(Illustration by iStock/Marisvector)
“The American Dream starts now.” Or at least that’s how the federal government is marketing Trump Accounts, the $1,000-per-child investment program that launched on July 4. Of course, numerous observers have warned that the promise of Trump Accounts will not be evenly shared. While all American children born in 2025 or later can receive the $1,000 seed investment—and after a recent regulatory update, the government is automatically opening accounts for eligible children, which drastically expands participation—these accounts primarily reward kids whose families are aware of the program, who “claim” their accounts, and who are able to (or connected to others able to) make additional yearly contributions.
Progressive critics have pointed to Trump Accounts as an example of a performative gesture that, while borrowing the language of equity, quietly preserves the status quo. We need more of these kinds of critiques; we need to take the ambition of racial equity seriously enough to recognize what will be required to get there. And this is particularly true of causes that progressive critics themselves are most likely to support.
Nowhere is the issue more evident than in the goal of “closing the racial wealth gap.” While it is a critically important aspiration, this phrase is too often attached to programs with as little chance of eliminating wealth disparities as Trump Accounts have of making the American Dream truly attainable for all. Saying so allows us to be honest about what we actually need to do.
An Underestimated Gap
It can be deceptively easy to talk about “closing the racial wealth gap” because so many Americans radically underestimate its size and durability. Even set against a backdrop of extreme inequality in the US, the distance between the wealth held by White and Black American families is particularly cavernous. The most recent data shows that the median White family holds more than nine times the wealth of the median Black family, roughly $332,100 versus $36,800. Looking at average wealth paints an even starker divide in absolute terms, $1.7 million versus $242,400. This wealth disparity has only worsened in recent years—median Black wealth plummeted by 25 percent between 2022 and 2025 while White wealth grew by 6 percent—but the gap itself is far from new. It was largest prior to the Civil War, when the vast majority of Black people in the US were both unable to accumulate wealth and also, themselves, counted as wealth on the balance sheets of White enslavers.
Public interest in the “racial wealth gap” is a newer phenomenon. Google search trends show effectively zero searches for the term prior to 2011, with a gradual rise as Black Lives Matter emerged, a steady surge during the first Trump era, and a peak amidst the racial reckoning of 2020. Of course, search interest isn’t the same as public understanding. And as searches ticked upward, one nationally representative survey found that Americans believed Black families held $90 in wealth for every $100 held by White families, when the true figure for Black families was closer to $10. Nearly every respondent (97.4 percent) overestimated wealth equality to some degree, with 13.7 percent believing Black Americans were wealthier than White Americans. Much to the chagrin of many organizations fighting for racial and economic justice, the enormous degree of Black-White wealth inequality appears to be one of many lessons the country failed to carry forward from the #BLM era.
Even so, Google searches for “racial wealth gap” today still remain well above their pre-2020 baselines. And, at least in progressive circles, the gap is easily accepted as both the motivation for and ultimate goal of countless equity-focused efforts.
Why We Are So Far From Closing the Gap
The popularity of the term “racial wealth gap” hasn’t translated to widespread understanding of its scale. Neither has the popularity of closing it, as a philanthropic and policy goal, translated to an honest reckoning with what doing so would require. As others have noted, there are a variety of well-intentioned strategies that could materially help Black individuals build wealth, by enabling homeownership, forgiving student debt, or fueling entrepreneurship, but these individual-oriented programs would have a microscopic impact on the gap itself. Even investing in publicly-funded accounts known as “baby bonds” (similar to Trump Accounts but with contributions based on family resources, thus disproportionately benefitting Black children) would be likely to leave a substantial disparity in place.
These efforts run up against the staggering scale of the overall gap, which—depending on whether median or mean wealth is considered—could require $3–15 trillion to close. And even those huge sums fail to capture how deeply intertwined racism has been with America’s economy and policy choices throughout history, a history which continues to shape the present far beyond mere numbers.
