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When Howard University alum and actor Chadwick Boseman died after a four-year battle with colon cancer, he didn’t have a will. His wife had to petition the court to be named the administrator of his estate.
Despite Aretha Franklin having specific and predetermined outfit changes during her homegoing ceremony, the Queen of Soul made no similar plans when it came to having a will.
And while it’s evident that most Americans don’t possess the financial assets that these celebrities enjoyed, when it comes to passing down assets, most Black people have not implemented the appropriate strategies to secure and preserve generational wealth.
“It’s not even just leaving something behind for our progeny,” explained Jasmine Tyler, professor of the practice at the McCourt School of Public Policy at Georgetown University, where she’s also the executive director of the Policy Innovation Lab.
“Of course, our ancestors could barely dream of survival in most cases, let alone having the actual ability to leave something behind,” she said. “The hope of life itself was basically the inheritance that we were afforded.”
Inheritance, commonly referred to as generational wealth, refers to any assets passed down from one generation to the next – anything of value, including investment accounts like stocks and bonds, savings accounts, life insurance policies and cash. Cars, real estate, jewelry, businesses, and even heirlooms also count – anything of monetary value qualifies.
The transfer of wealth across generations, most commonly through property, is a significant vehicle for maintaining intergenerational wealth.
However, research shows that because African Americans start with less, they have less, if anything, to pass on to their children and grandchildren.
According to the 2019 Survey of Consumer Finances, the median wealth of a white household was $181,400, compared to just $20,700 for the median wealth of a Black household.
On average, a Black household owns around 11 percent of the wealth of an average white one. Even when considering the slightly better measure of income ratio, a significant difference exists. The median income of Black households ($38,700) is only 58 percent of the median income of white households ($67,200).
Gary Cunningham, president and CEO of Prosperity Now, a think tank with a mission to “ensure everyone in our country has a clear path to financial stability, wealth and prosperity,” said the numbers are frightening when looking at Black generational wealth.
“All of our research shows that it will take over 200 years for Blacks to equal the wealth that whites have today,” Cunningham said. “In fact, we did a report several years ago that showed that by 2050, Blacks will have zero wealth. So, unless we do something very different, that pattern will continue.”
Tyler pointed to several ways that whites have maintained generational wealth.
“We’ve long known that handing down assets is a way to maximize the general wealth of others. In addition, the avoidance of inheritance taxes was the route to not only solvency and financial success but also [to] accessing and wielding power,” Tyler said.
And with that economic power came access to political strength, as well. Tyler said it’s not inconsequential that voter suppression often occurs in Black communities as they begin to secure financial prosperity. History shows that stripping Blacks of wealth often led to politicians who were in power who failed to represent the needs of Black communities who were also being deprived of political access.
“We are not able because of the lack of generational wealth to compete with the political machines of the majority class, whether they be Democrat or Republican, in [America’s] two-party system,” Tyler said. “That undermined power is experienced as a cumulative effect or cumulative undermining as fortunes continue to grow for the wealthy and the privileged, whether that’s through new privilege or through generational privilege, based on race and class.”
Tyler said the challenge extends beyond just homeownership and good jobs as the systems that protect the power and wealth of majority citizens have not held up for Blacks.
“Sadly, studies show that African Americans who are able to generate wealth or at least have achieved homeownership, often fall back in future generations because of the challenges of everyday Black life,” she said.
Cunningham noted that one need not look back to the Reconstruction era or the Tulsa Massacre, which occurred over 100 years ago. He said one need only look to the present to find examples of the dismantling of Black wealth.
“The 2008 Great Recession stripped more wealth from Black families than any time in the history of this country, and nobody went to jail,” he said. “Nobody even got a citation for stripping Blacks of all of that wealth which didn’t get transferred because of the nefarious activities of real estate brokers and bankers.”
“If you look at the tax system, it’s geared towards those who own property and who already have money, so they can make more money,” Cunningham said. “The folks who don’t have money are left out of the system. So, if you’re a renter, which a lot of Black people are, you’re paying even more taxes than someone who owns a home.”
Tyler said while many people don’t actively connect voting and participating in the democratic process to wealth accumulation; research bears out that the concepts remain inextricably bound.
“Here at the Georgetown Law School and with my students in the Policy Innovation Lab and in the McCourt School of Public Policy, we’re looking at the benefits of cash assistance programs and universal basic income projects,” she said. “There are a lot of opportunities to figure out how to fix these inequities.
“There’s also another big conversation around reparations that’s happening at the federal level and in local and state entities around the country,” she said. “And that’s really an exhilarating observation of the laboratories of democracy. However, it’s a very fraught space because there are those who don’t want to see this happen,” Tyler said.
Cunningham agrees that the tools to fix the problem of income inequality which leads to a lack of Black generational wealth already exist.
“We know one solution is baby bonds,” Cunningham said. “There’s research to support that from (New School Economist) Dr. Darrick Hamilton,” he said. “We at Prosperity Now recently came out with a report which shows that within a single generation, if the U.S. government invested enough for a youth to have $45,000 to $50,000 when they graduated from high school, they could invest in college, homeownership or entrepreneurship and close the wealth gap within their own communities of color.”
“There’s a study out of the University of Washington business school by (economist) William Bradford in which he looked at 10 years of income data on Black and white families. He found that for Black families who worked for someone else, the gap in income grew significantly wider over the 10-year period. But for those who had entrepreneurs in their family, they actually closed the gap almost completely,” Cunningham said.
It indicates an opportunity that Cunningham believes could be taken advantage of through political means.
“We know the fastest-growing group of entrepreneurs in this country is Black women,” he said. “If we were able to harness that and provide them with the capital, technical support, and access to markets they need, we could transform America by investing in Black women.”