Reframing “Wealth” and Activating Data as an Effective Tool for Change

Lamar Gardere

Published: Jun 12, 2024

“The Racial Wealth Gap” has become a common term among data and racial equity crowds, but people outside of these disciplines sometimes bristle at the notions and perceived implications underlying the phrase. When we think of what it means to be wealthy, we might picture a neighborhood, street, or school that represents the places and opportunities that are open to someone who has “wealth.” Or perhaps we imagine powerful people who can control the environments around them for their own financial benefit. Because the word “wealth” often evokes these images of affluence and influence, when researchers and advocates talk about balancing wealth gaps across demographics, it is a short leap to imagining that efforts to redistribute wealth are not far behind.

Those on the upper end of the wealth spectrum may be reticent to support actions that, according to their perceptions, would threaten their current wealth, diminish access to future wealth and influence, or simply don’t square with their beliefs about how wealth has been built in America. Similarly, those on the lower end of the spectrum who may not have had access to wealth in any form and are more concerned with day-to-day survival also don’t connect to the phrase as it doesn’t appear to reflect or directly help their present circumstances. In the end, it is often a divisive topic, pushing both sides farther away from realizing collective prosperity. But what would a path forward look like?

Wealth can be polarizing not because we disagree on the need to address racial wealth disparities, but because of differing understandings of wealth accumulation and the strategies that promote growth within populations. Those who favor laissez-faire capitalism might propose deregulation, incentives, government non-intervention, or job creation coupled with personal grit as solutions to the wealth gap. Supporters of community based social reform philosophies might prefer direct corrective action such as reparations, redirection of public funds to expand public benefits, and/or progressive taxation to raise additional funds to significantly enhance social safety net programs. Regardless of preference, these strategies are not sufficient at the local level alone to solve long developing disparities in wealth. This level of action requires effective policy from state and federal governments or extensive private sector action capable of reshaping a local economy.

Closing the wealth gap through local interventions is incredibly challenging and taking it on would require a deep understanding of its drivers and the levers that can be meaningfully moved with local action and resources. Both the common notion of wealth (affluence and influence) and the textbook definition of wealth (assets minus debts) make it too blunt of an instrument to guide local change on its own.

Still, describing local issues through the lens of wealth disparities continues to gain national momentum and remains a powerful way to contextualize the problems communities face in clear and actionable ways. Despite the semantic dissonance “wealth” carries, the wealth gap fundamentally describes differentiated access to the basic resources required to live and advance in today’s economic context and to have the agency to make reasonable decisions for one’s family. In short, having wealth means having viable choices. But quantifying the many factors that drive access to the choices and opportunities that contribute to individual or community success is hard. Wealth, however, sidesteps this issue by condensing the social and economic successes and injustices of the past, uneven opportunities in the present, and hopes for a future of shared prosperity into a single calculation. From this perspective, wealth is a powerful and easily understood concept with the ability to sum up our collective efforts into a measurable construct. To avoid limiting the utility of this work, it is then important to redefine our connection to and comfort with the notion of wealth.

Mechanically, wealth is the sum of all assets minus the sum of all debts; and, indeed, to establish previously unavailable local wealth data, we have applied sophisticated statistical methods to generate disaggregated local wealth data using this same definition. But to realize its potential, we should reframe wealth as a measure of one’s ability to thrive – to weather emergencies and health shocks, to give families the means to succeed through stable housing and educational opportunities, to pursue investment and business opportunities as they arise, then to pass down resources and assets to future generations.1

Collectively, having greater wealth means that neighborhoods aren’t on the edge of financial disaster, nor will one “bad break” spiral residents toward poverty. For example, an anchor business leaving a neighborhood retail corridor is simply replaced as opposed to foreshadowing the eventual hollowing out of the neighborhood. This expanded definition of wealth, based on what it enables and not merely its monetary properties, has the potential to guide efforts to make families more stable, solvent, and prosperous.

How would changing our notions about wealth make any difference?

