On an unusually mild day in August 1963, Dr. Martin Luther King Jr. stood on the center steps of the Lincoln Memorial and delivered one of the most inspiring speeches in American history. More than 250,000 people packed the National Mall to hear Dr. King announce: “I have a dream”.
Dr. King, speaking with the tone of a Southern minister, reveals a hopeful vision for the future from this touchstone phrase. Perhaps the most memorable line from that speech was:
“I have a dream that my four children will one day live in a country where they are no longer judged by the color of their skin but by their character.”
Dr. King spoke 100 years after the Emancipation Proclamation was signed. Therefore, his assessment of the economic situation of African Americans in 1963 did not fulfill his dream.
“One hundred years later, the Negro lives on an island of poverty in the midst of a vast ocean of material prosperity,” Dr. King said.
Where are we now
Although most of Dr. King’s hopes have been realized, inequality still exists in America. Nothing is more compelling than economics and personal finance. As a result, Dr. King’s dream remains unfulfilled for many black Americans today.
Despite rising incomes for black families and women, wealth gaps between men and women and between black and white families remain large and growing.
Median household wealth increased by $51,800 between 2019 and 2022 during the pandemic, according to the agency Federal Reserve (FED). At the same time, the wealth gap between white and black households widened by $49,950. As a result, the total wealth gap between white and black households rose to $240,120.
The economic costs of racism
Racial inequality harms more than just a single family or even a racial group. It hurts the entire country’s economy.
USA $51 trillion in economic output lost due to racial and ethnic inequality from 1990 to 2021, according to research by San Francisco Fed President Mary Daly and three co-authors.
Daley pointed to gaps in employment, education and income between racial groups as reasons for the losses.
“The need to achieve equity and close some of these gaps is not only moral but also economic,” Daley said.
Citigroup confirms Economic losses since 2000 total $21.3 trillion. The 2024 report is an update to Learning in 2020.
income inequality
One of the reasons for the widening gap between rich and poor is income gapaccording to the U.S. Bureau of Labor Statistics (BLS). Black men earned $987 per week, accounting for 76.4% of the average white male earnings in the third quarter of 2023 ($1,184). 87.5% of white women earn $1,069 per week.
Even with a college degree, black people earn less than white people. According to the National Center for Education Statistics (NCES), median annual income is as follows:
white people
Associate’s Degree Bachelor’s degree master
$50,930 $70,250 $78,700
african american
Associate’s Degree Bachelor’s degree master
$46,950 $56,030 $68,970
credit inequality
Your credit score is the cornerstone of how you get a loan. A good score will bring more money at a better price. A low score will result in your credit application being denied or approved at the user rate.
Your application for a credit card, car loan or mortgage is determined by information compiled to determine your credit score. Therefore, this information may be distorted.
“The data we’re dealing with are flawed for a variety of historical reasons,” said Laura Blattner, an assistant professor of finance at Stanford University. She co-authored a credit study with Scott Nelson of the University of Chicago. “If you only have one credit card and have never taken out a mortgage, you have much less information to predict whether you will default. If you defaulted once a few years ago, that may not mean much going forward.
Until recently, black people had few options to obtain credit at fair rates. A generation ago, banks did not have branches in black neighborhoods, and their hours (usually 9 a.m. to 2 p.m.) limited access.
The Civil Rights Act of 1964 prohibited racial discrimination in many businesses. However, banking is not one of them. Furthermore, it was not until the Fair Housing Act of 1968 that discrimination in housing financing was prohibited.
Home Loan Highlights
One area where credit assets have improved is in mortgage rates.
one Federal Housing Finance Agency (FHFA) Research After decades of black and Hispanic households being charged higher mortgage rates, the trend is set to end in 2023.
The study, which covers data from 2000 to 2024, states:
“Two periods stand out: the peak of the subprime boom from 2004 to 2007, when the gap between rich and poor was extremely wide; and the most recent year for which data are available, 2023, when the gap narrowed dramatically, breaking long-standing patterns.
cycle of poverty
The wealth gap between white and black Americans began with slavery. Unfortunately, the end of slavery did not end the economic stranglehold of African Americans.
Institutional racism prevents most black people from the educational and economic opportunities they need to fully realize the dream of Americans and Dr. King. As a result, cycles of poverty are often passed from one generation to the next.
Break the cycle – make your dreams come true
The key to realizing Dr. King’s dream is fighting racism, investing in education, and improving financial literacy. These challenges are magnified when institutions abandon diversity, equity, and inclusion (DEI) standards. This means that if we support the dream of Dr. King and our nation’s founders, we must work harder.
Part of the reason for America’s success is its vast natural resources. More importantly, however, our national wealth is the American people and the opportunities for success this country provides. Denying or limiting the right of any of our citizens to a fair chance also reduces the nation’s wealth.
As Dr. King said in his speech:
“When the founders of our republic wrote the majestic words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American would be heir. That note promised all men—yes, black and white ——All will receive the inalienable rights to life, liberty and the pursuit of happiness.
“Today it is clear that as far as its citizens of color are concerned, America has defaulted on this promissory note. Instead of honoring this sacred obligation, America gave Black people a bad check that bounced and was marked as Insufficient funds.
“But we refuse to believe that the Bank of Justice is bankrupt.
“We do not believe that this nation’s vast treasury of opportunity is underfunded. So let us cash this check that will provide us with the wealth of freedom and the security of justice as needed.
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