In The Contribution of Shareholder Primacy to the Racial Wealth Gap, Roosevelt Fellow Lenore Palladino explores several ways of evaluating the impact of disparate equity ownership, and payments to shareholders, on racial wealth disparities. Using data from the Federal Reserve’s Distributional Financial Accounts and S&P Compustat, Palladino measures corporate equity ownership by race and ethnicity and shows how shareholder payouts have disproportionately—and increasingly—benefited white households. Palladino finds that the contribution of ownership of corporate equities to the racial wealth gap has grown over time.
This original analysis contributes to ongoing policy discussions about how to restructure the rules for corporate equity ownership in our society and how to end wealth inequities that are a legacy of the US’s shameful history of slavery, racism, and xenophobia. As noted by Insight Center for Community Economic Development President Anne Price in a Roosevelt report, it is critical to focus “on the root of racial wealth inequality rather than fixating on the racial wealth gap,” because a gap can be partially closed without addressing its underlying causes. This working paper uses the RWG as a measurement device but supports a conceptual and policymaking reframing to focus on wealth equity—by confronting ongoing racism, checking the dominance of corporations that stems from neoliberal economic theory, and increasing public power.