Former NFL running back now aims at the racial wealth gap
Jason Wright, a McKinsey partner, co-authors new study detailing why black families are financially so far behind whites
Jason Wright always saw himself as more than a football player.
While playing at Northwestern University, the former running back led the local chapter of his fraternity, Alpha Phi Alpha. During his seven-year NFL career, he was a union leader who went on to launch a charter school network in Cleveland.
His football career ended in 2011, and Wright, 37, is now a partner with McKinsey & Co. And, no surprise, he sees himself as more than your ordinary management consultant.
Wright, who has an MBA from the University of Chicago, is leveraging his company’s reach and expertise to tackle one of the nation’s most critical problems: the vast wealth gap separating African Americans and whites.
Wright co-authored a report released Tuesday that lays out the broad scope and troubling implications of the racial gap. The typical black family has a net worth of just $17,600, one-tenth of the wealth of the typical white family, which in 2016 had a median net worth of $171,000, according to the Federal Reserve’s Survey of Consumer Finances.
The gap widened significantly in recent decades, and it is showing no signs of closing. The biggest reason is that the typical African American family faces an array of obstacles that often work together to thwart wealth creation.
For one, the report says, two-thirds of black families are concentrated in 16 states where, taken together, the overall economy is weak and educational options lag behind those elsewhere in the country. Most of those states are in the South, where economic opportunity, health care and even access to fast internet service are not always a given.
Meanwhile, black families in relatively prosperous urban areas or states tend to live in low-income neighborhoods where home values typically grow slowly, crippling one of the main sources of wealth creation. In addition, black families are far less likely than whites to own homes. More than 10 years after the Great Recession, the home ownership rate for black families continues to decline; it is down to just over 40%, while more than 73% of white families own homes. As recently as 2004, more than 48% of African American families were homeowners.
Another factor contributing to the gap is that African Americans tend to come from families with scant wealth to begin with, leaving them with little to build on. Just 8% of black families receive an inheritance, for instance, compared with 26% of white families. And when black families do inherit money, they get less: The typical black inheritance is just 35% of the average white inheritance of $236,000, the report said.
The lack of wealth hits hard at black college students. Blacks are much more likely than whites to incur student debt, and when they do, the debt is higher. Too often, it proves to be unpayable. Overall, nearly half of black undergraduate borrowers default on their student loans, some 2.3 times the white default rate, the report said.
Many other African Americans are living outside the nation’s financial mainstream, a troubling fact that impacts their ability to get mortgages, consumer loans or even credit cards. More than 1 in 4 African Americans do not have a credit score, and 17% do not have traditional bank accounts.
On top of all that, black workers typically have unemployment rates that are double the rates of similarly educated whites. Among those that are employed, blacks tend to earn far less than whites, in part because of lower educational levels.
If economic trends continue as they are now, the outlook is bleak for African American workers, who tend to be overrepresented in professions like truck driving, for instance, that face increasing competition from automation, the report said. Meanwhile, fast-growing fields like software programming and artificial intelligence have relatively few African Americans.
It is a gruesome picture but one that Wright believes can be improved. He noted that there were periods in the past when the gap had closed somewhat. He said improving educational opportunities, making consumer credit more widely available, ramping up consumer education and devising economic strategies to uplift lagging regions can all make a substantial difference in closing the wealth gap.
“There is a galvanizing case for change,” Wright said. “When we look specifically at helping black folks across the country, the result is it helps everyone because the entire economy benefits.”
Later this week, a group of more than 200 black executives and leaders will meet in Martha’s Vineyard for McKinsey’s annual Black Economic Forum to discuss the report’s findings. Afterward, Wright plans to lead an effort to turn out a series of follow-up documents going into more detail about approaches for closing the wealth gap.
Wright called the work every bit as exciting as his days playing in the NFL.
“When I played football, one thing I saw was an opportunity to influence on scale,” he said. “What I found at McKinsey is something that I thought I lost when I retired from football, and that’s another platform” to make change on a large scale.