Economic and financial equity is a tough topic to tackle, largely due to the fact that many people are blind to it. The chorus of “Well, I didn’t grow up rich,” becomes overwhelming when someone tries to highlight this issue. I’m going to do my best anyway. Because creating economic and financial equity in our society doesn’t mean that typically privileged groups also don’t suffer due to income and wealth inequality.
But we have to acknowledge that, by the numbers, even among those who suffer, some suffer worse than others.
What Does Economic and Financial Equity Mean
Defining economic and financial equity is tough for a couple of reasons. First, most of the information out there focuses on economic equality, or the lack thereof.
Second, we have to lay out by what measure we’re determining the basis of said equality (or inequality). Are we evaluating economic inequality through income analysis?
Or perhaps the number of minorities and women present in Fortune 1000 company C-suites?
Maybe we should look at the percentage of investment dollars minority and women-owned businesses receive on a yearly basis?
The correlated race-based and gender-based disparities in income and opportunities in the United States are very stark, and seem to only get worse each year. In their report called “A Dream Deferred”, Inequality.org noted that the median White household held 41 times and 22 times more wealth than Black and Latinx households, respectively.
What would our society look like if income, wealth, and opportunities were more evenly distributed?
The Ripple Effects of Economic Inequality
Our previous article talked about educational equity. You can trace inequities found in our education system in part to poor funding. School funding comes largely from state and local tax dollars. Families who make less have less income to tax. This ties to less funding for their schools.
With an inadequate education, it’s that much harder for new adults from these communities to break their generational cycles. That includes the perpetuated cycle of low wealth.
When They Say the Rich are Getting Richer
When we talk about the rich getting richer and the poor getting poorer, there’s some data behind the phrase. Between 1979 and 2017, the top 1% of income earners had the fastest income growth. On the flip side, the bottom 20% of income earners’ income growth flat lined. There’s a general upward growth trend, but nothing drastic.
This has to do with the way people visualize numbers. One million dollars and one billion dollars both sound like large sums of money. But let’s translate dollars into seconds.
One million seconds is 11.574 days.
One billion seconds? Well, that’s 31.71 YEARS.
Yes, that’s right. So having more wealth doesn’t just mean you can buy more expensive things. It means the necessities aren’t even something on your radar, because it’s a given that you’ll have them.
What Changes Can We Make?
Many changes have been suggested, and some have merit, but the truth is that we have to invest in real systemic change that breaks us out of the cycles that marginalized communities experience. Real change will come from investing in these communities financially, but also by instituting education programs to help these communities grow their wealth.
Is Raising Taxes on The Ultra-Wealthy The Answer?
In order to be “ultra-wealthy” you have to have at least $30 million in investable assets. Most ultra-wealthy people are 50+ year-old men. Should we just raise taxes on them to fund the reforms our country needs?
People financially smarter than me likely have well-informed opinions. But what if we tried closing the loopholes in our current tax laws?
For example, last year I paid thousands as a small business in federal taxes. That’s my responsibility as a citizen. But when I saw that Amazon paid $0 in federal taxes on $11 billion in profits, well… that upset me more than a little.
Then I got a lot more upset when I found out they actually got a tax rebate of $129 million. The key here is that Amazon and other mega-companies do this legally. So what if we closed up some (or all) of these loopholes?
What About Reparations?
I would be remiss in not addressing reparations. My first concern with reparations comes from looking at lottery winners and others who experience large financial windfalls. Investing in proper financial education would help keep wealth in the communities instead of bleeding back into the pockets of those who begrudgingly gave it up in the first place.
What if reparations went into rebuilding and upgrading infrastructure? Or perhaps funding for better child education programs? Maybe minority and women owned small business investing would be a good move. There are many possibilities to consider, and it’s high-time we did.
Wealth Isn’t Finite
Financial and economic equity doesn’t take away wealth from others. Not really. We create new wealth all of the time from raw assets. There are houses in places where houses didn’t stand 100 years ago. Someone created that real estate asset. People invest in the stock market every day and grow their wealth.
I and many of my small business friends have created businesses that we want to build and pass onto our children. We CREATED something we hope will be a source of wealth for the future.
That is a hope that everyone should have.