The Growth of the Suburbs - and the Racial Wealth Gap
Developed by David M. Seiter

ACTIVITY 5: Deepening Understandings of Race and Family
Wealth Accumulation: Six Jigsaw Readings


What does the wealth gap have to do with race?

Dalton Conley: The one statistic that best captures the state of racial inequality in America today is wealth, or net worth. If you want to know your net worth, just add up everything you own, subtract all your debts and that's your net worth.

Today, the average Black family has only one-eighth the net worth or assets of the average white family. That difference has seemingly grown since the 1960s, since the Civil Rights triumphs, and is not explained by other factors like education, earnings rates or savings rates. It is really the legacy of racial inequality from generations past. No other measure captures the legacy - the cumulative disadvantage of race for minorities or cumulative advantage of race for whites - than net worth or wealth.

The wealth gaps between Blacks and whites aren't explained by income. In fact, if you compare people at the bottom of the income distribution - say, a family that makes around $15,000 a year, you'll find that the average Black family that earns $15,000 a year in income has $0 net worth, or is in debt actually. Compare that with the average white family that earns $15,000 a year, and they have a good $10,000 to $15,000 in equity. That means being poor, being at the bottom of the income distribution, really means two different things depending on whether you are Black or white.

That white family has a little bit of a cushion. If unemployment strikes, as it does so often to people at the bottom of the economic distribution, they've got some means to ride out the storm. They might have a car that will increase the radius of their job search. They might have this money that they can spend in case of a medical emergency, even if they don't have health insurance. But compare that to the situation for a poor Black family with $0 or negative net worth. There is no cushion. There is nothing in between the paycheck and homelessness, so to speak.

The same kind of disparity emerges at the upper end of the income distribution. If you compare, say, a white family that earns $50,000 with an African American family that earns $50,000, you'll find that the white family has about double the net worth - about $80,000 to $100,000 of net worth compared to about $40,000 to $50,000 of net worth for the African American family at that income level. So when you are talking about the difference between financing their kid's college education, starting a new business, moving if they need to move for a better job opportunity - having $100,000 versus $50,000 in net worth might make the difference between upward mobility and stagnation.

How do other groups compare in terms of wealth?

Dalton Conley: Blacks and whites really anchor the ends of the distribution in terms of wealth in America. Latinos fall somewhere in the middle. They fall, on average, closer to the African American average in terms of wealth. But there is enormous disparity within the Latino community. It's hard to talk about Latinos as a unified group because there are enormous differences within that community. And not coincidentally, how Hispanics fare depends on their skin color and it also depends on the particular history of that group.

Cuban Americans, for example, have wealth levels that are much more similar to whites. They don't exactly equal the white levels, but they come close. On the other hand, Puerto Ricans or Dominicans are almost equivalent to the Black average. Other groups, like Mexicans and South Americans, fall closer to that group, but again are in the middle somewhere.

Questions for READING A:

  1. What is the racial wealth gap? How does the net worth of Black and white families compare at different income levels?
  2. How does the typical family net worth of other groups compare to whites?



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