woman holding money

(WOMENSENEWS)–It’s the difference between the cost of a Porsche and the cost of a purse; about $45,400 compared to about $100.

That is the current wealth gap difference between white women and black women. White women have enough accrued wealth to buy a small Porsche sports car, at about $45,400. Black women have about $100 in wealth, enough for a designer purse.

While the onus for saving and preparing for the future has been on the backs of individuals, it is time for employers to consider their part in closing the racial-gender wealth gap.

Employers need to create benefits that offer a “catch-up” for those employees who are low on personal and family assets. Closing the racial wealth gap should not only be a policy priority, but a business incentive as well: benefits are an important component attracting skilled workers to companies.

Chipotle recently announced that it would give all employees, including part-time and hourly workers, paid vacation time, sick leave pay and tuition reimbursement starting July 1.

Richard Branson, founder of Virgin, also made a gesture by announcing recently a year of paid paternity leave for his employees. (Since it only applies to workers in London or Geneva who have worked in Virgin Management, one of the company’s businesses, for four years, only 0.2 percent of his 50,000 workers are affected.)

For all workers, benefits are clearly important. And for workers — women of color, especially–employers can help them catch up and narrow the gap.

Most employment-based benefits, such as pensions and health insurance, are provided voluntarily by businesses. The federal government supports these voluntary employment-based benefits by granting them favorable tax treatment. The government also supports individual financial security programs through individual retirement accounts and favorable taxation of life insurance contracts.

Many companies realize that skilled workers make decisions regarding whether to join the company based on the strength of their benefits packages.

What Wealth Buys

While income is money that comes to us regularly–through earnings or other sources such as Social Security–income pays for daily living expenses. Wealth is money and resources available to a household for major purchases and investments such as housing, college, start-up funds for business and monetary gifts to adult children.

The demands on wealth are significant. A state-run public college typically cost $23,410 in the 2014–2015 academic year, while a private college costs $46,272 per year on average. The average home in the U.S. costs $188,900. And for the entrepreneurial at heart, it costs an average of $30,000 to start a business.

This is what wealth buys. In other words, it’s not really a Porsche versus a purse; it’s the difference between owning your own home and sending your kids to college or not. It’s about setting the next generation on a stable course, increasingly building wealth with each generation, or not.

The disparities between blacks and whites exist because of factors such as historically lower wages for blacks, dating from the United States’ exploitation of the labor of enslaved Africans, to the Jim Crow era of segregation which barred blacks from access to decent housing, jobs and education; and continued widespread discrimination in the labor market that made it difficult for blacks to attain higher paying jobs.

Houses are typically a household’s major asset. Most of the 9 million Americans who lost their homes in the foreclosure crisis of the late 2000s were Latinos and blacks, widening the racial wealth gap, finds a study published in May by Cornell University researchers.

The 2008 recession has led to an epidemic of foreclosures in black communities after many buyers were systematically targeted by predatory lenders.

But this is not new. Historically, housing segregation and unequal access to government policies also played a part in the racial wealth gap. For example, whites were able to use government guaranteed housing loans to buy homes in the suburbs after WWII, courtesy of the GI Bill.

Those homes then rose in value over the years, creating a white “middle class.” But because of discrimination, few black veterans were able to make use of the housing provisions of the GI Bill. And banks generally wouldn’t make loans for mortgages in black neighborhoods; and African Americans were excluded from the suburbs by a combination of deed covenants and informal racism.

Even today homes in black neighborhoods are worth less than homes in white neighborhoods.

Because women tend to earn lower wages than men all this is more pronounced for black women, who are less likely than black men to be able to turn their salaries into wealth. And they are then less able to afford buying a home in the first place.

In 2014, median weekly earnings were $708 for black men and $606 for black women. Black women are also less able to take advantage of pooled household income than white women, as they are less likely than their white counterparts to marry and to remain married.

Redressing the Gap

Taking in these grim statistics, it may be hard to imagine how to effectively redress the racial-gender wealth gap. Changes in housing policies preventing redlining and predatory lending could help, as can policies to increase employment opportunities in all communities.

While wealth management is often put into the hands of individuals, it is only fair to insist that employers–from small businesses to large corporations–assist their employees in building wealth for their futures. This will have pay off for all workers and black women in particular desperately need these innovations.

There are a number of remedies, but most broadly, U.S. companies can simply follow the example of Chipotle and expand benefits for all employees. Benefits are important to building wealth. They act as a “wealth escalator,” turning wages into wealth at a faster rate than for employees who don’t enjoy benefits.

For example, some private companies’ 401K plans match employee contributions to a retirement fund with employer dollars. If an employee puts one dollar into this fund, the employer will match those dollars. An employee can literally save twice as much as an individual without that option. This is a way for black women to catch up.

At the end of five years that could mean as much as $10,000 additional savings for someone who contributes 5 percent of his or her yearly salary of $40,000. In many 401K programs, employee contributions are made before taxes are deducted, so that income taxes are not paid at the time of investment.

Employers could contribute directly into investment funds that employees could have access to currently, rather than deferred retirement funds. Employers could also offer benefits to employees’ children – similar to the baby bond proposal for municipalities.

The baby bond proposal is an idea gaining momentum. Hillary Clinton has suggested a $5,000 baby bond for all newborns. It would be an endowment given to all Americans at birth and maintained by the federal government until they are 18.

Duke University political scientist William A. Darity and The New School economist Darrick Hamilton have suggested apportioning this bond on a sliding scale based on poverty levels such that a newborn could earn eventually as much as $50,000 – $60,000. The bond would function in a similar way to Social Security and could be used to pay for college, buy a house or start a business.

If employees are at varying points along the journey to establishing financial security for themselves and their families, it makes sense that employers would have the flexibility to meet a variety of needs of their employees.

Some organizations do help employees with financial literacy, according to the Society for Human Resource Management. These organizations also have “financial wellness” programs, intended to help employees with their short-term needs, as well as setting a foundation for their long-term stability.

Private sector efforts to extend these programs to help employees catch up on personal and family assets will go a long way toward closing the racial-gender wealth gap–and improving the quality of many lives.

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