We’ve all heard the saying that the 99% is getting poorer, while the 1% gets richer.
This is true, and in America we have a severe wealth gap. In other words, there’s a large discrepancy between the income of the richest and the income of the working class. And there’s a large gap between the income of women and men. And there’s a large gap between the income of Black Americans and white Americans.
We’re going to discuss the concept of the wealth gap, and then, we’ll give some prospective solutions that might fix it. It’s important that Americans are tuned into this systemic problem, so that we can find a way to combat it.
What are Wealth Gaps?
Essentially a wealth gap is any discrepancy between the income of two different groups of people. So, you’ll commonly hear people discussing the wealth gap, when referring to billionaires and common Americans. There is a large gap between the income of, say, Jeff Bezos, when compared to an American that works at a local grocery store.
However, the wealth gap can be used when talking about other demographics, too. Discriminatorily, Black women are statistically paid less than their white counterparts, even when they’re just as qualified as their competitor. Though the gap between a working white woman and a working Black woman would not be as extreme as the gap between Bezos and the common American, there is still a gap.
This principle can be applied to gender, too. Whereas men often get paid a comfortable salary for their work, many times women are not paid as much as their male coworkers. This wealth gap is even more extreme when comparing white men to BIPOC women.
All in all, the wealth gap refers to an inequitable gap between the income of one group, and the income of another. It’s important to note that the wealth gap is calculated by comparing two demographics’ net worth. Net worth is how much someone is worth after subtracting their debts from their assets. This is important, because many working class Americans have credit card debt or student loan debts, while many upper class Americans are afforded paid college tuition and the liberty to pay off their credit card every month.
Not only are some Americans struggling to get by, some Americans are in extreme debt, because they do not have access to high paying jobs, familial support, and more. Many factors, like systemic racism and discrimination, affect the wealth gap.
The Racial Wealth Gap
It’s relatively simple to understand the fact that most Americans are exorbitantly worse off than someone like Mark Zuckerberg. However, it might be more difficult to conceptualize other wealth gaps, like gender wealth gaps and racial wealth gaps.
To make things clearer, let’s discuss the racial wealth gap in more detail. Black Americans have endured centuries of exploitation and discrimination, and because of this, white Americans have a financial advantage, because they have access to generational wealth that many Black Americans don’t have access to.
Statistically speaking, white households are worth about ten times more than Black households. When looking at the numbers on a national scale, Black households are worth about $2.54 trillion, while white households are worth about 12.68 trillion, which positions white Americans at a 10.14 trillion advantage.
In order for equity to be achieved in this country, it is important that the wealth gap is lowered, so that there is less of a difference between the total amount of wealth that white Americans have when compared to Black Americans.
It is important to note, that if the top ten percent of the richest white households are eliminated from this equation, the wealth gap would still be around 8 trillion dollars. That’s still around eighty percent of the wealth gap that exists between white families and Black families, so there is a lot of work to be done, to reduce the gap.
How Does the United States Compare to Other Countries?
The United States fosters a much more inequitable climate, when compared to other countries. For example, countries like Denmark, the Czech Republic, Norway, Finland, and more are known for having less inequities, when you consider the income of the citizens in the country.
The study that this information derives from proves that since the year 1985, most all countries are slowly becoming more inequitable. However, the United States was more inequitable in 1985, than most every country is today—by a lot. This means that the United States has been facing the wealth gap issue for decades.
How Can We Combat the Wealth Gap?
As we’ve discussed, the wealth gap is extremely pressing, and it’s vital that we find ways to reduce it. It is important that every American has equal access to success, and as the country currently stands, that isn’t the case. There are a few ways to reduce the wealth gap, and we’ll discuss the ways that are most likely to reduce poverty.
It isn’t feasible for one simple policy to erase years of inequities, racism, and wealth inequality. However, if we invest in low income communities, we can begin to slowly mend the gap.
Investing in Communities
Scholars report that it is vital to invest in low income communities, if we want to reduce the wealth gap. Oftentimes, low income communities are disproportionately Black, because Black Americans are at a systemic disadvantage, due to historic racism.
By investing in Black communities, we are referring to the concept of funding college education, forgiving already established student loans, helping Black Americans achieve homeownership, providing Black children with bonds, and more. By providing reparations of sorts, these acts will reduce the wealth gap between low income Americans and higher income Americans.
When you’re born into poverty, you’re more likely to be impoverished when you’re older—this is the case for anyone. So, if we invest in low income communities, we are more likely to see a decrease in the wealth gap between low income and high income communities.
How We Invest In Communities at Foundation 99
We believe that every working person in the United States deserves the opportunity to make sound financial decisions for themselves and their families with as little stress as possible. To make this happen, our organization provides a plethora of financial education resources to people who could benefit from the knowledge including women, people of color, and people with disabilities.
We help people thrive financially by offering online one-on-one financial coaching sessions via video chat, email, text or phone calls. Our financial coaches help educate people on topics like emergency savings, budgeting and spending, security and protection, credit score, retirement planning, and debt management.
People who work with Foundation 99 also receive access to online courses, live workshops, small group training, and virtual webinars through FinPath University. Our resources are tailored for all levels of financial knowledge.
We believe that providing these resources to low-income individuals will help empower them to feel financially secure. Foundation 99 believes that financial education is essential to one’s financial journey. We work to promote increased financial knowledge so that less individuals feel stuck or behind in life because they may be struggling with money.
We’ve discussed the wealth gap, and it is clear that the wealth gap affects all Americans. Low income people, BIPOC people, women, disabled people, and other marginalized groups are all affected by the wealth gap. So, as informed citizens, it is our job to speak out against the discriminatory policies we have in place today.
Foundation 99 is trying to reduce the wealth gap, so that less Americans have to live in poverty. We are committed to providing the 99% with the information that they need to escape the cycle of poverty. By providing working Americans with things like financial coaching, Foundation 99 hopes to make a difference, in order to close the wealth gap.