Our Growing Racial Wealth Gap

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A man walks through a blighted neighborhood, July 11, 2013, in Philadelphia. (AP Photo/Matt Rourke)
A man walks through a blighted neighborhood, July 11, 2013, in Philadelphia. (AP Photo/Matt Rourke)

The vast chasm between the richest one percent of Americans and everyone else continues to widen, and researchers have found that when you factor race into the equation, the economic gap is even more pronounced.

A recent Urban Institute report finds that the racial wealth gap — measured as the difference in wealth accumulated by white Americans and black and Latino Americans — is the largest it has ever been since the Federal Reserve started tracking it. In 1983, for every dollar held by the average black or Latino family, the average white family had five. In the aftermath of the financial meltdown and the Great Recession that figure today has increased to six dollars. The figures for the median post-recession family — a measure less skewed by America’s handful of superrich — are even further apart: in 2010, for every dollar held by the median black or Latino family, the median white family had eight.

Credit: Urban Institute. Click to enlarge.

One thing that’s remarkable about these statistics is that the racial wealth gap is three times greater than the racial income gap. In other words, white people not only have higher incomes, but they are also better positioned to retain that income and build it. “Such great wealth disparities help explain why many middle-income blacks and Hispanics haven’t seen much improvement in their relative economic status and, in fact, are at greater risk of sliding backwards,” the researchers who compiled the Urban Institute study note.

Credit: Urban Institute. Click to enlarge.

This is part of the larger trend toward inequality. The richest 20 percent of families saw their wealth increase by nearly 120 percent since the early ’80s, while the poorest 20 percent of Americans saw their wealth decrease over the same period.

Another dimension of the racial wealth gap is that it increases over the course of a lifetime, so that elderly black and Latino Americans are in a significantly worse place than white senior citizens. At the MetroTrends blog, Urban Institute senior fellows Signe-Mary McKernan and Caroline Ratcliffe explain:

Whites in their 30s and 40s have about 3.5 times more wealth than African Americans and Hispanics in the same age group. By the time they reach their early-to-mid-60s, whites have seven times the wealth of African Americans and Hispanics. In other words, the average wealth gap has grown over time, and it also grows over the course of people’s lives.

Although the United States is one of the wealthiest countries, this prosperity remains out of reach for many Americans. Blacks and Hispanics, who strive to make a better life for themselves and their families, are not on the same wealth-building paths as whites. They are less likely to own homes and retirement accounts, so they miss out on these traditionally powerful wealth-building tools. Families of color also lost a greater share of their wealth in the aftermath of the Great Recession.

Statistics from the Federal Reserve’s Survey of Consumer Finances show that, between 2007 and 2010, black and Latino Americans lost significantly more than whites in overall wealth, home equity and retirement savings. Latino Americans were hit by far the hardest, losing nearly 45 percent of their wealth and 50 percent of their home equity.

In a Politico op-ed last month, NAACP CEO Benjamin Jealous cited some of these statistics to illustrate the lack of progress toward racial and economic equality since the 1960s, and America’s backward slide in the wake of the Great Recession. But “we can fix this,” he wrote:

There are steps we can take now to start to close the wealth gap. We need to hold banks accountable for predatory lending, and demand that corporations implement diverse hiring practices. We need to educate on these issues and reach out to local community groups to call attention to racial and economic injustice. And most importantly, we need to develop the will among our lawmakers and employers to take strong action to bridge racial economic inequality.

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  • Anonymous

    Labor is the source of all wealth. US government policies are increasingly allowing that wealth to be re-distributed more and more to the most wealthy. From 2007 to 2012 the percentage of all wealth owned by the most wealthy 1% increased from 35% to 40%. Meanwhile the percentage of all wealth owned by the poorest 80% shrunk from 15% to only 7%. The stock market, with capitol gains taxed at only 15%, was the avenue for most of this change. The redistribution of wealth away from the source of wealth to such a radical extent is dangerous.

  • Eugene Patrick Devany

    The bottom half of the population gradually lost 70% of their net wealth between 1995 and 2010. Regardless of race they average only $3 for every $10 they had in 1995. The loss of wealth has impaired the ability of families to stay together and properly guide their children. The social fabric has been torn apart.

  • btcomp

    Boy this really makes a statement. It isn’t just Blacks that remain poor, but some Whites do too, it just doesn’t show on these graphs!

  • Anonymous

    @btcomp, you’re so right. Whites left behind are the invisible poor made so by the obscene wealth of the rich.

  • Bill Huff

    One-out-of-four Ky children under 5 yrs of age lives in poverty; One-out-of-5 ky seniors lives in poverty; i.e., Ky’s poverty made up of 20% children and 25% seniors! In 2013 Ky’s 4.1 million citizens’ tax burden is 3rd in nation with New York’s 20 million citizens leading the way! Ky’s educated citizens only makes up a small percent of it’s 4.1 million population and they run the businesses and hold down all the high paying jobs in goverhment. Ky is one step from becoming a 3rd world country!

  • Tina

    I wish I knew some of these wealthy white folk. I don’t know any that make over 12,000 annually. When I lived in NYC My room mate (who is Hispanic) with less education than me made$3. more per hour than I did and didn’t seem to have as much of a struggle to get a job as I did. Here in Cali I see more employed Hispanics than I do any other race. Statistics are not accurate. This is just more hype to propagate more hate and discord.

  • http://aloistmartinsequinox.blogspot.com/ Alois Saint-Martin

    The Question is not one of Race,
    it is more a matter of the polarization between the Common Resources, and the Ownership Plutocracy.
    It is a well known fact of Socialist Ideology, that the Ownership Class (Bourgeois) will exploit the insecurities of immigrant minorities, by offering them false hopes and corrupt ambitions of cultural integration and economic opportunity.
    One can only wonder, what the fortunes of Leftist Political organization would be, in country’s like Mexico, Thailand, Egypt, Syria, Bahrain, and South Africa, if it were not for the Orwellian Propaganda,
    of Capitalist Globalizationist “Democracy” ?

  • Babawawawa

    The biggest bunch of race-baiting nonsense I have ever read. While we whine about these non-issues, we fail to see that the Corporatists are quietly stealing the wealth of ALL Americans. Corporatists only see one color- green- and they are intent on siphoning it out of peoples’ pockets as fast as they can, without regard to race, creed, color, or national origin.

  • doctorchrysallis

    Your last statement is certainly true. But I fail to see how merely pointing
    out empirically verified statistics amounts to “race-baiting.” I’m guessing that you’re a white male, and are accustomed to taking your white-privileged and male-privileged status for granted.

    As a female, I know that there are gender correlates of poverty, just as there are correlates with race and immigrant status. THESE ARE VERIFIED FACTS. Health and wealth in the U.S. fall along a steep, pyramid-like gradient, and where one is located on that gradient has to do with the very things you deny and discount: race, color, immigrant status, and gender. This has been well documented. See, for example, the PBS series “Unnatural Causes.”

    Get over your denial, and get real.

  • Tyran Steels

    Man your absolutely right. So why do poor whites and middle class whites that are stuggling seem to be more angry at black people who are stuggling right along with them than the rich white bankers who drew up the schemes that exploit us all? Maybe that is the reason why the rich have been so successful is they have turned the middle class and poor against each other. Look man I’m ready when you are to get out into these streets to fight for economic justice for all, but it seems like Americans cannot get past our social divisons.

  • Jason

    ^ You guessed he was a white male! That’s profiling!!! :O