How Diversifying the Economy Can Solve the Racial Wealth Gap – Forbes Advisor

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Black voices have been suppressed in America for far too long. And the problem has become so glaring in the economics industry that an entire federal agency still struggles to diversify its workforce, even after federal law required it.

The Federal Reserve, the country’s central bank tasked with controlling the monetary system and fending off financial crises, is predominantly white. Ten years after the Dodd Frank Act forced the system to diversify its hires, a New York Times analysis found it to be still far from inclusive.

Even on a smaller scale, it can be difficult to find black voices in economics. #EconTwitter is dominated by white males. Studies show the voices of black economists were largely absent from the initial discussions on the financial impact of the Covid-19 pandemic.

In a country where systemic racism steals the promise of a flourishing financial future for black Americans, representation is important, especially when it comes to those charged with researching, proposing and implementing economic policy that can help the community thrive.

The economy lacks black voices, prospects

There is a long history of racial inequality in economics. The first black woman to earn a doctorate in economics, Sadie Alexander, was unable to practice after earning her doctorate because of racism and sexism in the industry in 1921, the same year Black Wall Street was destroyed. The incident took place in Tulsa, Oklahoma, where one of the richest territories of black-owned businesses was reduced to ashes by a mob of whites.

George Stigler, Nobel Laureate in Economics in 1982, once argued that black Americans are inferior as workers and can succeed economically with a “willingness to work hard.”

Today, there is still a glaring lack of representation of blacks in the economic industry. Alone 4% PhDs in economics in the United States went to black economists in 2018.

Few of these professionals end up in one of the country’s top economic agencies, the Federal Reserve – just 0.5% of Fed staff in Washington were black in April 2021, according to the New York Times analysis.

The Federal Reserve is one of the cornerstones of economic research in the United States, and its work has a great influence on research and policy development. The agency is responsible for implementing monetary policy that strongly affects vulnerable groups in the country, including black Americans.

When there is not an appropriate representation among its researchers and principal economists, policy choices may not be sufficient to help improve these demographics along with the rest of the economy.

“If you block out certain perspectives or voices, you are missing out on a wide range of experiences representative of culture and the population at large,” says Valerie Wilson, PhD in Economics and Director of the Economic Policy Institute. Program on Race, Ethnicity and Economy, which analyzes the impact of political decisions on the economic situation of people of color in the United States. “By doing this, you are automatically limiting your ability to resolve policy issues. “

Even though the issue of racial representation has been resolved at the Fed, there is still an alarming lack of research and discussion around racism and equality.

An analysis of the International Monetary Fund in 2020, only 0.2% of articles in the top 10 economic journals published in the past 10 years, or about 16 articles out of a total of 7,920, covered issues of race, racial inequality and racism. And when it comes to amplifying the few black voices on the ground, the world of economics is strikingly lacking. A study finds that black business authors are slightly less likely to publish in leading journals than their white counterparts.

Without additional emphasis on these topics and the voices of experts from these communities, blind spots persist throughout economic research. Little change can happen when problems are not properly identified and addressed.

William Spriggs, a doctorate in economics and a professor at Howard University and chief economist at the AFL-CIO, acknowledged these blind spots at a conference in April where he said economists were completely not to recognize everyday racism at all in their research.

Why representation is important in economics

The industry’s lack of attention to – and sometimes blatant disregard for systemic racism – can result in economic policy that neglects the financial condition of much of the country. And these political blind spots perpetuate the racial wealth gap.

The racial wealth gap is the result of institutionalized racism that has eaten away at the incomes, economies, home values, and overall wealth of Americans of color. The gap makes these communities more at risk of financial insecurity throughout their lives, including in retirement.

Read more: America’s racial wealth gap in retirement savings

Adding more black voices to the economy is becoming a way to overcome the racial wealth gap. Wilson says black economists are largely responsible for bringing the problem to the fore as “a problem worthy of serious consideration.” Their role is crucial in creating solutions.

“Your interpretation of [economic] the disparity will be largely influenced by your personal experiences, and that comes into play in thinking about how we decide to solve a problem, ”says Wilson.

