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Originally Published: Jun 04, 2020
Originally Published: Jun 04, 2020 Last Updated: Jun 19, 2020 13 min read
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We at Money talk a lot about the power of compound interest. It's the magical way your savings builds up exponentially — or compounds — as you stash away cash and earn interest on your interest, year after year.

But disadvantages can also be compounded. Even small doses of injustice, oppression, and inequitable policies are bad, of course, but they are much, much worse when their impact builds up over time and they hold people back on a national, generational scale.

This is why the racial wealth gap is so persistent in American society. As a Brookings Institution report analyzing the black-white wealth gap sums up, "Black and white households reveal the effects of accumulated inequality and discrimination, as well as differences in power and opportunity that can be traced back to this nation’s inception."

You can't point to one period of time, or one single statistic or cultural factor, to explain why the average black American has a tiny fraction of the wealth of his white counterpart. Instead, there's a broad range of elements at play — from mortgage-lending practices dating back a century ago to higher car insurance rates for drivers living in black neighborhoods today — that have compounded over the decades and collectively result in a system that's unfair, if not overtly racist.

No single data point can explain all the ways black Americans are held back economically. With that in mind, we compiled numbers that show dramatic racial disparities in everything from retirement savings to business ownership.

Together, the data reveal a pattern of injustice that's also a core part of why protesters have taken to the streets in the wake of the recent killing of George Floyd at the hands of the Minneapolis police. As Linwood Tauheed, an economics professor at the University of Missouri-Kansas City, told MarketWatch in early June: "The wealth gap is one of the reasons there are protests today."

Jobs, Unemployment, and Business Ownership

• Black job applicants who "whitened" their resumes — by removing cues that revealed their race — were significantly more likely to be asked for job interviews, according to a 2016 study co-authored by a Harvard Business School professor.

• Similarly, a National Bureau of Economic Research paper found that job applicants with popular "white" names like Greg and Emily were 50% more likely to get callbacks from employers than people with "black" names like Lakisha and Jamal.