Report on the Racial Wealth Gap and its Intersection with Sustainable Development Goals

Executive Summary

An analysis of the racial wealth gap in the United States reveals a persistent disparity that has seen no significant improvement in six decades, posing a direct challenge to the ambitions of the Sustainable Development Goals (SDGs), particularly SDG 10 (Reduced Inequalities). Despite a period of convergence following the Civil War, the wealth ratio between white and Black Americans has stagnated at approximately six-to-one since the 1960s. This report examines the complex drivers of this stagnation, moving beyond historical injustice to analyze underlying economic and social factors. Economic modeling indicates that race-specific interventions such as reparations, while addressing historical grievances, would likely fail to create lasting parity without fundamental changes to the income gap. The primary drivers of the wealth gap are identified as disparities in income, educational attainment, and asset portfolio composition. Consequently, this report concludes that achieving sustainable and equitable progress requires a strategic shift toward universalist policies that address the root causes of economic disparity, aligning with SDG 1 (No Poverty), SDG 4 (Quality Education), SDG 8 (Decent Work and Economic Growth), and SDG 11 (Sustainable Cities and Communities).

The Stagnation of Economic Convergence and its Relation to SDG 10

Historical Trajectory of the Wealth Gap

The measurement of the Black-white wealth gap begins after the abolition of slavery, a period that established a profound initial disparity. Economic history shows a slow but steady convergence in the century that followed.

• 1860: On the eve of the Civil War, white Americans possessed 56 times the per-capita wealth of Black Americans.
• 1870: The ratio narrowed to 23-to-one.
• 1920: The ratio further decreased to ten-to-one.
• 1950: The gap stood at seven-to-one.

This progress occurred despite the institutionalized racism of the Jim Crow era, which systematically denied suffrage, economic opportunity, and social mobility. By the mid-1960s, at the height of the civil-rights movement, the wealth gap had settled at approximately six-to-one. However, in the sixty years since the passage of landmark civil rights legislation, this ratio has remained virtually unchanged, indicating a failure to advance SDG 10 (Reduced Inequalities).

Analyzing Systemic Barriers Through the SDG Framework

The Primacy of the Earnings Gap: A Challenge for SDG 8 and SDG 1

Economic research increasingly points to the income gap as the primary engine sustaining the wealth gap. Wealth is an outcome of accumulated earnings, and persistent income disparities prevent the accumulation of capital. This directly implicates failures in achieving SDG 8 (Decent Work and Economic Growth) and SDG 1 (No Poverty) for all segments of the population.

1. Economic Modeling: A study by economist Ellora Derenoncourt identifies the halt in income convergence as a key reason for the stalled progress on the wealth gap.
2. Federal Reserve Analysis: Research from the Federal Reserve Bank of Cleveland concludes that “equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap.” Their models show that a one-time wealth redistribution without addressing the earnings gap would have no long-term effect.
3. Asset Composition: Black wealth is disproportionately held in housing rather than in higher-growth financial assets or businesses. This means that stock market growth, a feature of the modern economy, exacerbates the wealth gap.

Educational Disparities and Human Capital (SDG 4)

Quality education is a cornerstone of economic mobility and a key target of SDG 4. The link between educational attainment and lifetime earnings is one of the most robust findings in economics. College graduates earn, on average, over 80% more than those without degrees. Therefore, persistent racial gaps in educational achievement and college completion are significant contributors to the income gap, and subsequently, the wealth gap. Attributing these gaps solely to historical factors overlooks the contemporary challenges in providing equitable, quality education for all.

Urban Segregation and Housing (SDG 11)

The goal of SDG 11 (Sustainable Cities and Communities) is to make human settlements inclusive, safe, resilient, and sustainable. Historical and ongoing residential segregation works directly against this objective. While policies like redlining are often cited, the issue is multifaceted.

• Concentrated Poverty: Segregation corrals marginalized groups into areas of concentrated poverty, which has been shown to hinder cognitive development, educational attainment, and long-term earnings for children of all racial backgrounds.
• Predatory Governance: As documented in Detroit, illegal overassessment of property taxes in predominantly Black neighborhoods has led to mass foreclosures, stripping wealth and deepening inequality. This represents a failure of SDG 16 (Peace, Justice and Strong Institutions).
• Barriers to Integration: Restrictive zoning, complex building regulations, and other municipal policies prevent the construction of affordable housing in affluent areas, perpetuating segregation and limiting access to better schools and opportunities.

