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The Ugly Truth: Racial and Ethnic Disparities in Wealth in the U.S.

Data released by the Federal Reserve in September of 2017 reveals stark disparities between the wealth held by families of different races and ethnicities in the United States. With wealth defined as the “the difference between families' gross assets and their liabilities,” the following table shows the median and mean net worth of families of different racial/ethnic backgrounds in 2016.


Note that for each group, mean net worth greatly exceeds median net worth, indicating a skewed distribution of wealth within each group, “reflecting the concentration of wealth at the top of the wealth distribution.” White wealth exceeds Black, Hispanic, and “Other” (a designation indicating Asian, American Indian, Alaska Native, Native Hawaiian, Pacific Islander, other race, and those reporting more than one racial identification).  In fact, median White wealth is nearly 10 times that of Blacks and over 8 times that of Hispanic families.

Further analysis of wealth disparities found that they are much greater than differences in income. Median White income of $61,200/year is less than twice that of Blacks at $35,400/yr. or Hispanics at $38,500/year. The differences in wealth are primarily found in home ownership rates, possession of retirement accounts and other types of equity.

One finding reported by the Federal Reserve was that education is a significant predictor of both income and wealth: a college degree increases a family’s wealth by about five times. This is true for all races and ethnicities, but the actual incomes and wealth attained by those with a college degree differs widely among the racial/ethnic groups. A White family whose head of household has a bachelor’s degree can expect to earn nearly six times that of a Black family whose head of household has a bachelor’s degree (which is actually an improvement over 2013, when Black families with a head of household with a bachelor’s degree earned 1/10 of what White families with similar education earned). Hispanic families with a bachelor's degree curently earn 1/5 of what White families with a similar degree earn.

A study conducted by The Center for Investigative Reporting gives us some insight into to the sources of the disparities between Whites and People of Color in wealth. As the Fed study found, house ownership is a major difference separating Blacks and Hispanics and even “Others” from Whites in determining a family’s total wealth. The study included “all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant’s income, the amount of the loan, the ratio of the size of the loan to the applicant’s income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.” The findings were shocking: “Black applicants were turned away at significantly higher rates than whites in 48 cities, Latinos in 25, Asians in nine and Native Americans in three.”  In other words, racial discrimination in application for home mortgages continues to exist in America, despite federal laws prohibiting it, and makes it difficult, and sometimes impossible for families of color to obtain loans to buy houses, one of the most  important determiners of differences of family wealth in our country. The study found that, although laws passed in the Carter administration were supposed to prohibit so-called “redlining” of areas where minorities would be denied mortgages, “The disproportionate denials and limited anti-discrimination enforcement help explain why the homeownership gap between whites and African Americans, which had been shrinking since the 1970s, has exploded since the housing bust. It is now wider than it was during the Jim Crow era.”

The conclusion is clear: deliberate discrimination against people of color within the United States limits the financial attainments of Blacks, Hispanics and others, and results in wide wealth disparities. Those who argue that such disparities reflect different work ethics, different educational attainments, different culturally-based ambitions, are ignoring what the data clearly show. It is racial and ethnic discrimination, ingrained in our economic and social system, that results in the disparities we see in our current society.

Reader Comments (12)

Correlation does not imply causation. The differences you apply to being caused by skin color have nothing to do with race and everything to do with culture. People are free to pursue wealth, build savings, purchase assets and and spend freely as they choose. None of these decisions has to do with race. However, certain sub-cultures in the US may instill behaviors or barriers that have a tendency to either promote wealth-building or not. For anyone involved in the drug culture, the gambling culture, the prison culture, the gang culture, the high school drop-out culture, the never-married mother culture, the party-all-night culture or the welfare culture, wealth building and every associated financial benefit will certainly be less available regardless of skin color. Saying simply that someone didn't get a loan because they're black or did get a loan because they're white is facile. As for the bachelor's degree earnings difference, what is the degree in? A gender studies degree versus an engineering or finance degree is going to make a huge difference in earnings. Again, this comes down to choice, not discrimination. For those that argue that individual attainment, individual drive and cultural spheres of involvement don't have a profound affect on relative economic status are ignoring the success of the many people of all races who have risen from positions of economic hardship to positions of great wealth and economic benefit.

February 16, 2018 | Unregistered CommenterMark Wheeler

Even uglier than the statistics regarding race and ethnicity regards the unfair distribution of wealth and income are the statistics regards class.
There are no bigger indicators of future economic success than starting out as part of the ivy league culture, the private country club culture, the inherited wealth culture, or even as low as the bottom of the top 1% culture.
The game is truly rigged to favod dynastic wealth and the trend is worsening. High class mobility is a figment of the imagination. We have less mobolity than the United Kingdom and have arrived at the level of the caste system of India.
Free-booting Capitalists understand this well. Fair and equal access to the capital markets, a basic requirement of real capitalism, is not even given lip service. Likewise free and equal information availability is non-existent....all tightly controlled by a legal and cultural framework controlled by the elite.
Causation, correlation??? It's actually immaterial. One need only take a look at the outputs of a complex system to ascertain how it functions.
In this case the system is killing a lot of people and allowing t he capabilities and capacities of nearly everyone to wither.