Using an expanded definition of wealth allows for clear recognition of the historical decisions, policies, and laws that influence wealth accumulation, making the origins and solutions to wealth gaps easier to discover and act upon. While many components of wealth are the result of past decisions rooted in racist public policies and discriminatory private practices; and in as much as that reality worked to ensure disadvantage for Black individuals and stripped Black communities of wealth, undoing these past inequities creates stronger neighborhoods that offer a higher quality of life for all of us, regardless of race or ethnicity.

Identifying antecedents to the wealth gap provides a pathway for data to serve as an important tool supporting wealth generation for those who have lacked it. Data can be used to understand and quantify the drivers of wealth and wealth extraction and to inform the scale, variety, design, and implementation of innovative solutions. Unfortunately, data on the wealth gap at the local level is hard to come by, creating an opening for rigorous research and exploration. The Data Center has responded to this challenge.

While past decisions can be clearly traced to today’s disparities, the choices ahead that would solve them seem less clear. There are measurable differences in the demographics of wealth – how people obtain and build it, who has it and who doesn’t – but recent national surveys suggest it is commonly believed there is little difference between races when it comes to wealth, financial resources, and access to opportunities with 43 percent of those surveyed saying the average Black person is about as well off or better off financially than the average White person. Paradoxically, others believe poverty and its related problems are largely the plight of people of color, missing the millions of White Americans that struggle with the same concerns. The danger in either position is in believing that either no targeted corrective action can be justified or that these efforts would unfairly leave out many struggling people. Misguided ideas of wealth and other disparities are sometimes perpetuated by misinformation, disinformation, reasoning by anecdote, and/or bias toward personal experiences, and can benefit from an exploration of data facilitating a shared understanding.

Conversations on the wealth gap do often center on disparities by race, and for good reason, but our local data suggests there is a significant element that goes beyond race. With the data we’ve produced, solutions can be better tailored to address specific circumstances and household characteristics that cause hardship for many in our region, regardless of race. As such, solving the wealth gap can be a unifying activity, bringing the shared prosperity necessary for all groups to perform at their utmost potential and fully participate in the economy. To be sure, the causes, solutions, and subsequent choices for solving social issues may differ across demographics, but the necessity of addressing them all remains the same. We need not be divided over ideas on improving lives in our region, but rather work together using tactics suggested by rigorous analysis of good data to the benefit of all.

Disaggregated local wealth data brings the kind of visibility that makes solving the wealth gap within communities a choice. As we wait for national change capable of addressing these issues, locally we can chart our own path to shrinking the wealth gap, but doing so must be an intentional, long-term effort. Aside from the quality of life gains described earlier, the W. K. Kellogg Foundation’s Business Case for Racial Equity in New Orleans makes clear the collective financial benefit that awaits us for choosing to solve inequity. The report describes a $43 billion increase in local GDP associated with eliminating inequity across a range of key areas, but eliminating all inequity is an extremely daunting task. Fortunately, The Data Center’s report on the potential economic impact of increasing income for Black New Orleanians points to gains that are available to all of us through the incremental step of reducing disparities in income. Imagine the benefit if wealth disparities were addressed not only across racial lines, but for all populations in the metro area. Ultimately, choice is only real if our options are clearly understood. Local data deconstructing wealth is then a critical element of our ability to choose to close the local wealth gap.

In The Data Center’s forthcoming publication quantifying the local wealth gap, the data suggests that: there are significant differences by race that accumulate over the course of a person’s life, that socioeconomics don’t explain our disparities, and that, for about the lower third of the wealth distribution, White, Black, and Hispanic people all have similarly low levels of wealth.  The Data Center’s model-based statistical estimates of local wealth describe many critical insights pertaining to gender, race, age, income, educational attainment, home ownership and value, employment classification, family structure, and, to a lesser extent also considers disability, citizenship, English proficiency, public assistance, social security, and poverty status. Identifying these elements and their relative contributions to wealth provides clear pathways to solving wealth disparities and guidance on the scale of solution required for success. While this newly developed data is only available for the New Orleans metro area, The Data Center’s methods can be applied to nearly any metro area in the country, allowing many regions to address its issues effectively through a measurable, data-based, and quality of life-oriented approach to wealth inequities.

Endnotes

1This expanded notion of wealth has been well documented by William Darity Jr. and Kirsten Mullen in their book, “From Here to Equality.”