader wealth gap means that many families cannot get ahead, while others are reaping the benefits of tax breaks and other policies that can only be accessed by those who do not want.

Consider data from the most recent Survey of Consumer Finances on average family income (before taxes):

White non-Hispanic families: $51,800.
Non-white or Hispanic families: $36,800.

Pretty Troubling.

Now consider the following: “According to the Fed, for every dollar of wealth held by the typical white family, the African American family has only one dime.”

Pretty Terrifying.

While Lui justifiably concentrates on the racial wealth gap, asset building policy presents a great framework for lifting all vulnerable demographics out of poverty. In addition, asset building policy attempts to reward work, saving, and innovation among at-risk populations much like current policy attempts to do for those who are fortunate enough to not be at risk. Perhaps this is why asset building policy often achieves bi-partisan support.

As for Lui’s policy prescriptions: Good, but dream bigger. Capping and making refundable the mortgage interest deduction, creating a Financial Products Safety Commission, and keeping an eye out for racially-inclusive zoning are all useful ideas. But I’m not sure this is the policy cocktail that will most directly and largely address the “deepening canyon” that Lui rightfully describes.

How about making it easy to save at tax time (friendly reminder to readers: three weeks away!)?
How about tax-free universal savings accounts?
How about accounts at birth?
How about allowing employers to leverage the payroll system to help employees save for lean times?
How about promoting responsible homeownership?

And my personal favorite: How about rewarding and incentivizing saving for college, a policy track that, if pursued aggressively, could be the wealth-building silver bullet?

Nonetheless, extremely heartening to see the asset building frame in primetime.