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Minorities and Financial Literacy / By: Sergio Mendieta

The racial wealth gap is not a myth, it is real. There is a long history that the United States has with minorities that impeded their economic progress. According to a white paper prepared by economists at the Federal Reserve, the racial wealth was 23 to 1 between white and Black Americans in 1870. Unfortunately, after decades of improvement with the fastest period being the civil rights movement from 1960 to 1980, progress in reducing the racial wealth gap stalled in 1980 at 5 to 1. “In the 40 years between 1980 and 2020, the racial wealth gap actually increased by the equivalent of 0.1 percent a year(McKay, 2022). As you can see, this has been a perpetuating cycle for the past 40 years and shows no sign of slowing down. It is the same system that is still preying on the fact that these certain groups of people have not had exposure to wealth and that makes them more vulnerable to losing it. This explains that even though we are in one of the greatest eras of globalization with easy access to information, we the people are still very much struggling with economic equality. 

The divide in income can be seen further when we look at the U.S. as a whole. Below are two maps, both from the United States Census Bureau (Census.gov, 2020). On the map on the right, it can be seen where the largest racial or ethnic groups lie within each United States county. The map on the left shows the United States divided by county, but in this figure it takes a look at the Median Household Income. Something that you might notice when looking at these figures side by side is that wherever the most ethnic groups are located is where we often tend to see lower median household income. Max Rybchuk, a real estate broker for Compass, has seen this division in Chicago first hand. “We looked at the broad view of real estate in Chicago and saw a big difference (in wealth) between the north and south side.” This is a perpetuating cycle that many people are not aware of and thus can not take action. Even if it is in small or big ways any type of awareness with this issue helps. By helping individuals, primarily minorities, learn to build financial capability skills and build assets, the Economic Awareness Council brings awareness to addressing this issue. An educator at the organization, Ivon Guzman tells us, “The EAC focuses on helping minorities or low-income families obtain the necessary resources to better manage their money.” With experience and knowledge of wealth building, individuals can become more conscious and aware of how to build wealth and financial stability. With the help of this EAC program and other programs like this, minorities as a community could potentially make decisions to grow wealth and reduce the impact of this divide in impeding on their future.



 

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