Growing up, my mom instilled strong values around education in my life. She saw education as a tool for economic mobility, particularly as she raised three black girls in Little Rock, Arkansas during the 1980s & 1990s, when the city was considered the murder capital of America. She drilled into our heads that we would be self-sufficient, educated, professional black women. There was no question about college: we didn’t have a choice, we were going to college.
Observing the world around me, I have taken note of a significant discrepancy: Black and Hispanic individuals with a 4-year degree are not protected by their higher education. The Federal Reserve Bank of St. Louis’s Center for Household Financial Stability recently published a report on “Why Didn’t Higher Education Protect Hispanic and Black Wealth.”
Median Family Income in 2013 Points.
- Four-year Asian college graduates ($92,931) make $51,457 more than White non-college graduates ($41,474).
- Four-year Black college graduates ($52,147) make $10,673 more than White non-college graduates ($41,474).
- Four-year Hispanic college graduates ($68,379) make $26,905 more than than White non-college graduates ($41,474).
Median Family Net Worth in 2013 Points.
- Four-year Asian college graduates ($250,637) have $169,945 more in net worth than White non-college graduates ($80,692).
- Four-year Black college graduates ($32,780) have $47,912 less in net worth than White non-college graduates ($80,692).
- Four-year Hispanic college graduates ($49,606) have $31,356 less in net worth than White non-college graduates ($80,692).
Asian American incomes and net worths mirror that of White Americans, making education an economic mobility tool. However, for Blacks and Hispanics, education does not have a significant impact on economic empowerment. Increasing the college rates of Blacks and Hispanics, currently at 20% and 13% respectively for four-year college degrees, will help only slightly. Discriminatory hiring practices, higher risk of career termination, predatory mortgage lending and redlining, 4-year college selection, and lower net worths are potential reasons for the discrepancies.
I wouldn’t trade my Bowdoin education for anything, as my experience was a transformational one that played a part in the person that I am today. The solution is not that all Blacks and Hispanics stop attending 4-year college. In order to address the income and net worth gaps that minimize Black and Hispanic economic mobility, these groups should:
- Understand the basics of personal finance. My “1.0 series” on personal finance started last week with this post on budgeting. Get a financial advisor to provide guidance on the how to build out your plan.
- Know your rights. Between issues at work and applying for a mortgage, there are a number of opportunities for Blacks and Latinos to be victims of discriminatory practices. When in doubt, seek an attorney for advice.
- Invest in you and your family for the long-term. Home ownership, retirement, and small business ownership are the primary ways to build wealth. Saving for your children’s college will ensure optimal school options, which also plays a part in the post-college career opportunities, networks, and salaries.