But it’s not as easy as telling the federal government or research organizations to hire more black economists. There must be systems in place that promote and ensure diversity at every stage of life.

“As with any other institution in this country, the way to make it more diverse is to prioritize diversity, but unfortunately this is not happening organically in this country due to the long history of segregation,” Wilson said. “In order to make it a more diversified field, [it] must be a priority for those in positions of power and influence and who can make their voices heard.

The Biden administration has focused heavily on diversifying its core advisory roles, particularly in the offices of labor and economics. He appointed Janelle Jones, 36, chief economist for the Department of Labor, making her the first black woman to hold the post. Treasury Secretary Janet Yellen also expressed urgency to diversify those responsible for changes in economic policy, declaring that “diversity is important to ensure that research carried out in economics adequately reflects the priorities of society”.

These diverse voices will prove crucial to rebuilding communities of color as they continue to disproportionately bear the economic burden of the pandemic. At the height of the pandemic in April 2020, black or African American workers had an unemployment rate of 16.7%, compared to 14.1% for whites.

And although the economy is recovering, the black community is being left behind. The unemployment rate for black and African American workers was 9.7% in April; for white workers it was 5.3%.

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How To Get Out Of Credit Card Debt


Economic turmoil was a key feature of the COVID-19 age. Recent trends in credit cards spending support that. Although the average card balance has increased steadily for years but fell during the Pandemic, the balance of an American adult’s credit card account was $ 5,315 at 2020’s close. This is nearly $ 1,000 less that in 2019. Despite this decrease, more than half of Americans added to their card accounts – another sign of the uneven distribution of financial difficulties that we have been dealing with since March 2020.

The decline of credit card debt has ended for now. Our national balance was $ 17billion higher in the second-quarter 2021. Here are some ways you can reduce your spending, and how to develop a practical and realistic plan to pay your credit card bills.

Find out how you got into credit cards debt

Understanding your debt history is a key step in managing credit card debt. You could end up back in the same place after paying off your balance on your card. Click to explore:

Brittney Castro CFP is mint’s financial app. She believes that poor financial habits are often due to insufficient financial literacy. “Students often receive credit cards from their campus or are able to apply for multiple credit lines online. It’s thought that this is more or lesser free money.” They are not informed that if the balance isn’t paid off by the due date, the APR (interest charge) of the credit will be applied to their account (the amount spent on the card). This can sometimes be as high at 29.99%. This can quickly become a huge debt load.

You can avoid this by understanding how credit cards work. Credit is valuable in many cases, but it could be expensive. The longer you leave a balance unpaid, the more interest you will be charged. She says, “Smart and good credit card habits require making monthly payments on time and paying off your entire balance.” This means that you shouldn’t charge it unless it is absolutely necessary.

Set a budget

Credit cards are not the only thing that can make you feel overwhelmed. You might not realize how much you’re actually spending. You may have had an emergency that you didn’t save for and so instead, paid with your debit card. Whatever the reason may be, knowing what money is coming into and out of your pocket is essential to manage your finances. It is vital to create a budget that will allow you to monitor your spending and help you pay off your debt.

Simply put, credit cards debt is when you spend more than you can afford. A budget is a visual record of your financial situation. Although it might take time to establish, it can be very useful. Start by adding up every month’s income to create a category. Next, create a budget by categorizing and adding up all your expenses. Budgeting apps can do all of the heavy lifting. The most widely used are:

Once you have established your budget, ask these questions:

  • Are my expenditures greater than my earnings?If you spend more money than you make, you have two options. You can either cut down on your expenses or increase how much you work (or take up a side business) to increase what you earn.
  • How can I save money for an Emergency Fund?You might be able to avoid borrowing money in an emergency by creating a rainy days fund.
  • Can I cut my expenses?Find ways to reduce your spending, such as eating out less or cancelling subscriptions. Send the money you’ve saved to your credit card company faster.
  • How much do I owe?Calculate your current balances on each credit card to find out how much you owe them and how long they will take to pay it off.
  • How much interest must I pay?Estimate how much of your monthly card payments are set aside for interest. Then rate the cards offering the highest interest rates.

