The weather was unusually cool on the day in August 1963 when Dr. Martin Luther King taking center stage on the steps of the Lincoln Memorial delivering one of the most inspiring speeches in American history. A crowd of more than 250,000 people, some of them dangling their feet in the luminous pool that runs 2,028 feet east of the Washington Monument, crowded the National Mall to hear Dr. King proclaiming, “I’m in a Dream”.
In that touchstone document, Dr. King, in his Southern ministerial speech, revealed a hopeful vision for the future. Perhaps the most memorable line from that speech is:
“I have a dream that one day my four young children will live in a nation where they will not be judged by the color of their skin but by the content of their character.”
Dr. King spoke 100 years after the Emancipation Proclamation was signed. As a result, his assessment of where African Americans stood financially in 1963 did not fulfill his dream.
“One hundred years later, the Negro lives on an isolated island of poverty in a vast ocean of material prosperity,” said Dr. King.
Where are we now
Although many of Dr. King’s hopes have been realized, there is still inequality in America. Nothing is more amazing than economics and personal finance. As a result, the promise of Dr. King’s dream has not been realized for many Black Americans today.
Even as incomes for Black families and women are increasing – the wealth gap between women and men and between Black and white households is wide and growing.
During the pandemic years of 2019 to 2022, the median household wealth increased by $51,800, according to the report. Federal Reserve (FED). At the same time, the wealth gap between white and black households increased by $49,950. As a result, the total wealth gap between white and black households increased to $240,120.
The Economic Costs of Discrimination
Racial inequality is more damaging than individual families or even a single racial group. It hurts the economy of the whole country.
the United States the economy lost $51 trillion due to racial and ethnic inequality from 1990 to 2021, according to a study by San Francisco Fed President Mary Daly and three co-authors.
Daly pointed to gaps in employment, education, and income between races as a cause of the loss.
“The need for equity, in closing some of these gaps, is not only moral, but also economic,” Daly said.
Citigroup decided that $21.3 trillion has been lost in the economy since 2000. That 2024 report is its update 2020 lesson.
Income Inequality
Another reason for the widening wealth gap is income inequalityaccording to Bureau of Labor Statistics (BLS) numbers. Black men earned $987 a week, 76.4 percent of white men’s earnings ($1,184) in the third quarter of 2023. At the same time, black women earned a weekly income of $935. That was 87.5 percent of white women making $1,069 a week.
Even with college degrees, blacks earn less than whites. According to the National Center for Education Statistics (NCES), median annual income breaks down as follows:
White people
Associate degree the highest rank The highest degree
$50,930 $70,250 $78,700
African-Americans
Associate degree the highest rank The highest degree
$46,950 $56,030 $68,970
Credit Inequality
Your credit score is the foundation of your access to credit. A good score will lead to more money at a better rate. A negative result will lead to the rejection of your credit application – or approval at user rates.
The decision on your credit card, car loan, or mortgage application relies on the information gathered to determine your credit score. Therefore, that information may be reinforced.
“We’re working with data that’s flawed for all kinds of historical reasons,” said Laura Blattner, an assistant professor of finance at Stanford University. He co-authored a study on debt with Scott Nelson of the University of Chicago. “If you have one credit card and have never taken out a loan, there is very little information to predict whether you will lose it. If you didn’t pay once a few years ago, that may not say much about the future.”
Black people had few options for getting affordable credit until recently. In the past generation, banks did not build branches in Black areas and kept hours (usually (9 am to 2 pm) limited access).
The Civil Rights Act of 1964 prohibits racial discrimination in most businesses. However, banking was not one of them. Furthermore, it was not until the Fair Housing Act of 1968 that home equity discrimination was banned.
Mortgage Bright Spot
An area of credit equity improvement has been mortgage rates.
A Federal Housing Finance Agency (FHFA) survey decided that after decades of being charged higher mortgage rates for Black and Hispanic families – that practice ended in 2023.
Covering data from 2000 to 2024, the study noted:
“Two periods stand out: the height of the subprime boom, from 2004-2007, when inequality was very high; and the latest data year, 2023, when disparities drop significantly, breaking their long-standing pattern. “
The Cycle of Poverty
The wealth gap between white and black Americans began with slavery. Unfortunately, the end of slavery did not end the financial captivity of African Americans.
Institutional discrimination prevented most Blacks from getting the education and financial opportunities they needed to fully realize Dr. King’s dream. As a result, the cycle of poverty is often passed from one generation to the next.
Breaking the Cycle – Living the Dreams
The keys to realizing Dr. King’s dream are fighting racism, investing in education, and promoting financial literacy. At a time when institutions are turning their backs on Diversity, Equity, and Inclusion (DEI) standards – those challenges are huge. That means that if we support the dream of Dr. King and the founders of our nation, we must work hard.
Part of America’s success has been its wealth of natural resources. However, greater than that, our national treasure has been the American people and the opportunities this nation has provided for success. Denying or restricting any of our citizens their right to a fair opportunity is also a diminution of the nation’s wealth.
As Dr. King said in his speech:
“When the framers of our republic wrote the beautiful words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American would inherit. This note was a promise that all men – yes, Black men and white men – would be guaranteed the inalienable rights of life, liberty and the pursuit of happiness.
“It is clear today that America does not agree with this promise as far as its black citizens are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check that has been marked as insufficient money.
“But we refuse to believe that the judicial bank is dead.
“We refuse to believe that there is not enough money for the great opportunities of this nation. Therefore, we have come to issue this check, a check that will give us when we need the wealth of freedom and the security of justice.”
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