The wealth gap – Starting Early

👋 Not having the resources needed to live each day, achieve financial stability, and save for the future is a huge barrier that prevents families from thriving.

It’s easy to say, “Money doesn’t solve anything,” unless you’ve experienced the crushing stress of living paycheck to paycheck — unable to take the time to bond with your children, having to choose between food or rent, finding it impossible to build a nest egg. More income would make a difference for these families.

An alarming wealth gap in New Jersey and the nation falls hardest on Black families. Camden, NJ, where fewer than 5% of residents are white, has a median income less than a quarter of Cherry Hill, a predominantly-white suburb just 5 miles away. It’s no coincidence that Camden residents’ average life expectancy is 17 years shorter than their Cherry Hill neighbors. That’s what happens to people who live in inadequately-serviced communities, are less likely to have access to quality healthcare, and suffer unrelenting financial stress.

This issue of Starting Early examines the harsh realities of income and wealth inequality, the harm it causes families, and steps needed to eliminate disparities. We’ll hear from Ryan Haygood, president and CEO of the New Jersey Institute for Social Justice, about the root causes of these disparities and what it will take for Black families in New Jersey to thrive. I’m grateful for the powerful approaches Ryan shared to bring more Americans into the “sunlight of opportunity” called for by Dr. Martin Luther King, Jr.

Atiya Weiss
Executive Director, the Burke Foundation

1 big thing: The wealth gap trap

Wealth disparities in New Jersey are dramatic:

White families average about $350,000 in accumulated wealth, between homes, savings, and retirement plans
Latino families — $7,300
Black families — $6,100

Those are among the nation’s widest gaps.

Wealth begets wealth: Families that own a home will most likely accrue more wealth over time to pass on to their children, boosting the next generation. They can afford a car or handle emergency expenses without facing the burden of double-digit credit card interest rates or payday loans. They’re more likely to live in places with better-funded, higher-rated schools, more green spaces, less pollution, and greater availability of nutritious food.

The homeownership gap: The primary contributor to the wealth gap is homeownership.

For centuries, most families of color were denied mortgages through the practice of “redlining” by lenders, holding back entire communities.
Would-be homeowners were steered away from neighborhoods through restrictive covenants.
Even the GI Bill benefits that made middle-class life attainable for many in the U.S. often were denied to Black veterans. In New York State and the New Jersey suburbs, fewer than 100 of the 67,000 mortgages insured by the GI bill supported home purchases by non-whites.

Meanwhile, many families of color remained in underserved neighborhoods, paying increasing rents, gaining no wealth or equity. Generations were stuck with little or no wealth growth.

The health gap: The long history of policies and practices fostering segregation constrained millions of people of color to specific neighborhoods, to the detriment of family health.

These communities have fewer healthcare providers and hospitals and precious few safe places to be outside.
Opposition from wealthier, politically-influential communities pushes unhealthy facilities into lower-income neighborhoods, exposing residents to pollution and toxic waste from highways, landfills, and power plants.

This all adds up to higher incidences of low birthweight and pre-term births, cancer, asthma, developmental disabilities, and more.

The education gap: Families of color often live in communities with lower housing values, and a property tax base inadequate to fund necessary services. And while New Jersey has equalized state school aid across the state, areas that are home mostly to people of color are still held back educationally by decades of neglect and economic hardship that can stand in the way of life-long wealth accumulation.

The bottom line: Generations of inequity in housing, income, and wealth accumulation left a hard-to-overcome legacy for families of color that continues to reverberate today.

2. Solving a complex challenge for families

Centuries of decisions made by people in power created and sustain the nation’s persistent, widening wealth gap. Measures to address the symptoms of income and wealth inequality — food and housing insecurity, healthcare access, quality education — have not closed the gap.

Such innovative strategies as those described below address the root causes of disparities by infusing wealth into families directly.

Baby bonds: The government establishes and contributes to a bank account for a child soon after birth. The account grows over time and, upon turning 18, the account holder can use the money toward such wealth-boosting activities as post-secondary education, a down payment on a home, or starting a small business. Connecticut, California, and Washington, DC are in early stages of implementation.
Guaranteed income: Public or private funders give qualifying families or individuals unconditional, monthly cash payments to help participants get and stay on their feet. Dozens of communities, including Newark, NJ, have launched pilot guaranteed income programs. California last year funded a statewide program with a focus on people aging out of the foster care system and pregnant people. Other Guaranteed Income projects address maternal/child health, including The Monarch Foundation’s The Bridge Project, which makes cash payments to 1,000 new mothers, and Philadelphia’s JoyBank supports pregnant people with cash and services. Growing research shows these cash transfer programs make a difference — especially for families with young children. For example, a recent study in Stockton, CA, found “lower rates of income volatility, lower mental distress, better energy and physical functioning, greater agency to explore new opportunities related to employment and caregiving, and better ability to weather pandemic–related financial volatility.”
Homebuyer assistance: New Jersey recently began providing qualified first-time homebuyers with up to $15,000 toward down payments and closing costs. First-generation home buyers can receive additional help.
Cutting red tape: Even when support is available, obtaining it can be time consuming, inefficient, and burdensome — preventing many families from receiving benefits. As part of its plan to eliminate child poverty, Maryland prioritizes eliminating barriers to program participation by streamlining application and re-enrollment processes. MomsFirst uses the promise of Artificial Intelligence through PaidLeave.AI to help more people enroll in New York’s paid family leave program.

