In the United States, the racial wealth gap is continuing to increase with no signs of slowing down, but as the 2020 election nears there is growing talk of federal policies which could be implemented to deal with the inequality.

Baby bonds, universal basic income, student loan forgiveness and a federal jobs guarantee are four of the proposed solutions to this issue. Many of the candidates running for the 2020 Democratic presidential nomination have shown interest in these plans or have already proposed their own versions to address racial wealth inequality in America.

To monitor this gap, researches look at families wealth, which is measured by the value of their assets minus their debts such as student loans, house mortgages and credit card debt. In the most recent Survey of Consumer Finances in 2016, it reported that the median white family has $171,000 net wealth, while the median Hispanic family has $21,000 net wealth and the median African-American family has $17,000 net wealth. The proposed programs aim to close that gap and create an equal playing field for all American families regardless of race.

Baby bonds, a proposal that 2020 Democratic candidate Cory Booker has backed, is a program that gives every baby born in America a grant to be accessed when they are 18. Booker’s plan would give $1,000 to every baby born and then every year after that the child would receive as much as $2,000 in the locked account, which has a 3 percent interest rate. This means children in the lowest income families could receive as much as $46,215 by the time they are 18.



Because low-income families are more likely to be minorities, this plan would allow those children to spend this money on college, housing or to start a business and be better set up for the future. A study by The Annie E. Casey Foundation found that if baby bonds had been started in 1979, there would be almost no racial wealth gap between 18 to 24-year-olds today.

Universal Basic Income is a solution which has been trialed in towns such as Stockton, California and is also the basis of Democratic presidential candidate Andrew Yang’s campaign. It is a cash grant given monthly to every American over the age of 18 for them to spend on anything they deem necessary. The stipend does not change whether you are low income or not, rather it gives everyone the same starting point.

Student loan forgiveness has also been receiving increased attention lately due to Democratic candidate Elizabeth Warren’s plan to cancel student’s debt. Her plan would cancel $50,000 of loans for households earning less than $100,000 annually. Then the cancelation amount would decrease by $1 for every $3 a household earns over $100,000 per year, which would result in no cancellation if the household earns over $250,000 annually. This would wipe out 75 percent of American’s student loan debt and allow them to start their career debt free.

The fourth proposal is the federal jobs guarantee which is a program supported by multiple presidential candidates including second in the polls Bernie Sanders. This program creates federal jobs for anyone who wants to work, making having a job a fundamental right for all Americans. This plan would be administered at a local level with funding from the federal government and jobs could be anything from childcare to elderly care and building infrastructure.

As of 2018, the unemployment rate was at a relatively low 4.1 percent or 6.7 million people unemployed with a further five million in part-time work wanting fulltime jobs. This program would essentially cut out involuntary unemployment and allow every American the right to earning a living.

Tom Shapiro, a professor of law and social policy and director of the Institute on Assets and Social Policy at Brandeis University, is one of the leading researchers of racial wealth inequality and asset policy in America. The Globe Post spoke with him to discuss the ins and outs of the proposed policies and how they would impact American society.

The Interview has been lightly edited for length and clarity.

Q. In America, the racial wealth gap is continuing to grow and it’s a huge issue. So why is this, why have so many past administrations done nothing about it, and why has it only come to the public attention really in recent times?

Shapiro: Let me start from the last one first, the seemingly lack of public attention. I think there are a couple of parts to that and I’ll try to be somewhat crisp here. But the reality is that only since the mid-1980s in the United States has there been good information, good data on family assets and liabilities. We’ve always had it at the very, very top but the survey didn’t ask questions about families wealth and debt until the mid-1980s. So in terms of being able to specify what wealth inequality and or the racial wealth gap actually empirically looked like, that really didn’t start in the United States until the late 1980s when people started to look at the data.



