Minority Wealth Inequality
In America, we all know that racial and ethnic wealth inequality is bad, but how bad is it? Has it gotten better or worse over time, and what can we do to address this issue?
These are all really tough questions that aim to identify the heart of racial and ethnic wealth inequality in America. Fortunately, America’s Census Bureau has been tracking data for many years, data that can be combined to shed light on the unfortunate reality of wealth inequality. All of the data to support the analysis below can be found here.
Bottom line up front:
In America, the typical white family has a wealth of ~ $171,000
In America, the typical black family has a wealth of ~ $17,400 (90% less than typical white family)
In America, the typical Hispanic family has a wealth of ~ $20,920 (88% less than typical white family)
It is uncertain what’s worse: the fact that typical black and hispanic families in the U.S. only have a tenth of the wealth of typical white families, or the fact that the typical black and hispanic families have total wealth valued at less than the price of a Toyota Camry. Those numbers are especially jarring when it is considered that, at time of writing, it’s 2018. In the 55+ years since the days of the Civil Rights Era, it would be expected that racial wealth inequality would have become less severe. Contrarily, U.S. Senator Elizabeth Warren had this to say at the most recent Banking, Housing, and Urban Affairs Committee hearing:
“In 1968, the typical black family had one-sixth the wealth as the typical white family. Now it is one-tenth. We have gone backwards since the Civil Rights Era.” – Sen. Elizabeth Warren (D-Mass.)
It is important to note that the wealth of a “typical family” is the median wealth for that group. In other words, the wealth of a typical black family is the amount that half of black families have more than, and half have less than. Yes, this means that half of black families have a wealth of less than $17,400.
More quick facts:
In America, white people hold ~90% of the wealth, while representing 61% of the population
In America, black people hold ~2.49% of the wealth, while representing 13% of the population
In America, Hispanic people hold ~3.45% of the wealth, while representing 18% of the population
In an ideal America, every subgroup of people would hold wealth representative to their population contribution (i.e. if Hispanics make up 18% of the population, they would own 18% of the wealth). The notion of equal representation of wealth may seem quixotic, but it should nevertheless be the mark that America strives to achieve. Unfortunately, as time has rushed forward, wealth inequality has actually gotten worse. In 1983, for example, black people held approximately 2.44% of America’s wealth, while representing about 12% of America’s population. This means, over the span of 35 years, the black population has grown more than its share of the overall wealth.
Quick Math (skip if you’d like):
For those who like ratios, that’s
2.44% of wealth : 12% of population (1983) > 2.49% of wealth : 13% of population (2016)
However, since 1983, Hispanics have been growing their share of the wealth, albeit at a tardigrade pace, but still growth.
1.04% of wealth : 6.5% of population (1983) < 3.45% of wealth : 18% of population (2016)
So what should be done about this perpetual racial wealth inequality?
The goal is to overcome the past discriminatory policies and mindsets that barred the upward mobility of minority groups, which directly promoted their generational impoverishment. It all started with the freeing of the slaves. When the slaves were freed, they weren't given anything for their centuries of free labor. During the same time, Europeans were given millions of acres of land by America, just to come live in the United States. This means the slaves were finally freed, but only freed to struggle with nothing except what they had as slaves (fyi, they didn't have a lot as slaves). Martin Luther King Jr. is quoted saying, "It's a cruel jest to tell a bootless man that he ought to lift himself by his own bootstraps."
There were also policies that literally closed the door to advancement by minorities. For example, there is a past policy that allowed homeowners to enter into neighborhood covenants that prevented minorities from moving to better neighborhoods. The thought process was that neighborhoods with minorities would bring the property values down just by living there. The Federal Housing Administration actually promoted such policies, publishing templates for housing officials that read, “No person of any race other than the ___ shall use or occupy any building or any lot…” Such policies prevented minorities from integrating into better neighborhoods, which would have been key in the economic development of minority groups. Even progressive policies with good intentions, such as the desegregation of schools, have had far less than the intended impact due to the barring of minorities from moving to other, better neighborhoods with better schools. Because students could primarily only attend schools in their own neighborhoods, minority children were forced to attend subpar schools with limited funding and resources. This systematically kept minority children behind their white counterparts in the same age group. Subpar education often leads to subpar income, which unassailably leads to very low levels of wealth. By combining this systemic failure of minorities with other systemic failures, such as redlining and mass imprisonment of minorities(more on this here), it becomes clear that current policy intervention is likely necessary to bridge the racial wealth inequality gap.
