Racism is not only morally wrong, but it also has massive detriments to our economy. In a recent study by Citigroup, “Closing the Racial Inequality Gaps,” economists state that in the last 20 years, racism has cost the U.S. economy $16 trillion. This is not insignificant as the U.S. gross domestic product (GDP) is $21 trillion.
These detrimental effects are particularly stark in housing, education, and tax policy.
Housing is a major source of intergenerational wealth for many people. However, public, private, and federal discrimination and policies like redlining prevented families of color from owning a home and devalued their homes. Decades of obstacles to homeownership meant that families of color have missed out on the benefits of rising home values. This is critical, as owning a home is crucial for wealth accumulation.
A study by Princeton University notes “that even among Black families owning homes, properties do not appreciate at the same rate as properties held by other ethnic groups.” In 2016, the Federal Reserve found that the median amount of housing wealth for a Black family was $124,000; for white families, it was $200,000.
All forms of discrimination are very costly to the economy. Economists estimate that $218 billion was lost in the last two decades due to discrimination in providing credit—lending and receiving loans—to families of color to purchase homes.
This economic racism in housing isn’t just in the past; it’s happening today through home devaluation because the owners are Black.
You can find the rest of the March/April Washington Newsletter, including the rest of this article, in the sidebar to the right.
