The coronavirus pandemic has proved a bonanza for billionaires and further widened the enormous racial wealth gap in the US, according to a new report released Friday.
Δ The New York stock exchange. Even before the pandemic, the racial wealth gap had expanded. Photograph: Kevin Hagen/AP
In the 12 weeks between 18 March and 11 June, the combined wealth of all US billionaires increased by more than $637bn to a total of $3.581tn, more than the entire wealth of the US’s 59 million Latinx population combined and equal to three-quarters of all Black wealth, according to an analysis by the Institute for Policy Studies (IPS).
The report is called: White Supremacy as Pre-existing Condition: Eight Solutions to Ensure Economic Recovery Reduces the Racial Wealth Divide.
The top five billionaires – Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett and Larry Ellison – saw their wealth grow by a total of $101.7bn, or 26% between 18 March and 17 June. They captured 17.4% of the total wealth growth of all 600-plus billionaires in the last three months. The fortunes of Bezos and Zuckerberg together grew by nearly $76bn.
Over the same period, 44 million Americans lost their jobs and filed for unemployment insurance. The numbers have declined from a one week peak of 6.6 million in April but are still historically high. More than 3 million people have filed for unemployment in the last two weeks alone. Latinx and African American people have been hit hardest by the layoffs.
The share of households of color with zero or “negative” wealth, meaning their debts exceed the value of their assets, is much higher than the share of white households. According to the report, 37% of black families and 33% of Latino families have zero or negative wealth, compared to just 15.5% of white families. Black Americans have a homeownership rate of just 44%, compared to a white homeownership rate over 70%.
Darrick Hamilton, one of the report’s authors and the executive director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, said: “Today’s racial wealth divide is an economic archeological marker, the result of the multigenerational history of white supremacy running from the African slave trade, Jim Crow, separate and unequal, predatory lending, and other forms of systematic discrimination in wealth-building opportunities.”
Even before the pandemic, the racial wealth gap had expanded. Racial wealth inequality increased by more than $40,000 from 1983 to 2016, according to a previous IPS report, Ten Solutions to Bridge the Racial Wealth Divide.
“In 1983, white median wealth was $110,160, while black wealth was $7,323, and Latino wealth was $4,289. By 2016, white median wealth had increased by $36,000 to $146,984, while Latino median wealth increased by only a couple thousand to $6,591.
“Black wealth declined by about $4,000, to a mere $3,557,” the report found.
Hamilton said the racial wealth gap had been worsened by government efforts to address the 2008 financial crisis – bailing out banks and propping up the stock market – and that the federal response to the coronavirus pandemic needed to address systemic issues with racial inequality.
“Surging billionaire wealth contrasting with a worsening racial wealth divide undercuts the solidarity and unity required to overcome the health and economic challenges of this pandemic,” he wrote.
The report sets out a number of short- and long-term solutions to address the wealth gap, starting with better collection of data on the economic health and racial consequences of the pandemic, and a “racial wealth audit” of each stimulus bill and economic recovery proposal.
Longer term, the report says the gap must be addressed by expanding healthcare access for all Americans. In New York City, the center of the pandemic, Covid-19 is killing black and Latino people at twice the rate of white patients. One factor is the higher proportion of uninsured people in communities of color.
IPS is also calling for a reassessment of the tax system to benefit those on lower incomes and a surtax on the top 0.2%, those with incomes over $2m.
“We have a recent case study in how not to address these issues in the bailout from the last recession,” said Chuck Collins, director of the program on inequality and the common good at the IPS. “It would be criminal to spend trillions of dollars in this situation and not to narrow the racial wealth gap.”
Dominic Rushe in New York
Courtesy The Guardian