What Is Wealth?
Wealth is having access to an abundance of money or valuable possessions or assets (such as stocks, land, houses, insurance, cars, and retirement accounts) after accounting for liabilities (debts). Assets are property or resources with value that can be borrowed against or invested to generate more money and can be passed down. For people historically disenfranchised from wealth in the U.S., most wealth is accumulated through well-paying jobs, home ownership, and entrepreneurship, rather than from intergenerational gifting or inheritance. But significant barriers still exist for BIPOC in accessing and benefitting from housing, education, and labor/ business.
Wealth is held extremely unequally in the U.S. The top 10% own 70% of the nation’s wealth, while the bottom 90% hold only 30% (Frank, 2022). Stated differently, the top 1% of Americans have nearly 35%, or about 17 times more wealth than the bottom 50% (Chancel et al., 2022, p. 224). Within that, there are stark racial inequalities. Although the various movements for civil rights during the 1960s made notable legal improvements for BIPOC communities and white women in the United States, these advances have not improved racial economic inequalities. For example, in 2018 Black income was half that of white households in the U.S., just like it was in the 1950s (Guilford, 2018). Additionally, the methods used to widen wealth inequalities in the U.S. have transformed and adapted to our changing world. But so have the methods of resistance.
Studies that deconstruct the racial and ethnic inequalities in the U.S. are mostly focused on housing, education, and labor. This section will focus on uncovering why having access to these three areas in our lives is critical to closing the racial wealth gap and how they have been used to further disenfranchise racial and ethnic groups in the U.S.
How Unequal is Wealth in the U.S. by Race and Ethnicity?
In 2020, the U.S. Federal Reserve System released a study finding that white families have far higher wealth (defined as the difference between families' gross assets and their liabilities) than BIPOC families using either the median (the typical household within each group) or mean (the average among households in each group) measure of family wealth:
white families have the highest level of both median and mean family wealth: $188,200 and $983,400, respectively (Figure 1). Black and Hispanic or Latino families have considerably less wealth than white families. Black families' median and mean wealth is less than 15 percent that of white families, at $24,100 and $142,500, respectively. Hispanic families' median and mean wealth is $36,100 and $165,500, respectively. Other families—a diverse group that includes those identifying as Asian, American Indian, Alaska Native, Native Hawaiian, Pacific Islander, other race, and all respondents reporting more than one racial identification—have lower wealth than white families but higher wealth than Black and Hispanic families. The same patterns of inequality in the distribution of wealth across all families are also evident within race/ethnicity groups; for each of the four race/ethnicity groups, the mean is substantially higher than the median, reflecting the concentration of wealth at the top of the wealth distribution for each group (Bhutta et al., 2020).
The study also found that many key areas of wealth creation also showed clear racial inequities:
- white families are substantially more likely to receive inheritances, gifts and other family support than Black and Hispanic families;
- there are significant differences in homeownership rates between white and non-white families throughout the life-cycle (but with the smallest gap in older age);
- in all age groups, Black and Hispanic families are far less likely to have retirement accounts than white families;
- white and other or multiple race families have broader access and participate more in employer-sponsored retirement plans; and
- white families have significantly more emergency savings than Black or Hispanic families (Bhutta et al., 2020).
The Federal Reserve System found in a later study that in addition to the striking and enduring differences in the amount of wealth held by white and BIPOC families, the gap has actually widened dramatically over the past few decades (as has overall wealth inequality). In 2021, the typical white family had eight times the wealth of the typical Black family and five times the wealth of the typical Hispanic or Latino family (Aladangady and Forde, 2021). In fact, a study by McKinsey and Company found that an estimated 19% of Black American families, roughly 3.5 million households, have a negative net worth because of a history of discriminatory policies from the government and private industry that has hindered their accumulation of wealth over time (Alcorn, 2021).
Perceptions of Race and Wealth
Significantly, white Americans are aware of the privilege their race affords them in financial matters in comparison to BIPOC communities, but disagree about the degree to which Black Americans continue to experience discrimination in economic systems.
A 2019 Pew Research Center survey about “Race in America,” found that respondents unanimously agreed that being wealthy in the U.S. “helps a lot” whereas being poor in the U.S. “hurts a lot” (Menasce Horowitz et al., 2019, p. 28-29). Among those who responded with their racial backgrounds: the majority of white respondents agreed that being white either “helps a little” or “helps a lot”; the majority of those who identified as Hispanic believed that it “hurts a little” or “hurts a lot”; the majority of Asian respondents stated that it “neither helps nor hurts”; the majority of Black respondents stated that it either “hurts a little” or “hurts a lot”; additionally the majority of Native American respondents stated that it either “hurts a little” or “hurts a lot” (p. 29). Most respondents, regardless of their racial and ethnic background, were not in agreement if blacks were treated poorly when applying for a loan or mortgage or in stores and restaurants, however most agreed that blacks are treated worse than whites in police encounters and by the criminal justice system (p. 11).
A study at Yale by Jennifer A. Richeson and Michael W. Kraus found that in 2016, respondents estimated Black wealth to be 90 percent that of whites, when in actuality it was about 10 percent (Richeson, 2020). The authors examined perceptions at various other times in history and found that people’s estimates of inequity were not only far too low for every period, but the estimates actually grew more inaccurate the closer they got to the present, implying that people were more willing to imagine inequity in the past than acknowledge its ongoing presence. A follow-up study that only interviewed white respondents had a subset of the respondents read a short article about the persistence of racial discrimination before responding. Exposure to the article had a surprising impact - rather than considering that the present might be worse than they think it is, respondents instead still estimated that, in 2016, Black wealth was close to that of whites but plotted a more gradual slope of progress by lessening historic inequalities (Richeson, 2020).
