“’Twice as Hard for Half as Much’: Wealth Privilege and the Racial Wealth Gap”

Those who study the racial wealth gap are in a bind. Although the Life Cycle Hypothesis (LCH) serves as an effective framework to understand the wealth gap, it is itself incapable of explaining a key question: why the racial wealth gap is so much larger than the racial income gap. This paper introduces the Wealth Privilege (WP) model as an alternative vehicle to ground future analysis. Unlike the LCH, the WP model can incorporate both the effects of contemporary sources of racial discrimination as well as systemic sources that are the legacy of several centuries of racialized policies. Using evidence from the 2013 Survey of Consumer Finances, this paper examines each of the two models as they each attempt to explain wealth accumulation among White as well as Black and Latino households. Introduction When examining racial progress in the United States, most researchers have examined educational attainment, income levels, occupational advancement, or other socio-economic variables. In most cases, these comparisons offer some optimism, although all show substantial racial gaps stubbornly persist. An appraisal of the racial wealth divide generates a very different conclusion. While White households continue to hold substantial advantages in educational attainment, income, and occupational status, these leads pale in comparison to the wealth gap. Whereas White households typically earn about 60 percent higher than Black or Latino households do, White household wealth surpasses Black and Latino wealth by tenfold. Even worse, as one considers the many benefits of wealth, this yawning gap can undermine whatever gains Black and Latino households have earned “in the classrooms, workplaces, and paychecks” (Shapiro, 2004, p. 183). Without a thorough examination of the racial wealth gap, one cannot fully understand the underlying forces that are influencing any movement toward racial justice. In comparison to occupational status, education, and even income, wealth provides a more enduring and multi faceted source of well being. Household net worth includes assets, both financial and real, as well as different forms of debt. Unlike sources of income that are vulnerable to unpredicted disruptions, most household assets hold their