February 16, 2018 | Unregistered CommenterDariel Garner

Three more statistics I neglected to include in the article— related to the question of discrimination: the differences in whether a family had a high payment to income ratio when applying for a loan, or a history of delinquent payments, was quite small between groups (0-5%), but a history of being denied loans, was substantial, with more than 30% of Black and Hispanic families having been denied loans in the past compared to 15% of Whites. With regard to inherited wealth (relevant to Dariel’s point), 26% of Whites had received an inheritance compared to 6% of Blacks, 5% of Hispanics and 20% of “Other.” Also, 71% of White families had family or friends who could loan them at least $3,000 in an emergency, compared to 43% of Black families, 49% of Hispanic families and 64% of “Other” families. Wealth differences, including those related to inheritance and immediate social network resources, are race and ethnicity related, even if they are also class related.

February 16, 2018 | Unregistered CommenterCasey Dorman

I really loathe using personal anecdotal evidence to make a point but here goes. The collective net work of my birth family was negative $20,000 in 1970. We were in the lowest class possible. My dad spent some time in jail about this time on a drug offense. My brother, sister and I shared a tiny bedroom. Things seemed bleak. Fast forward two generations and the collective net worth of those same individuals is somewhere above five million dollars. Not through any nefarious dealings, but simply through hard work and common sense applications of money. Don't try to convince people that this country is permanently economically stratified. That's a complete mistruth. I've seen it first hand. I also have many clients who were formally one-percenters and lost their wealth through addictive behaviors or by being sued into bankruptcy. The claim that there is a permanent rich class or a permanent poor class in the United States is a flawed concept.

February 16, 2018 | Unregistered CommenterMark Wheeler

Some Facts: A 2015 Study by Stanford University and the Pew Charitable Trust, using tax return records and a measure of intergenerational (lack of) mobility (IGE) found that in the U.S.
• Approximately half of parental income advantages are passed on to children. The IGE, when averaged across all levels of parental income, is estimated at 0.52 for men and 0.47 for women. These estimates are at the high end of previous estimates and imply that the United States is very immobile.
• The persistence of advantage is especially large among those raised in the middle to upper reaches of the income distribution. The IGE among adults whose parents were between the 50th and 90th income percentiles is 0.68 for men and 0.63 for women. This means that approximately two-thirds of parental income differences within this region of the income distribution persist into the next generation.
• Children born far apart in the income distribution have very different economic outcomes. While a finding of unequal outcomes is not in itself surprising, the magnitude of this inequality has not been well appreciated: The expected family income of children raised in families at the 90th income percentile is about three times that of children raised at the 10th percentile.
• Parental income matters more for men’s earnings than for women’s. The average earnings IGE for men (0.56) is more than 40 percent higher than that for women (0.32). Although both men and women benefit from being born into higher-income families, men benefit much more—at least when it comes to their own earnings.
• Parental income matters more for women’s chances of marriage, and of marrying better-off partners. The income IGE is large for men (0.52) mainly because children from higher-income families tend to have higher earnings as adults. For women, the income IGE is nearly as large (0.47), mainly because those from higher- income origins are more likely to be married in their late 30s—and to marry higher-earnings partners.

February 16, 2018 | Unregistered CommenterCasey Dorman

Not everyone can live in Newport Beach, which is predominantly white and wealthy. Some of us live in Santa Ana, or Costa Mesa, or Long Beach, which are more ethically and racially diverse. There is something racially arrogant to equate Whiteness with wealth. My Mexican neighbors are some of the nicest people I know. They are hard working, their children speak flawless English, and if one cannot see their faces to judge, they are as American as anyone else. With the new state law, one of my neighbors, will not go back to prison for smoking some weed. That’s real life, and we cannot, should not, judge people by their wealth, or their ‘whiteness’. When I lived in Newport Beach, some people were delightful, while others genuine creeps. I chose not to buy a home there not for financial reasons, I can afford it, but for living in a more ethically diverse world, and glad to have made that choice. I think it is innately arrogant, if not hypocritical, to equate ‘whiteness’ with wealth, or the identity politics of a people. Wealth does not make a man. It is all in the choices we make. That’s real life.

