Experts at state hearing warn of widening disparities, seek solutions

Changing federal policies could worsen the racial wealth gap, experts at a hearing hosted by the State’s Joint Committee on Racial Equity, Civil Rights and Inclusion said.

“Today’s hearing is about more than naming the problem, it’s about deeply understanding the role federal policy plays in creating the disparities and what Massachusetts can do to fight back,” Sen. Liz Miranda, co-chair of the joint committee, said at the hearing.

At the heart of the hearing was a question about how the Trump administration’s policies — including the passage of the One Big Beautiful Act, newly-imposed tariffs, and the rolling back of diversity, equity and inclusion (DEI) efforts — could impact the wealth gap, the trend that households of color tend to hold less wealth than their white counterparts.

Nationwide, the median white household holds about six to seven times more wealth than the median Black household, and about five times more than the median Latino household. A 2015 report from the Federal Reserve Bank of Boston posited that in the Greater Boston area, white households had a median wealth of $247,500, while Black households had a median wealth of $8.

Kimberly Goulart, a senior research analyst at Boston Indicators, the nonprofit Boston Foundation’s research arm, said in testimony at the hearing that the legislative changes in the One Big Beautiful Act, through changes it made to the tax code, could increase financial instability for lower-income families while generating savings for wealthier households. The act also included cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP), which are expected to further cut into low-income households’ ability to create and preserve wealth.

Experts at the hearing warned that the cuts to Medicaid and SNAP through the federal law are an intentional choice to generate savings to balance out tax cuts passed first in 2017 and made permanent in 2025.

“The federal government’s policies are on purpose,” said Vivian Abreu-Hernández, president of the Massachusetts Budget and Policy Center, a think tank focused on state budget and tax policies. “This is not by mistake. The federal government is cutting close to $1 trillion in social services because it gave $1 trillion in tax cuts to the wealthiest and the corporations in the United States.”

According to estimates by the Congressional Budget Office, those tax cuts mean families making more than $1 million could see $90,000 in tax relief. That figure for those making less than $50,000 per year could see about $300 in tax relief in 2027.

“Because wealth in the U.S. remains disproportionately concentrated among white households, the central concern is that, taken as a whole, [law] largely benefits those who already hold substantial assets already,” said Goulart, whose testimony at the hearing centered on an October Boston Indicators report she helped author aimed at forecasting the law’s potential impacts on the wealth gap.

“This could exacerbate the racial wealth gap.”

That piece of legislation also established the formation of Trump Accounts, a baby-bondsstyle system, intended to invest in Americans when they’re born. But experts at the hearing said the goal of those accounts don’t seem to be playing out because those accounts weren’t set up in a way to explicitly help low-income communities.

That’s because after the government makes an initial deposit, the main benefits will come from individuals who can invest more in them, said Jeff Fuhrer, a fellow at the Brookings Institution, a think tank, and former director of research at the Boston Federal Reserve. In testimony at the hearing he said that the setup will be poised to help high-income people who don’t need the additional support.

“We don’t need to help them.

What we need is some government money to help folks who do not have the capacity to save right now,” he said. “It’s not that they don’t know how to save or don’t have the incentive to save. They don’t have the disposable income to save. Until we fix that, we’re not going to fix anything.”

Others at the hearing pointed out that the pilot program also doesn’t automatically enroll all eligible families — a step Goulart said would help ensure the families who need access the most are included. The program also has yet to provide guidance on how balances in the accounts could impact eligibility for other safety net benefits that depend on household wealth.

Beyond the policy changes, experts who testified at the hearing also spoke about the Trump Administration’s DEI pull-back. Almost as soon as he took office, President Trump signed an Executive Order overturning Biden-era DEI efforts in the federal government. Changes at the federal level have marked a broader shift, as companies, too, have pulled back on or dropped entirely DEI policies they had adopted in recent years.

That has created a chilling effect on diversity efforts, even in sectors where no policy has been implemented or the Trump Administration doesn’t have the authority to set requirements.

Nicole Obi, president and CEO of the Black Economic Council of Massachusetts (BEMCA), a nonprofit focused on building Black wealth and entrepreneurship, said that the shift has led to contracts being delayed, narrowed or denied. For Blackowned businesses, those contracts are an important way for firms to grow, she said.

The issue is compounded by federal funding cuts to the education, health care and nonprofit sectors, all of which are major purchasers from small businesses, Obi said.

“As these institutions pull back, Black-owned firms lose contracts and revenue at the very moment costs are rising,” Obi said, pointing to one BEMCA member who has lost over one-third of his revenue from the loss of contracts with nonprofits, particularly in the education and health sectors.

Another prominent focus at the hearing was the importance of maintaining access to accurate, detailed data to track statistics on labor and business outcomes.

In some cases, access to that data is hampered by changes in data collection and availability from the Trump Administration.

Experts have said that budget cuts at the federal level have led to reduced or eliminated federal data sets.

“When data is delayed, reduced or no longer disaggregated, inequalities become harder to identify and address,” Obi, who called on state leaders to continue and expand state data collection and distribution, said. “Policymaking without data makes it harder to address long-standing and newfound challenges.”

Already, Boston and the state are expecting to see new data that will help inform efforts to close the racial wealth gap. In 2022, the Boston Federal Reserve announced it would update its 2015 “Color of Wealth” report, which will look at racial wealth gaps in all of Massachusetts and not just Boston, drilling down on data specifically from Black, white and Latinx subpopulations.

An initial summary of that report is expected to be released by the end of the year. “Having that data in hand to update what he had from 2015 is critical,” Fuhrer said. “Start with the data.”

For some of the persistent challenges behind the racial wealth gap, state officials at the hearing said they had efforts in place to try to support residents.

Lauren Jones, secretary of the Executive Office of Labor and Workforce Development, pointed to the MassHire network that connects job-seekers to employment opportunities. She also pointed to her office’s work k supporting unions and the trades as a path to good employment, wages and benefits, as well as to English-language learning programs to create new paths to better employment for non-English speakers.

Juan Vega, assistant secretary of communities and programs at the Executive Office of Economic Development, touted state efforts to foster more and diverse small businesses, including steps like technical assistance, as one way to try to help close the racial wealth gap.

“The racial wealth gap is also a racial entrepreneurship gap,” he said.

Dr. Kiame Mahaniah, secretary of the Executive Office of Health and Human Services, pointed to the state’s Advancing Health Equity in Massachusetts initiative. Poor health outcomes impact and are impacted by poverty in the state, he said.

The state secretaries who testified at the hearing also used the event as a chance to advocate for funding for their respective offices as the state moves through its annual budget process, slated to be finalized in July.

Ultimately, experts at the hearing said that addressing the wealth gap is not just a matter of responding to actions from the current administration, but to take a more historical view, referring to the fact that current gaps in wealth are a result of the U.S.’s racial history.

“Can we leverage our work across the legislature and across secretariats so we can really boost up the quality of life?” Mahaniah posited. “How do we reverse 400 years of policies? How long will it take you? 400 years is a long time to be having a bad policy.”