Then if you will, there’s been a bit of an initiative, a social movement that has focused on racial justice, with closing the racial wealth gap as one of its main planks. And that movement has only really been vibrant I would say in the last decade, 10 to 15 years. So in terms of coming to the attention of the public in the United States the timeline has actually been relatively short and I would suggest that right now there’s been a whole lot of progress in terms of public awareness, not much done about it and not a willingness, but a much better understanding that there is a racial wealth gap and how drastic, deep and steep it really is.



If, for example, one were to do a Google search just simply of the phrase “racial wealth gap” and track that over the last 15 years you would see the incredible increase in coverage and conversation about it. So that’s the awareness type of question.



Past administrations that have done nothing about it, I think that’s certainly accurate. The reason for that, I believe – I’m actually firmly convinced having been in this space for a long time – the reason for that is that the sources and drivers of the gap are deeply institutional, they’re deeply policy, they’re deeply structural and that some groups have an interest in not having the policy of a challenged racial wealth gap.

I think it’s largely a question of power and thus far lack of power on the part of the social movement trying to change that.



So that takes us to the first question of why is it growing. So if we were to go to the institutional and structural policy forces, those are the ones that are actually widening the growth of the racial wealth gap. So it has to do with things like labor market discrimination, like who in the United States, what groups, have greater access to employer-based pensions plans, benefit health plans, all these protect wealth and for it not to be stripped away and easily. And the access to those kinds of wealth building benefits, clearly there’s a pretty huge gap between white families on average and Hispanic and African-American families.



So the labor market discrimination, access to wealth building benefits is part of it. In my work and the work of others has shown that a driver for widening, not why it exists in the first place, that the biggest driver for widening the racial wealth gap is actually homeownership and the wealth that builds up in the homes that people own over a period of time. Which is another way of saying that home equity of wealth increases much more rapidly in communities that are relatively homogeneous white versus communities that are integrated or diverse and certainly much much more than communities that are minority dominated in terms of demographics.



And then the last part is the whole tax policy question of who’s wealth building instruments are subsidized by the federal government in the United States. Homeownership and again through pension plans and it’s largely those upper middle class which tends to be predominantly white. And now those are the reasons our research has shown why the gap widened, the gap exists in the first place for a different set of reasons having to do with slavery, Jim Crow, our history in the United States of racism.



Q. These plans that you talked about in your Contexts magazine article, they’re not overly cheap. Some proposed Federal Jobs Guarantee programs cost around $400 billion and Senator Warren’s student loan forgiveness plan is estimated to cost around $640 billion. So how would the federal government be able to cover these costs and make it sustainable in the long term?



Shapiro: Sure, so it’s really a question about direction and it’s a question of understanding where the public investments are in the first place. So one example, we currently in the United States have a public investment, a federal investment of approximately $200 billion dollars every single year that subsidizes homeownership and more than 84 percent of that goes to the top 10 percent. So when we think about solutions I sometimes try and start with stopping the harm. And it’s that kind of tax policy that palpably creates harm and hurt every day and every year that tax policy is enforced. Reversing that could mean that $200 billion every single year, a kind of pot of investment, and making it much more demographically democratic and equitable is part of the answer to your question.



So the question is not really how do you come up with brand new money in a government that claims to be stretched, which we really aren’t, the question really is how does one redirect or how do we have a portfolio pivot in the public investment to policies that are much more equitable. That’s how you come up with the resources to do that.

Senator Warren, for example, has kind of tried to extend that in the way of her wealth tax is about where her claim in the modeling I saw, to bear her claim out is done by some really top notch economist the United States, the claim is that a wealth tax really only would hit the top 0.02 percent of the population those over 50 million dollars [in wealth] I believe. And that kind of plan if it were implemented, if we had the political will to do so, literally could fund just about everything you mentioned.



So again it’s about direction, it’s about values, it’s about the kind of society, the kind of direction people want the United States to go in.

Q. So there has been considerable pushback when it comes to cash grants such as universal basic income because people believe that this money could be spent irresponsibly. What would your response be to that criticism of these programs?



