Fed Study Says Wealth Rose for All Ethnic Groups After Recession, but Inequality Persists

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Wealth increased for families in all race and ethnicity groups between 2013 and 2016, according to newly released data from the Federal Reserve. However, wealth disparities between families of different racial and ethnic groups have changed little in the past few years. The report, titled “Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances,’’ came from the Fed’s Survey of Consumer Finances.

Wealth losses during the recession (2007 to 2009), as well as the scope and timing of the recovery, also varied across families grouped by race and ethnicity.

In 2016, white families had the highest level of both median and mean family wealth: $171,000 and $933,700, respectively. Black families’ median and mean net worth is less than 15% of white families, at $17,600 and $138,200, respectively. Hispanic families’ median and mean net worth was $20,700 and $191,200, respectively.

Other families — a 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 net worth than white families but higher net worth 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.

Between 2013 and 2016, median net worth rose for all groups. Growth rates for the 2013 to 2016 period were proportionally larger for Hispanic, other and black families, rising between 30% and 50%, compared with white families, whose net worth rose 17%. For black and Hispanic families, the white-black gap in median net worth increased from $132,800 in 2013 to $153,500 in 2016, and the white-Hispanic gap increased from $132,200 to $150,300 over the same period.

Experiences in the recession and the immediate aftermath (2010 to 2013) also varied across groups. Median net worth fell about 30% for all groups during the downturn. However, for black and Hispanic families, net worth continued to fall another 20% in the 2010 to 2013 period, while white families’ net worth was essentially unchanged, and other families’ net worth fell 10%.

Nearly one in five black households has zero or negative net worth. The share of white households without any wealth is 9%. Hispanic and other households fall somewhere in between white and black families.

For many families, the primary residence is an important part of the balance sheet. Seventy-three percent of white households are homeowners, compared with 45% of black and Hispanic households and 54% of other households.

Among homeowners, white households also hold much higher levels of equity in their homes. Mean net housing wealth — the value of the home, less any debts on the home — among homeowners is $215,800 among white families but only $94,400 among black families and $129,800 among Hispanic families. Housing accounts for only 32% of their total assets for white families, compared with 37% to 39% for black and Hispanic homeowners.

Sixty percent of white families hold retirement accounts, including IRAs and 401(k) plans, compared with 34% of black families and 30% of Hispanic families.

The highest business ownership rates are among white and other families (13% to 15%). Black and Hispanic families are about half as likely to own a business.

Debt is more evenly distributed across families grouped by race/ethnicity. A larger share of white families have debt secured by the primary residence than other groups of families.

Vehicle loans are fairly evenly distributed across groups, with around 30% to 35% of families having such loans.

Credit card debt is also fairly evenly distributed across groups, with between 42% and 50% of families having credit card debt.

Black families are the most likely to have education debt (31%), and Hispanic families are the least likely to have education debt (19%).

Black and other families are the most likely to have high debt payment burdens, as 9% of these families have debt-payment-to-income ratios above 40%. Hispanic families are at 8%. Black families are the most likely to be late on payments. Black and Hispanic families have the highest incidence of credit constraints, with about one-third reporting they were either denied credit or did not apply for credit because they feared denial.

The Fed report found that wealth generally increases with age and levels off from near-retirement age onward. Just over half of white households are headed by someone 55 or older, compared with 38% of black households and about one-fourth for Hispanic households.

White and other heads of households are much more likely to have obtained a college degree or some advanced level of higher education (39% and 36%, respectively). Only 23% of black heads of households and 17% of Hispanic heads of households have a college degree or higher level of education.

Educational attainment is a significant predictor of income and wealth. The data show that, overall, families with a bachelor’s degree have mean and median wealth values that are more than five times the values for less educated families. This pattern is also evident within each of the race/ethnicity groups. For example, the median college-educated black family’s net worth is about six times that of the median black family with less education, and the ratio is about 4.5 for Hispanic families.

Among households headed by someone with a college degree, net worth is substantially higher for white families than for the other three groups of families. The median net worth of college graduates in 2016 was $397,100 for white families, but well below $100,000 for black families and Hispanic families.