Debt and the Racial Wealth Gap

By Paul Kiel

December 31, 2015

Excerpt: “The most recent federal survey in 2013 put the difference in net worth between the typical white and black family at $131,000. That’s a big number, but here’s an even more troubling statistic: About one-quarter of African-American families had less than $5 in reserve. Low-income whites had about $375.

Any setback, from a medical emergency to the unexpected loss of hours at work, can be devastating. It means that harsh punishments for the failure to pay small debts harm black families inordinately. Sometimes, the consequence is jail. Other times, electricity [or water] is cut, or wages garnished….

What can be done? The best place to start is by identifying practices that are particularly damaging to black communities, and then fixing them.