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Wealth Matters: The Black-White Wealth Gap Before and During the Pandemic
5th December 2021 • MKG Tax Consultants News, View Points, Taxes & Finances • MKG Tax Consultants
00:00:00 00:50:10

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The lack of wealth in many African-American households has left them especially vulnerable to the financial fallout from the coronavirus crisis; but the federal government has perhaps its best opportunity yet to fix these racial disparities.

Huge wealth disparities between Black and white households in America existed long before the COVID-19 pandemic and have continued during the crisis. Data show that during the pandemic, Black households faced more financial emergencies with fewer economic resources, resulting in a widening gap in economic opportunity between Black and white households.

Black households had fewer emergency savings to fall back on during pandemic

The pandemic occurred against the backdrop of a massive Black-white wealth gap. Because households quickly needed to rely on their wealth when the pandemic hit in early 2020, the crisis also illustrated the importance of wealth for families’ financial security. Black households suffered more in the pandemic in large part because they needed more but had much less wealth than white households. Wealth, both as an emergency buffer and as a means to invest in people’s futures, became critically important.

Millions of households, especially African American and Latino households, faced unemployment and multiple health emergencies more or less from one day to the next. Yet many of these same households had few or no emergency savings to fall back on during this time. When people lost their jobs, many needed to rely on emergency savings, leaving them with less financial security as the pandemic unfolded. For example, in 2020, 46.7 percent of unemployed white households could not come up with $400 in an emergency, while 65.2 percent of unemployed Black households lacked access to $400 in such situations.

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