Our country’s widening wealth gap has risen in national conversations as an indicator of unequal opportunity, particularly for people of color. Various proposals and actions seek to address this gap, like wealth tax proposals and last summer's historic Congressional hearing on reparations for the enslavement and economic oppression of African Americans.

In 2016, the median net worth of white families in the United States ($171,000) was 10 times that of Black families and 8 times that of Latinx families. Those gaps have increased over the past several decades and are expected to continue growing. The persistence of these gaps over generations illustrates the harmful effects of structural racism in our laws, policies, and systems and counters the myth that the gap is the result of poor financial decisions by individual families.

The racial and ethnic wealth gap cannot be closed without large-scale structural reform.

Facing such a daunting challenge, can states and localities move the needle and pave the way for change?   

In 2018, leaders from the Chicago Community Trust, one of the largest and oldest community foundations in the country, came to the Urban Institute with that question.

Chicago faces challenges with Black-white and Latinx-white wealth disparities. Data on local-level wealth are limited, but the best available research on such indicators as homeownership, liquid asset holdings, and delinquent debt levels strongly suggest that Black and Latinx Chicago residents are far less well-off than white Chicago residents.

Throughout 2019, Urban partnered with Chicago Community Trust leaders as they prepared to launch a new strategic plan to narrow the racial and ethnic wealth gap in Chicago and realize the vision of an equitable, connected, thriving Chicago region.

Urban provided strategic guidance informed by Urban’s own research and data analysis, including work on wealth inequity, financial security, inclusion in American cities, and the cost of segregation, to help Chicago Community Trust leaders ground their new strategy in evidence and get from theory to action.

Through our collaboration with the Chicago Community Trust, Urban also developed a research-to-action brief that synthesizes the evidence base and data on racial and ethnic wealth gaps in Chicago and nationally and highlights a range of approaches that local and state leaders might consider to narrow wealth gaps.

Our strategic guidance work and research collaboration with the Chicago Community Trust reaffirmed that one program, policy, or organization alone will not be enough to tackle the entrenched and long-standing inequities that created this gap and continue to widen it. Addressing the racial and ethnic wealth gap will take a multifaceted approach.  

State and local leaders can begin to even the playing field through the following:

• ensuring that Black and Latinx families benefit from policies and programs designed to build assets and savings
• advancing reforms that address pervasive levels of delinquent debt
• restructuring wealth-building supports to benefit more people

Although national systematic change may take time, these building blocks can help localities start addressing the racial wealth gap and broaden access to opportunity.