Can Wealth-Building Programs Both Prevent Displacement and Narrow the Racial Wealth Gap?

Gentrification can bring economic investment to low-income neighborhoods, but not all residents experience the benefits of that investment equally,. Such neighborhood change often attracts new residents with higher incomes and displaces them with lower income earners, who tend to be renters and people of color.

Because it can drive displacement, gentrification can exacerbate the racial wealth gap, which stems from decades of systematic racism and bad policies that have prevented blacks and other people of different ethnics from accessing the same wealth-building opportunities–such as access to careers with higher incomes and home ownership–as white citizens.

Note: The link between the racial wealth gap, economic development, and displacement.

The black-white racial wealth gap is rooted in decades of policies such as redlining, racial restrictive covenants, and job discrimination. Even with the end of these policies on paper, the home ownership gap is even greater than it was in 1960, and African Americans are most likely to be renters and have low incomes. Shock events like natural disasters, financial crises, and gentrification show these patterns and inter generational inequalities.

Because of black and renter’s households’ lower incomes and wealth accumulation, they are especially vulnerable to displacement. Seattle, Nashville, and many other cities show patterns of increasing costs of living displacing these groups of community members.

Note: What Next?

Evaluating the impact of the racial wealth gap is critical for qualifying the potential of wealth building to combat the effects of gentrification. Over a two-year period (ending in 2025), society will assess its implementation and outcomes–including whether this could be a viable strategy for closing the racial wealth gap more broadly. Time will tell whether the model can decouple racial displacement from economic development. If successful, any project that aids in the bridging of the racial wealth gap will give policymakers an additional tool to fight the harmful effects of gentrification and advanced equitable growth.

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