The choice of a debt repayment method

Once you’ve established a budget, and have an idea of the amount of credit card debt that you must repay, it’s now time to begin to reduce it. There are many approaches to debt repayment. There are many ways to get rid credit card debt.

The avalanche procedure

If you have several credit cards that you need to pay, the avalanche strategy is best for you. It allows you to save the most money by paying off your most expensive debt first. Begin by allocating the largest amount of money to your highest-interest credit card. Then, pay as little as possible on all other credit cards. Once you have paid off any outstanding balances on the highest-interest rate credit card, move the money to the card with the next rate.

The snowball approach

The snowball approach is the reverse of the avalanche. This uses momentum to keep your debt payments on track. Bet on your success up to the point that you pay off all the balances. Pay your card back immediately to avoid being tempted to spend again.

Pay more than minimum

You can get rid your credit card debt by paying more than what is required each month. A balance can remain unpaid for years if it is not paid. At 17% APR, it can take up to 10 years to pay $ 5,000 for the monthly minimum. Total cost is $ 10,000.

Because credit can weigh heavily, keeping high balances could negatively affect your credit rating. Carma Petes, Michigan Legacy Credit Union’s CEO, states that the most damaging thing for your credit is a balance greater than 50% of your maximum. Your credit rating will be rebuilt faster if you pay it off quickly.

Transfer your balance to a card

Some credit cards offer attractive bonuses like low balance transfer rates or signup bonuses. If you have good credit, you might be eligible to receive 0% interest on balance transfers for 12 month or more. Balance transfers are a time-saver and can be used to pay off large balances for no cost. It is important to be able pay off the balance completely before the term ends. Otherwise you could be charged interest on the remainder or worse, the full transfer balance.

Consolidating Debt

If you are managing multiple credit cards at once, it may be a good idea to get a personal mortgage for the sum of all your debts. It is essentially consolidating all your debts into one loan, which can save you significant interest.

The average credit-card interest rate hovers around 16%. A debt consolidation loan’s APR is approximately 6%. This is a substantial savings. But, credit scores can impact your interest rate or your chances of getting approved.

Program of debt counseling

The debt counselor can help with your finances and create a repayment schedule. Be aware that not all debt counselors are paid. Depending on your financial situation it might be best to pay off all your debts on the spot and then apply any fees you pay to a counselor towards your credit card debt.

Programs to assist people with disabilities

Contact the card provider if your financial situation is difficult or you are experiencing difficulties paying your bills. Creditors typically offer hardship assistance programs. These programs can help you pay off certain fees, lower interest rates, or defer your payments for several months.

Take into account bankruptcy and debt settlement

Bankruptcy and debt settlement are other options for getting rid of credit cards debt. However, these options can have a negative impact on your credit score. Brian Dechesare, an ex-banker and founder Breaking into Wall Street cautions that these options should not be used. “You shouldn’t consider them in extreme cases if you have exhausted all other options and are unable make ends meet to pay,” Dechesare says.

Settlement of outstanding debt

If you have a greater balance on your credit cards, it is worth speaking with the creditor in order to negotiate a lower interest rate. Dechesare says, “Most lenders won’t settle debt if it exceeds $10,000,” so if you have small debts, consolidating it or paying it off is a good option.

Even though you might be eligible for half the pardon, it could have serious consequences. Dechesare said that “debt settlement” could lower your credit score to 100 points. However, it will remain on your file for seven years.


Bankruptcy can help you get out of financial trouble. When you file, creditors will give you immediate relief. If you receive a discharge from bankruptcy the court will stop you having to pay your creditors. There are downsides. Before you can deposit, credit counseling will be necessary. This can become costly if you include the filing fees as well as the cost of a bankruptcy attorney. If you are able to discharge your debt, bankruptcy will be publicized and remain on your credit reports for seven year.

Retrospectively examine your finances, and set goals.

When you are debt-free or at the edge of getting rid of credit card debt, it is crucial to maintain good financial habits. Respecting your budget is crucial. You might want to conduct an annual review of your spending habits and make adjustments to your budget. Additionally, make sure to have enough money in your emergency savings account to cover unexpected expenses. Final, set goals that you will stick to. It’s a great way for you to monitor the price of your home and manage your spending.