For people affected by layoffs or business closures, the top concern is often whether unemployment benefits will last until a new or better job is secured. Others who watched their neighbors lose homes to foreclosure wonder whether their upside-down mortgage loans will ever be right side up again. Then there are students who heeded their parents urging to get a college education and now have a new diploma in one hand, a stack of student loans in the other and no job prospects on the horizon.

Among African Americans these effects are not only experienced; but exacerbated by other harsh realities. When it comes to access to fair credit, being black in America imposes an undeniable financial burden. Whether shopping for groceries, a car, a home, or insurance, minority consumers often pay what should be illegal mark-ups.

In bygone eras, cities flourished with conveniently located full-service banks in nearly every downtown or city shopping district. Today, by contrast, most urban centers are home to clusters of high-cost consumer financial services such as check-cashing stores and payday lenders.

These economic disparities have been the focus of many research publications by the Center for Responsible Lending (CRL). Now, the Institute on Assets and Social Policy (IASP), part of Brandeis University’s Heller School for Social Policy and Management has released the first in a series of publications on America’s wealth gap. The first installment, The Racial Wealth Gap Increases fourfold, reviews how public policy has been a major contributor to the loss of wealth in African-American families.  

Using data from families over a 23-year period of time, IASP found that despite the enactment of legal safeguards, discrimination in housing, credit, and labor markets persisted. Secondly, public policies that took effect from 1984-2007 such as tax cuts on investment income, inheritances, or tax deductions for retirement accounts, college savings — all benefitted higher-income families. The sum of these two developments led to a four-fold expansion of this country’s racial wealth gap. In 1984, the racial weal gap between Whites and Blacks was $20,000. By 2007, the gap grew to $95,000.  Even among African Americans who have worked in well-paying jobs, a wealth gap still exists when compared to their peers in the workforce.

Other key ISAP findings revealed:

Many low-income and minority households must turn to costly lending products because they have no other options;

The average high-income African-American family had only $18,000 in assets, compared to middle-income whites who accumulated $74,000;  

In 2007, one in 10 African Americans owed at least $3,600 — nearly double their debt burden in 1984;

At least 25 percent of African-American families had no assets at all to turn to in times of economic hardship.   

After citing a litany of losses in African-American communities, IASP offered a clear and concise recommendation, “Public policies have and continue to play a major role in creating and sustaining the racial wealth gap, and they must play a role in closing it.”

So the next time a newspaper article or news program reports on the latest federal consumer finance reform development, remember that public policies set the nation’s playing field. Even more importantly for Black America, the new federal policy proposals have the potential to reverse the serious economic setbacks of the past 23 years.   

This article was originally published in the May 31, 2010 print edition of The Louisiana Weekly newspaper