February 16, 2018 | Unregistered CommenterIvan Alexander

I don't believe it is either arrogant or hypocritical to cite United States Federal Reserve statistics showing that there are large disparities between wealth in the U.S. based on racial and ethnic differences. These are facts and to say that they don't exist seems to me to represent a form of denial of reality. Wealth, of course, does not equate with goodness, worth, or anything else except financial status. That there are factors in our society, as the Center for Investigative Jounalism study reveals, which discriminate against people of one or another race or ethnicity from borrowing money in order to acquire a house, which is one element (and a major one) of how wealth is calculated, is another reality that color-blindness can fail to see and result in a failure to find remedies (especially when, as the study found, such discrimination violates federal laws). Identifying real differences and real factors that contribute to those differences, especially when they result in an uneven playing field based on race or ethnicity, is not identity politics, it is facing reality as it exists in our society.

February 16, 2018 | Unregistered CommenterCasey Dorman

<<Identifying real differences and real factors that contribute to those differences, especially when they result in an uneven playing field based on race or ethnicity, is not identity politics, it is facing reality as it exists in our society.>>

Yes, of course discriminatory practices against any ethnic/racial group creates an undesirable uneven playing field, and it should be stopped if we wish a fair and just society. No, even if the playing field is totally fair, there will be discrepancies in the resulting wealth and income levels, no matter how these groups are defined. That is reality. And to parlay that into political action, income redistribution, or castigating any one race or group is identity politics. It is not clear from your article whether you are truly in the ‘yes’ or ‘no’ column.
Writing as a ‘privileged white male’, you may not be in the best position to understand cultural differences with points of view differing from yours, a progressive view from the tower. Real people are less concerned with geopolitical, socioeconomic correctness than getting on with their lives as best they can. That demands fair practice, equal educational opportunity, equal consumer protection from fraud, equal opportunity in lending, equal job opportunity, etc. That is real, that counts. The rest of it is ideological fluff of the privileged, a view from the tower.

February 16, 2018 | Unregistered CommenterIvan Alexander

It is important to recognize that wealth in the USA is overwhelmingly concentrated in a few hands. Statistically wealth inequality is measured by the GINI coefficient. By measurement the USA has the most highly concentrated wealth in the industrialized world.

Actual numbers are worse. Published measurements generally are not up-to-date and often do not measure the 30% of the entire nations wealth that has transferred primarily to the richest 1/10th of 1% in the last 6 years nor do they count the probable 10% of national wealth held by Americans in secret.
This concentration of wealth, often expressed in monopoly power, is a drag ninnovation and prosperity in every sector, even high-tech. The effect on life in the USA is illustrated by an article by Harvard researchers in the British Medical Journal found that just the excess mortality caused by the difference income inequality betwwwn the USA and advanced European economies would account for one in three deaths in the USA. Columbia researchers paint a similar picture for death rates due to poverty related deaths as accounting for one American dying every 36 seconds, 847,000 per year. That our people cannot share the wealth we all create causes more death every year than the USA has had as soldier combat casualties in all the wars we have fought in ourwhole history.

Wealth in America is predominately white. At the highest levels it is almost exclusively whits. eg...there are only 3 Blacks and one Latino in the Forbes 400 , there are also a few Asians and others many of whicg derive their wealth from wage or capital arbitrage with their associated national ehnic states.

That the median (typical) family wealth in Boston for a US Black person is $5 (not a typo $5) versus $247,000 for a white family cannot be explained by hard work versus sloth. Or that the typical liquid assets of a Latino family in LA is $7 (both statistics from Fed Reserve studies) cannot be explainded by saying the people don't want to work.

The bad outcomes for our people, particularly hard felt by people of color, can be explained by looking at generations of theft, firstly of our nation from the indigenius, later by theft of life by chattel slavery and most recently by using a variety of legalizations creating division and discrimination of the lower and middle classes by the ruling and dominant classes.

I used to think critically of poor people buying lottery tickets for the chance of getting rich. Self-righteously I used to think ...I made it, so can they. I wouldn't waste my money on gambling, particularly the lottery, I worked hard, they can do it.

Eventually I figured out that I didn't make it alone. I made it because of my birth (white) my class, my education and due to the fact that the wealth oriented culture and a bunch of rich folks had rigged the system and greased the skids before me.

The chance for anyone to step into the ranks of the very wealthy is miniscule. The best chance for most people probably is the Lotto and that is virtually no chance at all.

February 16, 2018 | Unregistered CommenterDariel Garner

Ivan Alexander has it absolutely right. Bravo.

And from my earlier post "formerly" got changed to "formally."

February 16, 2018 | Unregistered CommenterMark Wheeler

Thank you all for your opinions. An interesting discussion, revealing different points of view.

February 16, 2018 | Unregistered CommenterCasey Dorman

Antonio Moore often comments on race and wealth. In this article he looks particularly at some of the few black people who attain high levels of wealth...the folks that some people would characterize as working hard through the system, maybe even lucky. Refrenced in the article are several recent studies from inequality.org which I recommend. Antonio's article is here... https://www.eurweb.com/2016/10/opinion-black-wealth-hardly-exists-even-when-you-include-nba-nfl-and-rap-stars/#

February 17, 2018 | Unregistered CommenterDariel Garner

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