For many children today, the door to economic opportunity is being shut, and they may never realize the “American Dream.” Of these kids, it is children of color that are most at risk since they are more likely to live in the most economically vulnerable households from birth to adulthood.
This is according to a new study by the Insight Center for Community Economic Development that examined U.S. households with young children and found that Latino, Black and American Indian children are three times as likely as Whites and Asians to live in households with little income and few or no assets, such as cash savings, stocks and bonds or retirement savings. The report argues that the lack of assets severely limits not only their future economic opportunity, security, and mobility, but the future of the nation as we become more racially diverse.
Wealth, more than income, protects families from the inevitable financial ups and downs of life and enables them to take the risks that lead to greater economic opportunities. For example, wealth allows parents of young children to afford high-quality early education, save for their college tuition, or help them with a down payment on a home. Wealth and race are inextricably linked. Black households with children hold only four percent of the wealth of white households. In 2007, 14.2 percent of white households with young children had no assets, compared to 40 percent of Black and Latino households.
What is striking about the findings is that while children of all races begin life with similar potential, as measured by cognitive tests at nine months old, by the time they reach the age of two, asset-poor children of color are beginning to fall behind. By kindergarten, white children and children from some Asian ethnicities score significantly higher on average than African-American, Latino, Pacific Islander and Native American children on reading and math readiness tests.
The divergent opportunities and destinies of children based on race are particularly disturbing at a time when our nation is undergoing the most transformative demographic shift in its history. By 2042, when the children born in 2001 will be reaching middle age, the majority of Americans will no longer be white. The task of responding to this shift becomes especially urgent because it is communities of color – with their younger median age amidst a white community that will reach retirement age in considerably large numbers – that will bear the economic burden of supporting the nation’s infrastructure during the 21st century.
Although there are no quick and easy solutions to the racial wealth gap and its consequences for children, it is clear that public policies, which have played a role in creating the racial wealth gap, must play a role in closing the gap. Policies such as government-supported, progressively structured child savings accounts and universal high-quality early education are two examples of possible strategies that will allow all of our children to join in a national effort to restore American prosperity. We need every child to dream big and live fully, in order to build family, community, and national well-being.
Anne Price is the Director of the Closing the Racial Wealth Gap Initiative, a national effort to close the racial wealth gap for the next generation, at the Insight Center for Community Economic Development. Prior to joining the Insight Center, Anne was the Project Director for California Tomorrow’s Community College Access and Equity Initiative where she worked to infuse attention to community college equity issues into a wide range of existing state, system and campus level conversations and to garner increasing support for equity-based reforms. As a Senior Associate at the Philadelphia Workforce Investment Board, she distributed new data and new thinking on the city’s undereducated labor market as part of a larger strategy to build public and political will around workforce development issues. Anne also spent several years at Seattle’s Human Services Department where she served as the Community Development Block Grant Administrator and Strategic Advisor to the Director.
Victor Corral joined the Insight Center in January 2009 to work for the Closing the Racial Wealth Gap Initiative. Victor is responsible for building and expanding the Experts of Color Network, a network of over 150 experts of color in the asset-building field. The network and the online clearinghouse serves as a place for policymakers, journalists and members of the asset development field to access diverse voices on policy and practice that can speak from the perspectives of communities of color. Prior to joining the Insight Center, Victor was a Public Policy Fellow and Researcher at the Applied Research Center, a national racial justice organization, where he worked on issues of income inequality and co-authored a study on childcare in low-income communities of color. He’s written for ColorLines Magazine blogged at Racewire.org, and was a contributor at The Cultural Connect, an online magazine that profiled young, successful professionals of color.