Shapiro: I would suggest a couple of things. One is not really a hypothetical question because in the United States and elsewhere, I believe New Zealand is one of the places, we have programs like the Alaska Permanent Fund where every single year residents of the state of Alaska are given a small pot of money with tax that comes from oil revenues, and we know from some really good studies, that its been going on in Alaska for close to 30 years I’d bet, that people spend it awfully responsibly, they pay bills, they invest, they put money into their kid’s tuition programs. And yeah, if we unexpectedly get a pot of money we’re going to do a little something for ourselves. So it’s really not a hypothetical question, you know, even families in poverty that they use that money pretty responsibly.



So that’s sort of one, if you will, framing of the question you asked, the other framing is that, I really sort of want to politically push back, is that it’s a criticism that’s only held up for families in poverty.

Nobody ever asked the question what about all these trillion dollar plus tax breaks we had the Trump administration, the Reagan administration before that, just gave the very wealthy. Do we ask the question are they going to spend it responsibly? We never asked that question.

We only asked that question of a family that are perceived to be in poverty. And so I think there is an awful lot of, a kind of a mixture if you will, of classism and racism that’s involved in that.



Q. So multiple candidates running in the Democratic primaries have backed these plans such as the universal basic income and federal job guarantees. Do you think that these issues will continue to be a talking point of the campaigns and if so how will they impact the way minorities vote in these upcoming primaries and presidential elections?



Shapiro: Sure, so I think it’s really interesting this relates back to the first set of questions you have asked. Almost every single one of the Democratic candidates, is couched at least as a second order of justification if not a first order of their policies in terms of “and they will say this policy will help close the racial wealth gap,” so that’s another measure of the widespread sensitivity and popularity at least within a certain part of the Democratic base in the United States. I think those issues as the candidates get sifted and whittled down to a much smaller group, as the primaries roll along that the ones left standing are going to have their signature programs whether it be universal basic income, whether it be housing, whether it be student debt cancellation all of which are big and dramatic and very much needed. And then hopefully they will be designed in a way that closes the racial wealth gap.



But having said that, it’s not enough to throw off policies like universal income because people really don’t know what the designs of that are. So this one design by a current candidate I believe that has UBI, universal basic income, substitutes it for all other forms of assistance and that in my estimation is not the way to go, it makes things worse.

I think the design universal basic income needs to look something like the pilot or demonstration program that’s happening in Stockton, California; Jackson, Mississippi; Newark, New Jersey. And other cities, Chicago, are toying with having pilot programs on UBI.

Q. So of the four proposals that you talked about in your Contexts magazine article, which one do you think is the most viable for closing the racial wealth gap in terms of cost and implementation and what is the possibility that there actually is an overhaul of the system and one, some, or all of these policies are put in place?



Shapiro: Sure. So let me go with two if you don’t mind because there’s been a lot more geopolitical breakthrough and traction on student debt cancellation. With Senator Warren’s proposal which it surveyed immediately as hugely popular, 64 percent favorable for her idea on that which is just stunning. But that issue really hadn’t broken through in the United States, before it kind of siloed in a small group of academics and college advocates. I think that’s a good start both because of how simple it is in terms of being able to explain it to people, how attractive it is in terms of almost, I’m not sure what the numbers are but I would bet that every family knows somebody in their family, a friend, relative who’s got a problem with student debt, and that makes it very attractive. That makes it popular and that means if that legislation moves forward it would have a noisy constituency that would help support it and back it up and make sure it’s not taken away if it were ever implemented. So that’s one.



Number two, I would suggest is baby bonds proposal put out by Professor Hamilton and Darity, which essentially gives, it provides, a birthright if you will for every child born in the United States. You have to figure out what the actual number is but literally within a generation would wipe out the racial wealth gap with that age group, not the entire society, it would do it for that age group.



So those would be two I would go with. I think debt cancelation is more feasible at the moment, that doesn’t sound so much pie in the sky and the outer rings of policy as baby bonds might to people. But several candidates like Senator Booker, for example, has really taken up the baby bonds post. So that’s where I would leave that.