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How Entrepreneurship Can Help Resolve the Wealth Gap
According to research done by the World Inequality Database, the 400 richest Americans own more of the country’s wealth than 150 million Americans in the bottom 60% of the wealth distribution. Between 1987 and 2014, the bottom 60% saw their share of the nation’s wealth fall from 5.7% down to 2.1%, that's a cut of more than half of the bottom's national wealth. With such a divide, that top 400 has the resources and power to control much of what decisions are being made in the US - decisions that make them richer and the poor, poorer.
The attention then turns to the question, why is our wealth distributed so unevenly? How can we change this and find a way for ‘the average American’ to have a bigger piece of the financial pie? For the rich, wealth is power, while for the average earning middle class American, wealth is a necessity for security.
The Economic Policy Institute addresses the issue of the racial wealth gap stating, “The role of policy in creating and maintaining the racial wealth gap makes it clear just how difficult it will be to close the gap through the individual choices and behaviors of African-Americans.” For white earners, the median wealth is 12 times higher than the median wealth for African Americans. 27% of black households have a net worth of 0 or less. The lack of opportunity and the uneven distribution of wealth has kept families of color from being able to build and own wealth over the past generations. It is not until we see significant changes in social and economic policies to break down barriers that have prevented wealth creation.
Entrepreneurship has the power to make a significant change in the wealth gap despite these barriers. One of the main factors driving this gap is the lack of assets and businesses within the black community alone. We've seen how athletes have started to change the narrative in professional sports by taking control of their careers and forcing the hand - we need to have this same mentality when it comes to corporate America to create the impact we need.
Becoming financially independent by owning your own business, allows the opportunity for people to build their own wealth, their own way, and increase their potential for economic mobility. It also opens up the opportunity to influence younger entrepreneurs to do the same. The less we rely on the top 400 to provide us resources, the more we can do for ourselves. Dependence is crippling when those you are dependent on are driven by their personal ambitions.
Families with a business owning head of household had a median net worth 5 times higher compared to those with a head of household working beneath someone else. This is because as an entrepreneur you are generating wealth directly related to the work that you put in, where as in corporate America your efforts are fueling the machine that generates wealth for those in charge.
Becoming an entrepreneur is definitely challenging. The road is often unsteady and sometimes scary, but without taking the risks, we’ll never know what we are capable of achieving. Its a risk that needs to be taken in order to provide real opportunity for our children and minimize the wealth gap that we face in 2019. If we continue at our current rate, the rich will continue to put policies in place that will never allow us to create change.
Determination and persistency will spark the revolution we need to impact our generation, inspiring more and more business owners to claim their piece of the wealth pie. The time to act is now. The road towards reclaiming our wealth is going to be a long one, full of challenges to overcome, but the sooner we start, the better we are going to make the world for future generations.