New York Times: Racial Wealth Gap Persists Despite Degree

A recent piece from the New York Times indicates that there’s much more work to do in order to improve the lives of those most at-risk. Educational equity, job discrimination, and previous family wealth all play a vital role in the equation.

Even with tuition shooting up, the payoff from a college degree remains strong, lifting lifelong earnings and protecting many graduates like a Teflon coating against the worst effects of economic downturns.

But a new study has found that for black and Hispanic college graduates, that shield is severely cracked, failing to protect them from both short-term crises and longstanding challenges.

Economists emphasize that college-educated blacks and Hispanics over all earn significantly more and are in a better position to accumulate wealth than blacks and Hispanics who do not get degrees. Graduates’ median family income in 2013 was at least twice as high, and their median family wealth (which includes resources like a home, car and retirement account) was 3.5 to 4 times greater than that of nongraduates.

According to Ray Boshara, director of the Center for Household Financial Stability at the St. Louis Fed bank, substantially narrowing the racial and ethnic wealth gap would require policy changes to expand the availability of a quality college education without forcing students into outsize debt.

But while these college grads had more assets, they suffered disproportionately during periods of financial trouble.

There is not a simple answer to explain why a college degree has failed to help safeguard the assets of many minority families. Persistent discrimination and the types of training and jobs minorities get have played a role.

By the numbers:

  • In even the best of economic times, blacks and Hispanics have lagged whites.
  • The black unemployment rate, for example, has consistently been twice as high as the rate for whites, even among college graduates.
  • Researchers have repeatedly found discrimination in the job market. When two nearly identical résumés are sent out, for example, it has been documented that the candidate with a white-sounding name receives more callbacks than the applicant with a black-sounding name.
  • Discrimination like this and other factors contribute to the persistent and substantial pay gap between whites and minorities.
  • Blacks, for instance, hold a disproportionate share of government jobs — a sector that has shrunk in recent years and provides fewer opportunities for big wage gains.
  • Blacks have fewer advanced degrees, and the ones who do are more often in lower-paying fields or graduates of colleges with lesser reputations.
  • Blacks and Hispanics are also less likely than whites to inherit money or receive help from their parents to cover a tuition bill or a down payment on a house

“Blacks and Latinos at all education levels, including college and advanced degrees, earn less than their white counterparts, which means lower lifetime earnings” and less ability to save, said John Schmitt, research director at the Washington Center for Equitable Growth.

Unfortunately, disparities around race, class and culture continue to exist. Wyman remains committed to addressing these inequities as we follow our North Star — what’s right by teens. Learn more about how to support teens and change communities here:

Read more of the New York Times piece here.