This report examines the growing wealth of billionaires and other ultra-high net worth individuals in Massachusetts — where voters will have the chance to levy a 4 percent surtax on those making more than $1 million a year this November.
Why is it that the wealthiest country on earth has the highest death toll of any nation in the world? And why are Black and Latinx households among those experiencing the greatest mortality and hardship during the pandemic?
There is excellent research on how the Black-white wealth gap left Black households more vulnerable (see resources below). But let’s consider the racial wealth divide in financial reserves as measure of economic precariousness as the U.S. entered the pandemic. A much higher percentage of Black and Latinx households were financially “underwater” with zero or negative wealth.
According to our calculations of the most recent Federal Reserve data, 14 percent of white households had zero or negative wealth. An estimated 28 percent of Black households had zero or negative wealth, twice the level of whites. And 26 percent of Latinx households had zero or negative wealth.
This is a slight improvement over previous years. Emerging from the 2008-2009 financial crisis, 40 percent of Black households and 34 percent of Latinx households had zero or negative wealth in 2013, compared to 16 percent of white households.
By one estimate, from before the pandemic, almost 80 percent of U.S. workers live paycheck to paycheck.
There is a strong likelihood that the pandemic has or will exhaust the financial savings and reserves of many households and we can anticipate an increase in the number of households who will be under financial water.
We need programs and policies that help build the assets of families with zero or negative wealth so they can have a reserve to fall back on in the case of an emergency, economic meltdown, or job loss.
Notes: Our analysis draws from 2019 Federal Reserve data and excludes cars from the calculation of wealth. Our view is that car ownership is an insufficient indicator of financial well-being and essentially illiquid as a form of wealth. For more on methodology, go HERE. Thanks to Joe Fitzgerald for his assistance with this research.
For more information on the racial wealth divide, see our previous reports and these resources:
Dedrick Asante Muhammad, Chuck Collins, Omar Ocampo, “White Supremacy is the Pre-Existing Condition: Eight Solutions to Ensure the Economic Recovery Reduces the Racial Wealth Divide,” Institute for Policy Studies, June 19, 2020.
“Ten Solutions to Bridge the Racial Wealth Divide,” April 2019. Institute for Policy Studies
“Dreams Deferred: How Enriching the 1% Widens the Racial Wealth Divide,” January 2019. Institute for Policy Studies
Other reports: Brookings Institute, “The Black-white wealth gap left Black households more vulnerable,” Brookings, December 8, 2020.