By Victor Ochieng
The racial wealth gap that characterizes the United States is so wide that it has become a barrier for African Americans to gain traction in economic development. In fact, it’s so bad that instead of being able to move forward, or even stay on the same level, it is decreased whenever there is even a slight hiccup in the economy.
For example, between 2010 and 2013, the average net worth of white households remained typically flat, while that of African-American households posted a 34% drop. Emerging from the 2008 financial crisis, there was a significant drop in the number of black middle-class Americans, which was inevitable for a number of reasons. Most middle-class African-Americans rely on their businesses and are faced with rent and high rates, from their homes to their places of business. At the slightest challenge, sailing through an elongated period of economic downturn can prove difficult.
Moreover, white Americans typically have greater and easier access to savings. It isn’t that Black families aren’t trying to save; it’s simply not easy when their wages are less than 75% of the national average.
Right now, African-Americans are faced with a choice that will define their future, and from the look of things, it appears that most believe that choice is presidential hopeful Hillary Clinton. What does Clinton have that will help pull out African-Americans from this bondage of financial cage?
Below are some of the points as outlined by Maya Harris, the senior policy advisor at Hillary For America.
First, it’s good to note that Clinton believes in a strong financial foundation if children are to successfully pursue their goals, and she’s focused on seeing them build it. It’s for that reason that she’s eyeing measures beyond simply creating better paying jobs.
The most fundamental thing to do is to do away with racial barriers when it comes to home ownership. People are more confident to invest where they’ve got a home. As things stand now, 72% of white households are homeowners, compared to only 42% among black households. One of the measures Clinton is looking forward to implementing is providing assistance to low income families to enable them to raise a down payment. She’s also planning to provide high standard housing counseling programs to help potential buyers navigate the intricate web of borrowing rules.
While many Americans enjoy 401(k)s paid for by their employers, only 10% of employees whose employers don’t cater for their 401(k)s have IRAs. According to Clinton, making it automatic for every employee to be roped in an IRA will consequently allow them to easily save for retirement, unless they decide to opt out.
Making it easier for employees to move their savings when they switch jobs is a great relief for low income earners as those with small savings end up losing a lot of their savings whenever they’re moving from one job to another. Although President Barack Obama already took a step through myRA, a startup allowing employees to save even as they switch jobs, Clinton is focused on introducing innovative ways to ensure that no workers lose their money when they switch jobs. This “Auto portability” will help millions of Americans save money every year. Source