Take racial disparities in homeownership, for example. That a vast wealth gap persists between Black and White homeowners already suggests that simply increasing Black homeownership isn’t the solution. White homeowners hold much greater wealth outside of home equity, but homeownership has also never offered the same promise to Black families, from decades of redlining and exclusion, to predatory inclusion in the housing market, to the bleak history of Black suburbanization, to the continued devaluation of housing in Black neighborhoods. The racial composition of a neighborhood remains a predictor of property values even after controlling for housing and neighborhood quality, making it clear that even bringing Black and White homeownership to parity would hardly translate into equal home equity, let alone equal wealth.
More fundamentally, many proposals overlook the arithmetic of wealth itself. Wealth compounds. That simple fact means that starting off behind makes catching up exceedingly difficult, even when annual gains are substantial. As economists point out, even if Black and White Americans had enjoyed identical rates of savings and capital gains after emancipation, Black Americans would still only have a third as much wealth today. As it was, the gap slowly narrowed until the mid-20th century, reaching the 6:1 ratio where it has largely stagnated ever since. Some analyses hold White wealth constant in estimating how long it would take for Black families to accumulate the wealth White families enjoy today. While analytically useful, this hypothetical unrealistically imagines a world in which White wealth stops growing within, and especially across, generations. It will not; it will continue to compound, making closing the wealth gap a moving target.
Why does a disconnect persist between acknowledging the racial wealth gap and being realistic about closing it, among the public, policymakers, and funders alike? It is perhaps not surprising that increased awareness of the gap has proved an effective motivator for many who fight for justice, without prompting rigorous consideration of the mechanics of wealth accumulation. Certainly, the enormity of the challenge of closing the gap also might make genuine solutions feel impossible. In the face of that, perhaps we embrace the fantasy that small increases in Black wealth constitute justice, even if they’re doing little to change the systems that landed Black people with drastically less wealth in the first place.
But a less charitable interpretation points to what scholars describe as cultivated ignorance in racial politics, or a commitment by those in power to misperceive or distort reality in ways that preserve the status quo. Ignoring what it would take to close the wealth gap conveniently allows philanthropy, policymakers, and other institutions to celebrate sub-scale initiatives while avoiding deeper questions about how wealth is distributed and why.
What Closing the Gap Would Take
We are not arguing against increasing Black wealth for its own sake, of course. But the goal of increasing Black wealth is fundamentally different from closing the wealth gap. The former tries to improve outcomes for Black families without addressing the root causes of why those families have less wealth. The latter targets historical, structural harm, and attempts to repair that harm by changing the systems generating those outcomes.
Imagine a machine that continuously hurls people off a cliff.1 To help, one can either treat the wounds of the people who have been thrown off or work on stopping the machine. Both are essential. But, in this metaphor, treating the people on the ground will not help those on top of the cliff. If we want to build a reality where people are not being hurled off a cliff, we must focus on the machine itself.
Truly dismantling the machine would require scale: a federal reparations policy that recognizes the wealth gap as one manifestation of the accumulated harms against Black people in this country, and which embraces our collective responsibility to repair those harms through material, systemic, and symbolic efforts for victims, their families, and broader society.
Such a policy could include a portfolio of financial measures designed to close the gap over a feasible period of time. Moreover, because race has been linked to value in this country—and because White Americans, as a collective, have the benefit of centuries more experience investing and receiving outsize rewards from risk-taking—dismantling the machine would further require proactive policies that prevent the gap from reopening.
Further modeling would be needed to determine what exact suite of policies could close the gap, at what scales, and over what time period (while also accounting for the compounding of White wealth in excess of Black wealth during any policy’s implementation window). But we do know some things already.
First, baby bonds are an especially promising strategy and should likely be core to any portfolio. One analysis comparing policy proposals put forth by presidential candidates in 2019 (including proposals to combat predatory lending, housing discrimination, and student loan debt, plus a proposal to expand retirement income) found that baby bonds would have much greater impact on the wealth gap, reducing it from almost 6:1 to closer to 3:1 over 40 years, if executed at scale.
