JANUARY 2-5, 2020

Beyond Poverty Alleviation:
Closing Wealth Gaps

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Kilolo Kijakazi, PhD

Fellow of the Urban Institute

To close wealth gaps, the goal is economic and social upward mobility for all, so that people can thrive not simply survive, Dr. Kijakazi reminded the Forum. And upward mobility requires wealth, the remainder between what you have and what you owe. Wealth in the US has increased significantly but is not equally distributed. Unfortunately, many young people at the low end of the spectrum are not able to move up or even stay on the rung of the ladder achieved by their parents. Almost 40% of children who grow up in the bottom 20% of the wealth scale, remain there.

​Distribution of Family Wealth (1963-2016)

The Root Cause of Wealth Disparity

Wealth disparity is not the fault of people making poor choices. But rather, it is the result of structural racism and gender bias institutionalized in policies and practices; for example, restrictive covenants blocking blacks from buying homes in neighborhoods with better schools, or targeting black families with sub-prime mortgages. In terms of gender discrimination, it was only in 1978 that the Pregnancy Discrimination Act ensured that women could obtain and keep their jobs even if they had children, and the gender gap in salary parity continues to date.

The data demonstrate institutional racism at every level of society. African American workers experience higher unemployment than white workers at every education level; receive lower wages than white workers at every education level and in every occupation; are paid a fraction of median annual wages paid to white men and women. For African American women, the picture is even more grim. They have higher unemployment rates than for white men and women at every education level, and are paid lower wages than white men, African American men, and white women at every education level. If change continues at its current glacial pace, projections indicate that women will not achieve pay parity until 2059, and, for African American women, it will take 100 years.

​African American Men and Women Are Paid a Fraction of
Median Annual Wages Paid to White Men and Women

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The Impact of Wealth Disparity

Lower wages and poorer employment opportunities for African American workers means they do not have the margin to save for retirement, participate in pension plans, move upward in the housing market, send their children to better schools, etc. It is noteworthy that, when people of color are paid at the same level as white counterparts, they demonstrate slightly higher participation in 401K plans than wage-matched white workers.

A Solution to Wealth Disparity

Everyone in a capitalist economy needs seed capital to start out, Dr. Kijakazi pointed out. But white Americans have the advantage of thirteen times more wealth than black adults, and whites have better access to the opportunities wealth brings. One solution to wealth disparity discussed by Dr. Kijakazi is a program that would give each child a savings account at birth that would accumulate interest until the child turns 18. The size of the annual payments would depend on the child’s family income, with lower-income families receiving larger amounts. {LINK to Discussion}

 

Speaker Biography

Kilolo Kijakazi, PhD  

Corina Eckl Mulder is the Senate Liaison for the Senate Presidents’ Forum. She is well known to the Forum, having presented the Annual State of the States Review for many years. She developed expertise on state legislatures during her lengthy tenure on the staff of the National Conference of State Legislatures (NCSL). Her NCSL responsibilities included planning training programs for top state legislative leaders, managing the conference’s core programs as director of State Services, and leading the Fiscal Affairs Program. She has written extensively on state budget issues and has been quoted in The Wall Street Journal, The New York Times, Financial Times, USA Today, and The Christian Science Monitor, among others. She has appeared on CBS, CNBC, FOX, ABC, CNN, and spoken on the BBC and National Public Radio. She represented NCSL on assignments to Algeria, France, Germany, South Africa, Indonesia, Nigeria, and Saudi Arabia. Corina holds a Master’s Degree in Public Administration from the University of Colorado in Denver and a Bachelor of Arts degree from CU-Boulder.