Systemic racism has contributed to the persistence of race-based gaps that manifest in many different economic indicators. The starkest divides are in measures of household wealth, reflecting centuries of white privilege that have made it particularly difficult for people of color to achieve economic security. This series of charts begins with a look at the widening of racial wealth gaps in the United States that have coincided with the extreme concentration of U.S. wealth.
The Covid-19 pandemic has exacerbated long-standing racial inequalities in America that are rooted in systemic racism. People of color make up a disproportionate share of low-wage essential workers who’ve had to keep working in food processing plants, grocery stores, and other workplaces, despite risks to their health. They’ve also faced higher rates of mortality and joblessness related to the Covid-19 crisis — while also suffering racialized police brutality and militarization.
According to the APM Research Lab, Black Americans have mortality rates that are more than twice as high as other races. For each 100,000 Americans (of their respective group), about 55 Blacks have died from the coronavirus, compared to 24 Asians, 25 Latinx, and 23 Whites, as of May 26, 2020.
Racial justice protests are happening against the backdrop of an economic crisis not seen since the Great Depression. U.S. billionaires are boosting their fortunes as tens of millions of people are losing their jobs. A Pew Research Center survey shows that Latinx and Black households are being hit with more job losses than White ones. Sixty-six percent of Latinx households and 44 percent of Black households have had a job or wage loss due to the pandemic, compared to 38 percent of White households.
By the middle of the 21st century, the United States will be a “majority minority” nation. If we hope to ensure a strong middle class, historically the backbone of the national economy, then improving the financial health of households of color will become even more urgent than it is today. Closing the persistent “wealth divide” between white households and households of color, already a matter of social justice, must become a priority for broader economic policy.
According to our Racial Wealth Divide report, the median Black family, with just over $3,500, owns just 2 percent of the wealth of the nearly $147,000 the median White family owns. The median Latino family, with just over $6,500, owns just 4 percent of the wealth of the median White family. Put differently, the median White family has 41 times more wealth than the median Black family and 22 times more wealth than the median Latino family.
Families that have zero or even “negative” wealth (meaning the value of their debts exceeds the value of their assets) live on the edge, just one minor economic setback away from tragedy. Our Racial Wealth Divide report shows that Black and Latino families are much more likely to be in this precarious situation. The proportion of Black families with zero or negative wealth rose by 8.5 percent to 37 percent between 1983 and 2016. The proportion of Latino families with zero or negative net worth declined by 19 percent over the past 30 years but is still more than twice as high as the rate for Whites.
As with total wealth, homeownership is heavily skewed towards White families, our Racial Wealth Divide report shows. In 2016, 72 percent of White families owned their home, compared to just 44 percent of Black families. Between 1983 and 2016, Latino homeownership increased by a dramatic nearly 40 percent, but it remains far below the rate for Whites, at just 45 percent.
In 2018, Fortune 500 CEOs, who earned approximately $14.5 million on average, included just four Black people and 10 Latinos — less than 3 percent of the total. By contrast, these groups made up 44.1 percent of the U.S. workers who would benefit from a raise in the federal minimum wage to $15 per hour by 2025, according to the Economic Policy Institute. Blacks and Latinos comprise 31.7 percent of the U.S. population.
One indicator of racial disparities at the top of the U.S. earnings scale is the threshold for entry into the top 10 percent. According to the Pew Research Center, for White families to make it into this tier of earners in their racial group, they need to have annual income of at least $117,986 — nearly twice as much as the threshold for Black families.
Racial discrimination in many forms, including in education, hiring, and pay practices, contributes to persistent earnings gaps. As of the last quarter of 2019, the median White worker made 28 percent more than the typical Black worker and more than 35 more than the median Latino worker), according to BLS data.
Although the official U.S. unemployment rate has dropped considerably since the Great Recession, the unemployment rate for Black job-seekers remains nearly twice as high as for Whites, according to Bureau of Labor Statistics data. In December 2019, when many were celebrating “full employment,” the unemployment rate for Blacks was 5.9%, compared to just 3.2% for Whites and 2.5% for Asians. These rates only count those who are actively seeking work, leaving out those who have given up finding a job.
Within racial groups, Bureau of Labor Statistics data shows the largest pay gaps between men and women appear among Whites and Asians — not because Latinas and Black women have made faster progress towards equity but because average pay for men in these groups falls far below the compensation of White and Asian men.
While student loan burdens have grown significantly for all racial groups, they are particularly heavy for Black and Latino students— especially women. Women comprise 56 percent of college students, but hold nearly two-thirds of outstanding student loan debt. According to the American Association of University Women, Black women graduate with the most debt — $30,400, on average — compared to $22,000 for White women and $19,500 for White men.
Racial inequality in terms of the official poverty rate is also particularly acute for women of color. As National Women’s Law Center research shows, while the U.S. poverty rate for White men is 7.0 percent, it is 20 percent for Black women, 18 percent for Latinas, and 22 percent for Native American women.