In 2015, the Federal Reserve Bank of Boston, Duke University and the New School, based out of New York, did a study that was entitled, the Color of Wealth in Boston.
The study had some astounding findings. However, the most astonishing was that “nonwhite” households have only a fraction of the net worth attributed to white families. Now, to say that the nonwhite household wealth was a fraction of white household wealth is an enormous understatement.
While whites families had a median wealth of $247,500, black families had a median wealth of just $8. That’s right; the disparity between black and white wealth is completely off the chart. In effect, blacks have 0.000032388663968 percent of the wealth that whites had.
On its face, these are horrific numbers. African-American median wealth is not a fraction of white median wealth, but an inconsequential blip. Now, this is Boston, but how does this issue look in your city, your state? Is the rate of disparity this bad or even worse? Can we blame the city of Boston, or is there a deeper rationale?
I would contend that on its face, these numbers are not an emergency, but something far worse. These numbers reflect a profound disparity, but not only the most obvious one based on racial bias. These numbers indicate a lack of understanding about wealth and what must be done to accumulate and maintain wealth, not only in this city but throughout this country.
You see, before the housing crash in 2006, most African-Americans housed their wealth in their homes. When bankers, some evil and others potentially well-meaning, developed exotic financial products that allowed people to extract money from their homes like they would withdraw money from a savings account, that’s when things went incredibly wrong. The primary source of African-American wealth was eviscerated, just like so many others. Not only was their wealth pummeled, but because they lost their credit standing, their banking relationships, their collateral, and so many other wealth-building resources, they were unable to qualify for future housing that would enable them to rebuild their wealth.
The aforementioned is an incredibly challenging situation and can mark a significant disparity in the future of this community’s ability to rebuild wealth. The solution is obvious, public health-oriented education and resource distribution. We are not referring to the normal process of instruction and learning, but a meaningful, circumstance-based, practical, and guided approach to education.
We believe that this approach must have its basis in three foundational pillars. The first is the use of epidemiological research that will identify the underlying issues, map them, and then direct resources to address, control, and improve these circumstances.
Second, we must offer rewards-based education that incentivizes behavioral changes. The educational resources must be infused with guidance and resources that move people towards a desired financial end.
Finally, there must be a network of partners that are prepared to fulfill the financial voids that will enable these communities to migrate to a better financial standing.
Guidation offers all three of these incredibly demanding resources. We have a mapping system that highlights financial challenges experienced by specific groups, use our education modules to better inform communities in need and partners with financial service providers to offer high quality, non-predator-based financial products that can lead to improved wealth and financial health.