3. A conversation with Ryan Haygood about how we got here — and where we go next

Ryan P. Haygood, civil rights lawyer and president & CEO of the New Jersey Institute for Social Justice in Newark, NJ, is a leading voice for efforts to close the persistent wealth gap between white families and families of color. While he is grateful for the many generous individual heroes who support communities, he believes “The ideal is to live in a community with systems that build a cycle of opportunity and you have heroes that supplement that system.”

The excerpts below are condensed from our full interview on causes and consequences of the racial wealth gap.

What’s one thing you wish people knew or understood about the wealth gap in America and in New Jersey?

I wish people understood that the wealth gap in New Jersey and across the country was created that way. Our modern-day $300,000 racial wealth gap was birthed in slavery.

When founded as a colony, New Jersey incentivized slavery. And then it was reinforced over time through laws, practices, and policies after slavery ended. There’s a direct line from slavery to today’s racial wealth gap.

It’s important to understand that if you divorce the history from those disparities, then all you’re left to believe is that there’s something wrong with Black people.

There’s nothing inherently wrong with Black people or people of color more broadly. The wealth gap reflects something inherently wrong with the system in which we operate, going back to slavery, which shaped every aspect of our founding, and every aspect of our present-day reality.

What are major barriers to success for most families, especially Black and brown families?

New Jersey is one of the most racially diverse states in the country. It’s a beautiful, rich diversity.

It’s also one of the most racially segregated states in the country. That matters because the opportunities are largely in the area where you live.

My wife (a principal in Newark) has students who can see Manhattan from their classrooms, but many have never been there. The nature of segregation is that you think of the world in the way it’s been designed for you, so it becomes very small.

New Jersey’s challenge is to reimagine how we take advantage of the rich racial diversity broadly so it doesn’t just exist in intensely segregated, mostly cities.

Homeownership is another major barrier because homeownership is the primary driver of wealth.

At the Institute, we’ve championed with partners a bill that provides $15,000 in down-payment assistance for first-time homebuyers and an additional $7,000 for first-generation homebuyers. I’m very excited about that.

We also championed, with the attorney general, legislation around discrimination in home appraisals. Once you own a home and seek to sell, or purchase a home, appraisals can be a major impediment for homeowners of color.

How can programs like Baby Bonds and college savings plans help close the wealth gap?

Since the murder of George Floyd, so many of our conversations begin with profound loss, and disparities, and inequality.

We’re so connected to the loss that we haven’t created space to think about an affirmative vision for flourishing and winning. And that gave birth to the Institute’s push for a conversation around reparations.

The reparation conversation is, yes, about slavery and its enduring impact. But it’s as much about what would you need — not just to repair it, but to win. So, we’ve championed a number of things to address the racial wealth gap. A big push has been around deepening access to homeownership.

We worked with the City of Newark and the mayor around a universal basic income pilot program to get a sense over 18 months whether that was impactful.

We’ve explored ideas like Baby Bonds, with the governor and Senator Cory Booker, which would help give young people a nest egg they could use at a critical time in life. The $15 minimum wage, which went into effect this year, applies to about 350,000 hourly workers in the state. And we continue to think about things like student loan debt forgiveness and ways to deepen home ownership further.

Read the rest of our conversation with Ryan.

3. Tools you can use

Read up:

Complicity: How the North Promoted, Prolonged, and Profited from Slavery by Anne Farrow, Joel Lang, and Jenifer Frank describes the often-hidden history of northern states’ role in slavery.
Nickel and Dimed: On Not Getting by in America, by Barbara Ehrenreich, is an investigative reporter’s journey through minimum wage jobs and low-income life in America.
Pulitzer Prize-winning book, Evicted: Poverty and Profit in the American City, by Matthew Desmond, relates 8 families’ struggle to keep a roof over their heads.

Simplify Cash Transfers: MoCaFi is a financial services platform for government and philanthropic organizations to provide individuals and families with cash assistance, mobile banking, and financial planning to create pathways to wealth.

Brush up on financial literacy: Check out this list of 10 tools to improve your personal financial knowledge.

Remembering Jeffrey Vega, Princeton Area Community Foundation

The Burke Foundation, the New Jersey philanthropic community, and the families we serve, lost a singular leader and partner with the passing of Jeff Vega last month.

Jeff was president and CEO of Princeton Area Community Foundation for 9 years and previously worked at New Brunswick Tomorrow for 22 years, including 14 as president.

Jeff committed his life to service and to the community, setting an example for so many of us who his work inspired. Jeff believed deeply in education and helping children and families succeed. His superpower was bringing people together for the benefit of others. His loss will be felt deeply, and we’ll do all in our power to carry forward his passion and commitment to the community.

Memorial donations can be made to the Jeffrey A. Vega Memorial Endowment at the Princeton Area Community Foundation.

The roundup

Continue the conversation: Join “New Jersey’s Place in Black America: A Black History Month Dialogue,” hosted by New Jersey Institute for Social Justice, February 21 in Princeton.
Make a difference: Gathering Ground is hiring for 2 positions: community engagement organizer and communications associate.
Learn more: Check out It’s Basic, a documentary on guaranteed income and see if there are screenings near you.
For the next generation: The Obama Foundation’s Voyager Scholarship for Public Service supports “young leaders who can bridge divides and help solve our biggest challenges.”