Recently, a dual study by Harvard and Stanford presented a way forward to directly address the issue of racial and ethnic wealth inequality. The study stated, “In the US, the economic inequality gap between races will never close unless policies are directed specifically at improving upward mobility for black men… targeted programs such as mentoring for black boys, efforts to reduce racial bias among whites, and interventions to reduce discrimination in the criminal justice hold the most promise.” Analysis of this dual study can be found here.
What about the Asians?
The Asian minority group is the only minority group that appears to be completely unaffected by racial wealth inequality. The latest data on Asian-American wealth is from 2013. However, a lot can be gathered from this data. Between 2010 and 2013, the median wealth for typical white families was about $133,200. For typical Asians-American families, it was $132,700. Why are Asians seemingly immune to wealth inequality in America? well over half of America’s Asian population are immigrants who bring wealth with them from Asia. Furthermore, they are the fastest-growing minority group in America, increasing in persons by 72% since 2000. Asians currently makeup about 6% of the population and hold approximately 4% of America’s wealth, often simultaneously owning assets in Asia as well. Because so many Asian-Americans did not have to initially depend on developing wealth within the confines of the American border, many American Asians had a leg up on the other minority groups (especially blacks) who had to wait for upward mobility barriers to be removed before real wealth accumulation could begin. Instead, a large amount of Asian Americans started off as part of the majority in Asia before becoming a part of the minority in the United States.
Now what?
Ultimately, it is possible to bridge the gap. It is okay if that takes years or decades. What is important is that the pursuit of racial wealth equality starts now. As Senator Warren stated, we have been going backwards. It is time to initiate policies that propel America forward. Policies that diminish the terrible weight of racial inequality will, if effective, make America great.
-Sources-
Data Pulls:
“Board of Governors of the Federal Reserve System.” Survey of Consumer Finances (SCF), Board of Governors of the Federal Reserve System (U.S.), 2016, www.federalreserve.gov/econres/scfindex.htm.
Dettling, Lisa J, et al. “Board of Governors of the Federal Reserve System.” Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances, Board of Governors of the Federal Reserve System (U.S.), 27 Sept. 2017, www.federalreserve.gov/econres/notes/feds-notes/recent-trends-in-wealth-holding-by-race-and-ethnicity-evidence-from-the-survey-of-consumer-finances-20170927.htm.
US Census Bureau. “Data.” Historical Households Tables, US Census Bureau, 1 Nov. 2017, www.census.gov/data/tables/time-series/demo/families/households.html
Flores, Antonio, et al. “Facts on U.S. Latinos, 2015.” Pew Research Center's Hispanic Trends Project, Pew Research, 18 Sept. 2017, www.pewhispanic.org/2017/09/18/facts-on-u-s-latinos-trend-data/
Worstall, Tim. “US Household Wealth Ticks Up $2.3 Trillion to $94.8T - But This Is Wrong, Entirely Wrong.” Forbes, Forbes Magazine, 8 June 2017, www.forbes.com/sites/timworstall/2017/06/08/us-household-wealth-ticks-up-2-3-trillion-to-94-8t-but-this-is-wrong-entirely-wrong/#3208c8d3621a
McKernan, Signe-Mary, et al. “1 Wealth Inequality Is Growing.” Nine Charts about Wealth Inequality in America (Updated), Urban.org, 4 Oct. 2017, urbn.is/wealthcharts
“POPULATION.” BlackDemographics.com, blackdemographics.com/population/
Housing Covenants:
Sidney A. Jones Jr. “Legality of Race Restrictive Housing Convenants.” National Bar Journal 4 (1946): 15.
Of Harvard and Stanford study :
Nelson, Eshe, and Dan Kopf. “A Huge New Stanford and Harvard Study Proves That US Inequality Isn't Just about Class.” Quartz, Quartz, 20 Mar. 2018, qz.com/1233187/equality-of-opportunity-project-a-new-study-proves-that-race-matters-more-than-class-to-us-economic-inequality/
Asian Americans Facts:
López, Gustavo, et al. “Key Facts about Asian Americans, a Diverse and Growing Population.”Pew Research Center, Pew Research Center, 8 Sept. 2017, www.pewresearch.org/fact-tank/2017/09/08/key-facts-about-asian-americans/
Weller, Christian E., and Jeffrey Thompson. “Wealth Inequality Among Asian Americans Greater Than Among Whites.” Center for American Progress, Center for American Progress, www.americanprogress.org/issues/race/reports/2016/12/20/295359/wealth-inequality-among-asian-americans-greater-than-among-whites/
Zong, Jie, et al. “Asian Immigrants in the United States.” Migrationpolicy.org, Migrationpolicy.org, 2 Mar. 2017, www.migrationpolicy.org/article/asian-immigrants-united-states
