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The true cost of closing the racial wealth gap

First, consider student debt. Black Americans would benefit disproportionately from getting off student loan debt, as they have a higher education debt, averaging $ 23,400 compared to $ 16,000 for white students. After accounting for the higher enrollment rate of white students, removing student debt would result in blacks earning an average of $ 8,424 in wealth and receiving $ 6,560 in white. Races at $ 1,864

It would reduce the $ 54,700 average gap by 3 percent and the $ 280,300 average gap less than 1 percent.

Now look at the baby bond. Under the proposal of Senator Cory Booker of New Jersey and others, the bond will hand over a fiduciary account to each newborn baby calibrated by the wealth of their parents. The goal of this program is to ensure that all Americans have basic wealth. It was not designed to achieve full racial equality.

Specifically, the focus is on getting all children closer to the middle level of the nation’s net worth during adolescence when they have access to their personal accounts. This means that, in turn, the average black child will have an additional $ 33,333 in net worth by the time they reach their early adulthood.

Without white youths any benefit from a program, which I don’t recommend – the “baby bond” moves the average wealth ratio from 14 percent to 74 percent. This is a significant shift. Even if the standard or the standard mean is used, it will leave 75 percent of the racial wealth gap unchanged. And of course, under the real deal, white children will also receive baby bonds, so the gap change will be much less.

In short, the idea that student debt discharge or Separately or together “baby bonds” will erase the racial wealth gap would be a real mystery. Both policies are preferred for a number of reasons. But the extravagant claims about the impact it have on black-and-white net worth differences are superfluous.

On top of that, celebrating these rewarding programs in misleading ways drives us to truly deviate from America’s ridicule of racial wealth. The average household’s use of wealth is a measure of the gap, totaling about $ 11 trillion.

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