Second, and given baby bonds’ long impact horizon, we should also pursue financial policies that would benefit today’s Black adults. The analysis mentioned above found that, collectively, the five policies examined could shrink the wealth ratio to under 2:1 by 2060. In another analysis, the Federal Reserve Bank of Cleveland emphasized the importance of eliminating the Black-White earnings gap if we hope to keep the wealth gap closed over time. Their conclusions suggest that a portfolio of efforts to reform education and to eliminate wage and workplace discrimination could close the wealth gap within 100 years if combined with direct payments.
This points to a third clear insight. No matter what suite of financial policies we pursue, we should expect direct payments to eligible Black Americans to be part of the solution, given the scale of the gap and as part of atoning for historical harms against Black Americans.
Ambitious, but Not Impossible
We recognize that reparations remain politically and emotionally difficult for many people, even among those who agree the US never repaired the grave harm inflicted against enslaved Black Americans. People worry about the cost of reparations, who would bear it, and who should be eligible. Many avoid the individual and collective moral reckoning that reparations would require. Many simply think reparations are an impossible goal.
And yet, our country has achieved ambitious goals before. Trump Accounts are a reminder of the federal government’s capacity to put capital directly into Americans’ hands, part of the same bipartisan tradition as the Homestead Act, National Housing Act, and G.I. Bill. We can also take inspiration from other efforts that have tackled ambitious aspirations. For example, the Millennium Development Goals (precursor to today’s Sustainable Development Goals) sought to “eradicate extreme poverty and hunger” by identifying more specific targets, such as cutting in half the number of people who live on less than $1.25/day. The Apollo Project and Human Genome Project similarly broke their impressive goals into measurable milestones. What if we aimed to cut the wealth gap in half, or by 25 percent? Could that allow us to be more rigorous in setting goals, because it feels more achievable?
Whatever the specific targets, greater political will and public understanding will be necessary to achieve a comprehensive federal reparations policy. We support the longstanding movement fighting for reparations, and we celebrate efforts that are underway across the country and that are standing their ground despite backlash.
In the meantime, being disingenuous about what it would take to close the racial wealth gap isn’t serving the cause. If many of us say we’re trying to close the gap but use strategies that will never get us there, we are creating the illusion of momentum where there is none. We are also shortchanging Black Americans in the process. Even at smaller scales, we can hold ourselves accountable to asking what systems produced disparities, who continues to benefit from them, and what it would take to fundamentally change them.
State and local governments and nonprofit actors should continue testing structural reforms that could narrow the gap over time, perhaps including topping up Trump Accounts through qualified contributions that don’t count against the $5,000 family limit. In addition to measuring what works, researchers must hold the line on why the gap matters and what closing it would require, so that the popularity of the phrase does not continue to substitute for progress on the thing it names. Movement leaders must continue pushing the boundaries of what is politically possible. Especially in the absence of a federal government that sees the racial wealth gap as a problem, philanthropy could convene all of these stakeholders to define respective roles, set a collective goal, and fund the infrastructure for collaboration that would enable us to meet it, together.
If we pair investments in Black wealth with an equally serious commitment to changing systems that shape how wealth is created, distributed, and passed from one generation to the next, we will be doing more than helping people survive the machine. We will finally begin dismantling it.
1 This metaphor is inspired by Stanford political scientist Rob Reich’s distinction between charity and justice, and reflects the broader social justice tradition of emphasizing the difference between addressing root causes and ameliorating their consequences. The metaphor also recalls Joseph Malins’s classic poem “A Fence or an Ambulance?”(c.a. 1895), about the choice between preventing people from slipping off a cliff or rescuing them once they have fallen.
Read more stories by Nina Yancy & Aria Florant.