Social and Gender Dimensions (SDG 5 & SDG 10)

A granular analysis reveals important social dynamics that intersect with race and class. The challenge of upward mobility is not uniform, highlighting the need for nuanced approaches that consider SDG 5 (Gender Equality).

• Gender Disparity in Mobility: Research by Raj Chetty and Nathaniel Hendren shows that the downward mobility gap between Black and white children is driven almost entirely by the outcomes for Black boys. Black girls raised in similar economic circumstances show no significant difference in mobility compared to white girls.
• Family Stability: A significant body of research links family stability to better economic and social outcomes for children. High rates of single-parent households, particularly those without a father present, correlate with poorer performance in school and lower lifetime earnings, with boys being disproportionately affected.

Evaluating Policy Interventions for Sustainable Development

The Limitations of Race-Specific Reparations

Proposals for reparations are often framed as the only response proportionate to the scale of historical injustice. However, from a sustainable development perspective focused on long-term outcomes, their efficacy is questionable. Economic models suggest that without addressing the underlying income and savings gaps, even a massive wealth transfer would see its effects dissipate over time, with the wealth gap re-emerging within decades. Furthermore, such race-conscious policies face insurmountable political and legal obstacles in the current climate, making them an unviable path toward achieving SDG 10.

The Case for Universalist Policies Aligned with SDG Principles

A more effective and politically feasible strategy lies in universalist, class-based policies that address the root causes of poverty and inequality for all Americans. This approach aligns with the spirit of the 1960s “Freedom Budget” and modern social science.

Economist Raj Chetty has identified key neighborhood characteristics that promote upward mobility for poor children, providing a clear policy roadmap:

1. Low levels of residential segregation
2. Low levels of income inequality
3. Good schools
4. Strong social capital
5. High levels of family stability

Policies designed to foster these conditions, such as expanded child tax credits, investments in quality education, and zoning reforms to promote integrated housing, would advance multiple SDGs simultaneously. They offer a path to break the cycle of intergenerational poverty, which is the fundamental driver of the wealth gap.

Conclusion: A Universalist Path to Achieving SDG 10

The stagnation of the racial wealth gap is a complex problem rooted in a persistent income gap. While historical injustices created the initial chasm, its persistence is now driven by ongoing economic and social dynamics that affect the poor and working class across racial lines. A focus on wealth redistribution alone, such as through reparations, is unlikely to create lasting change and is politically untenable. The most promising path forward is to adopt the wisdom of universalist frameworks like the “Freedom Budget.” By focusing on policies that reduce concentrated poverty, improve educational outcomes, promote decent work, and build integrated communities, it is possible to narrow the income gap. This is the most sustainable and effective strategy for making meaningful progress on SDG 10 (Reduced Inequalities) and ensuring economic justice for all.

Analysis of the Article in Relation to Sustainable Development Goals

Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty

  The article directly addresses poverty by discussing the “War on Poverty,” the impact of concentrated poverty on child development and earnings, and citing statistics on the reduction of poverty among Black children. It links poverty to economic marginalization and proposes solutions like direct cash supports (child tax credits) to break the cycle of intergenerational poverty.

• SDG 4: Quality Education

  The article highlights the crucial role of education in economic outcomes. It discusses the “Freedom Budget’s” call for increased investment in education, the persistent “racial gap in college completion,” and the significant earnings premium for college graduates. It critiques the view that “education is not the great equalizer” by pointing out its proven impact on income, thereby linking educational disparities directly to the wealth gap.

• SDG 8: Decent Work and Economic Growth

  The core of the article’s economic analysis relates to this goal. It emphasizes that the wealth gap is fundamentally an “income gap” and an “earnings gap.” It discusses the halt in income convergence, the impact of deindustrialization, the proposal for a federal jobs guarantee, and concludes that “equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap.”

