Giving Compass' Take:

• An article at Urban Institute calls for the deconstruction of historical, intergenerational racial inequality as we rebuild our economy during COVID-19.

• How has the history of the United States perpetuated the systemic marginalization of Black people? As coronavirus maintains its reign, what can you do to fight against intergenerational racial inequality?

• Learn more about intergenerational mobility and how strongly inequality is inherited in the United States.

The economic fallout from the coronavirus pandemic promises to affect families across the United States and future generations for years to come. The downturn will likely hit African Americans hardest, exacerbating large, long-standing racial wealth gaps. Because these inequities have historical roots, looking at how they contribute to intergenerational inequality can help citizens, policymakers, and stakeholders create policies that move the country toward racial equity.

The Black-white wealth gap may present the clearest example of how intergenerational transfers can lead to ongoing inequality. In 2016, the average Black household had 10 percent as much wealth as the average white household. Research has shown that this disparity cannot be explained by differences in education, income, or even savings rates. In fact, Black households headed by a person with a college degree have less than 70 percent the wealth of households headed by a white person who did not finish college. Lower-income Black families had $5,000 in median net worth in 2016, less than one-fourth that of lower-income white families.

These income and wealth gaps not only restrict parents’ opportunities for economic advancement but also affect the economic well-being of their children. Two factors influence wealth accumulation and retention: the savings and investment that households accumulate out of current income and the receipt of wealth from family members through gifts or inheritance.

COVID-19 has made the effects of past economic disadvantages on employment and savings, housing security, health, and business success of Black Americans especially apparent today. If policymakers want to lessen and reverse the effects of the pandemic on the income and wealth of Black families, they must consciously consider the persistent effects of the country’s legacy of human trafficking, bondage, and disadvantage.

Read the full article about intergenerational racial inequality by Kilolo Kijakazi, Jonathan Schwabish, and Margaret Simms at Urban Institute.