Debt and the Racial Wealth Gap

DEC. 31, 2015

IF you are black, you’re far more likely to see your electricity cut, more likely to be sued over a debt, and more likely to land in jail because of a parking ticket.

It is not unreasonable to attribute these perils to discrimination. But there’s no question that the main reason small financial problems can have such a disproportionate effect on black families is that, for largely historical reasons rooted in racism, they have far smaller financial reserves to fall back on than white families.

The most recent federal survey in 2013 put the difference in net worth between the typical white and black family at $131,000. That’s a big number, but here’s an even more troubling statistic: About one-quarter of African-American families had less than $5 in reserve. Low-income whites had about $375. . . .