• SDG 10: Reduced Inequalities

  This is the central SDG of the article. The entire piece is an in-depth analysis of the “racial wealth gap” between Black and white Americans. It traces the historical roots of this inequality from slavery and Jim Crow to modern forms of discrimination. It quantifies this inequality with the “six to one” wealth ratio and discusses policies aimed at reducing it, such as reparations, affirmative action, and universalist programs.

• SDG 11: Sustainable Cities and Communities

  The article extensively discusses how urban policies and housing have contributed to the wealth gap. It details the effects of redlining, discriminatory FHA lending, “predatory inclusion” through subprime loans, and illegal property tax overassessments in Detroit. It also points to residential segregation as a key issue and suggests that loosening zoning restrictions and integrating neighborhoods are potential solutions.

• SDG 16: Peace, Justice and Strong Institutions

  The article examines the role of laws and government institutions in both creating and failing to solve racial inequality. It references historical injustices like slavery and Jim Crow laws, as well as landmark legislation like the Civil Rights Act and the Voting Rights Act. It also discusses “predatory governance,” the color-blind interpretation of the Constitution by the Supreme Court, and how institutional reflexes perpetuate theft and wealth stripping.

What specific targets under those SDGs can be identified based on the article’s content?

1. Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.

   The article directly engages with this target by citing the significant reduction in poverty for Black children since 1970 (“from fifty-six per cent to sixteen per cent”) and discussing the damaging effects of “childhood exposure to concentrated poverty” on long-term outcomes.

2. Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

   This target is the main theme of the article. The discussion revolves around the persistent economic exclusion of Black Americans, quantified by the “six to one” racial wealth gap that has not changed in sixty years, despite civil rights efforts.

3. Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value.

   The article identifies the “earnings gap” and the halt in “income convergence” as the primary drivers of the wealth gap. The conclusion from a Federal Reserve study that “equalizing earnings is by far the most important mechanism” for closing the gap directly aligns with this target.

4. Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.

   The article’s detailed examination of discriminatory housing policies, such as redlining, FHA loan practices that favored white suburbs, and illegal property tax overassessments in Detroit that led to foreclosures for Black homeowners, directly relates to the challenge of ensuring adequate and affordable housing.

5. Target 4.3: By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university.

   The article points to the “significant racial gap in college completion” as a key factor in the earnings gap, noting that college graduates earn substantially more. This highlights the failure to achieve equal access to higher education and its economic consequences.

6. Target 16.b: Promote and enforce non-discriminatory laws and policies for sustainable development.

   The article traces the history from discriminatory laws (Jim Crow) and policies (redlining) to the passage of non-discriminatory laws (Civil Rights Act, Fair Housing Act). However, it argues that “predatory governance” and “institutional reflexes” continue to sustain racial inequality, showing the ongoing challenge of enforcing non-discriminatory policies effectively.

Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• The racial wealth gap ratio: The article repeatedly cites the per-capita wealth ratio between white and Black Americans. It tracks this indicator from “fifty-six times” in 1860 down to “six to one” in the 1960s, where it has remained stagnant. This is a primary indicator for SDG Target 10.2.
• Poverty rates by race: The statistic that “the share of Black children living in poverty has fallen from fifty-six per cent to sixteen per cent” is a direct indicator for measuring progress on SDG Target 1.2.
• Income and earnings gap: The article refers to the “earnings gap” and the halt in “income convergence” as the fundamental problem. These are key indicators for SDG Target 8.5.
• Educational attainment gaps: The mention of a “significant racial gap in college completion” serves as an indicator for SDG Target 4.3, measuring unequal access to tertiary education.
• Residential segregation levels: The article notes that sociologists found “significant drops in Black-white segregation across American cities” by analyzing census data. This is a measurable indicator for progress on SDG Target 11.1.
• Homeownership rates and property loss: The discussion of illegal property tax overassessments in Detroit leading to thousands of foreclosures among Black homeowners implies that homeownership rates and foreclosure data by race are critical indicators of housing security and wealth stripping (relevant to SDG Target 11.1).
• Childhood mobility rates by race and gender: The article cites research showing that “Black children face much higher rates of downward mobility than white children born at the same income level,” and that this gap is “almost entirely driven by Black boys.” This serves as a sophisticated indicator of intergenerational inequality (relevant to SDG Target 10.2).

SDGs, Targets, and Indicators from the Article

Source: newyorker.com