WHY ARE WHITES FIVE TIMES WEALTHIER THAN BLACKS???

A huge wealth gap has opened up between black and white people in the US over the past quarter of a century – a difference sufficient to put two children through university – because of racial discrimination and economic policies that favour the affluent.

A typical white family is now five times richer than its African-American counterpart of the same class, according to a report released today by Brandeis University in Massachusetts.

White families typically have assets worth $100,000 (£69,000), up from $22,000 in the mid-1980s. African-American families' assets stand at just $5,000, up from around $2,000.

A quarter of black families have no assets at all. The study monitored more than 2,000 families since 1984.

"We walk that through essentially a generation and what we see is that the racial wealth gap has galloped, it's escalated to $95,000," said Tom Shapiro, one of the authors of the report by the university's Institute on Assets and Social Policy.

"That's primarily because the whites in the sample were able to accumulate financial assets from their $22,000 all the way to $100,000 and the African-Americans' wealth essentially flatlined."

The survey does not include housing equity, because it is not readily accessible and is rarely realised as cash. But if property were included it would further widen the wealth divide.

Shapiro says the gap remains wide even between blacks and whites of similar classes and with similar jobs and incomes.

"How do we explain the wealth gap among equally-achieving African-American and white families? The same ratio holds up even among low income groups. Finding ways to accumulate financial resources for all low and moderate income families in the United States has been a huge challenge and that challenge keeps getting steeper and steeper.

"But there are greater opportunities and less challenges for low and moderate income families if they're white in comparison to if they're African-American or Hispanic," he said.

America has long lived with vast inequality, although 40 years ago the disparity was lower than in Britain.

Today, the richest 1% of the US population owns close to 40% of its wealth. The top 25% of US households own 87%.

The rest is divided up among middle and low income Americans. In that competition white people come out far ahead.

Only one in 10 African-Americans owns any shares. A third do not have a pension plan, and among those who do the value is on average a fifth of plans held by whites.

Shapiro says one of the most disturbing aspects of the study is that wealth among the highest-income African-Americans has actually fallen in recent years, dropping from a peak of $25,000 to about $18,000, while among white counterparts of similar class and income it has surged to around $240,000.

In 1984, high-income black Americans had more assets than middle-income whites. That is no longer true.

"I'm a pretty jaded and cynical researcher in some way, but this was shocking, quite frankly, a really important dynamic," said Shapiro. "This represents a broken chain of achievement. In the United States context, when we are thinking about racial equality and the economy we have focused for a long time on equal opportunity.

"Equal opportunity assumes that some people who have that opportunity are going to have pretty high achievements in terms of their jobs, their work, their income, their home ownership.

"The assumption in a democracy is that merit and achievement are going to be rewarded and the rewards here are financial assets. We should see some rough parity and we don't."

The report attributes part of the cause to the "powerful role of persistent discrimination in housing, credit and labour markets. African-Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes," the report says.

Although many black families have moved up to better-paying jobs, they begin with fewer assets, such as inheritance, on which to build wealth. They are also more likely to have gone into debt to pay for university loans.

"African-Americans, before the 1960s, first by law and then by custom, were not really allowed to own businesses. They had very little access to credit. There was a very low artificial ceiling on the wealth that could be accumulated. Hence there was very little, if anything, that could be passed along to help their children get to college, to help their children buy their first homes, or as an inheritance when they die," said Shapiro.

Since the 1980s, US administrations have also geared the tax system to the advantage of the better off. Taxes on unearned income, such as shares and inheritance, fell sharply and are much lower than taxes on pay.

"The more income and wealth people had, the less it was taxable," said Shapiro.

There were also social factors, the study found. "In African-American families there is a much larger extended network of kin as well as other obligations. From other work we've done we know that there's more call on the resources of relatively well-off African-American families; that they lend money that's not given back; they help cousins go to school. They help brothers and sisters, aunts and uncles, with all kinds of legal and family problems," said Shapiro.