Wealth represents the difference between what we own (for example, checking and savings, retirement savings, houses, cars) and what we owe (credit cards, student loans, mortgages, and other debt). Having wealth provides the foundation for economic security, allowing us to recover when we have a crisis and work towards better economic mobility.
Across the board, Black women are at a wealth disadvantage. Wealth disparities are especially a burden due to systemic racial and gender-based discrimination. As more Black women join the workforce, the labor market has made little progress in eliminating gender and race-based disparities in wages and employment outcomes. Unfortunately, this limits Black women’s ability to build wealth over a lifetime.
Black women have made great strides in the workplace, including surpassing men in higher education achievement. Black women are still the most educated group in the country. Yet we still earn less income, have less wealth, and face greater economic instability than our male counterparts. Imagine working seven extra months just to earn the same pay as a male coworker. As a Black woman, it’s our reality.
In a 2021 report, Goldman Sachs revealed that America’s Black women hold more than 90 percent less wealth than American white men. It states that “Only 0.5% of Black women own their own businesses — White men are 24 times more likely to own their own business than Black women. Access to funds and investment is a major barrier to successfully opening a business — Black business owners are 20% less likely to fund their startups with bank business loans.”
Yes, Black women have more obstacles than most in getting what’s due, and we have to make more sacrifices than most in stretching what we have. Several factors reinforce these disparities and are present in every stage of a Black woman’s life, from education to housing to health. Truth is, discriminatory employment practices, inadequate legal protections, and racial stereotypes have contributed to the pay gap that remains far wider for Black women than for white women.
The wage gap for Black women widens throughout their whole work-life and especially between ages 20 and 35. What propels the 90 percent wealth gap? Mainly, the large earnings gap that has only widened since the 80s and 90s. Black women make less in the labor market, primarily because they are paid significantly less per hour.
I worked in corporate America as an accountant for 12 years. You’re told over and over again to not discuss your salary, bonuses, etc. with coworkers. However, there were times we did. It shocked me to learn that a white man who did not have as much experience or education as I got paid considerably more for doing the same position. I was furious. It would be my first, certainly not last, a lesson on the pay gap.
Certified Trust and Financial Advisor Jala Eaton explain three basic steps to obtaining wealth: financial planning, and financial literacy, investing, and estate planning. Empowering a Black woman through financial literacy usually results in improved financial health and well-being for her entire family. Eaton suggests that the more financially literate Black women are, the better off we’ll be.
This speaks volumes to me about where my focus should be. Although I am not in corporate America any longer I still experience a wage gap as an educator in higher ed. Wage gaps affect wealth gaps. We can’t afford to hope for things to get better. We have to take what we have and make it work to our advantage. This is the foundation for closing the wealth gap, instead of waiting for others to do it for us.
If we continue to think along these lines, we can also identify a few ways to promote wealth building for Black women:
- Address inequities in the mortgage system to help Black women purchase their first home.
- Encourage retirement savings with things like automatic enrollment.
- Expand financial coaching services to help Black women achieve their financial goals.
- Promote small business opportunities which include funding.
The fact that we are talking about the wealth gap every year reflects the stubborn, structural nature of pay inequities that are multiple. Occupational segregation limits Black women’s access to higher-paying occupations. But, even when employed in the same occupation, pay discrimination results in lower earnings for Black women compared to men. I found that out the hard way. There is also another factor – the lack of a national paid leave program. Without this in place, women are more likely to take unpaid time off and have breaks in their pay. The combination of these factors means that women, disproportionately Black women, will start their careers with a pay gap that they are never able to close.
Black women bring the magic, and that includes our finances and wealth. We have to begin to shift our focus from what we’re lacking to what we deserve. Then we will be able to see the wealth gap improve us in a major way.
Other Resources:
National Community Reinvestment Coalition
