How AI Can Help Close The Racial Wealth Gap – Forbes
Money begets money, and success breeds success. But many historically disenfranchised groups begin their financial lives at a disadvantage, which can lead to enormous impacts.
But what if the mechanisms that lead to those disadvantages could be made smarter and less biased? What if we altered how we determined credit risk, home values, economic policies, and even language to benefit everyone—not just those who profit from the current status quo?
That’s what artificial intelligence brings to the table. Though white households have more wealth and opportunities than others, AI has the potential to close the racial wealth gap… once we eliminate its learned biases.
The Racial Wealth Gap by the Numbers
Black families hold less wealth overall…
According to the Federal Reserve’s 2019 Survey of Consumer Finances, white Americans hold 5x the wealth of the average Hispanic family. And in 2020, a Brookings Institution study found that Black families hold 10x less wealth than their white counterparts. Moreover, a full quarter of Black households have less than $5 to cover an emergency if they liquidate all their assets.
…Even though they’re more likely to prioritize personal finance and investing goals.
Though Black families hold less money, they’re more likely to invest regularly and build better financial habits. For instance, 54% of Black people with savings accounts put away more than 10% of their income compared to 36% of white people.
Additionally, 30% of Black Americans count investing and saving among their top priorities. Plus, people of color (POC) are 3x as likely as white Americans to consider securing their children’s future through investing.
Black people earn less than white people – and Hispanic people earn less than that.
According to the Bureau of Labor Statistics, in the third quarter of 2021, white people brought home median weekly earnings of $1,029 per week. Meanwhile, Black individuals earned $799, while Hispanics saw a median take-home of just $779. And while 58% of white Americans bring home more than $50,000 per year, just 36% of Black Americans cross the threshold.
Black people are more likely to struggle to stay in the middle class.
Studies show that Black professionals are generally more ambitious in their careers – though they only make up 3.2% of executives and senior-level managers and eight percent of all professionals. And even when Black individuals achieve middle class status, their children are unlikely to keep it, as more than 2/3 of Black children are …….