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Calling Attention to an Underlying Economic Inequity

June 2020

As COVID-19 negatively and disproportionately impacts the health and financial well-being of disadvantaged groups, notably black Americans, and in the midst of the tragic deaths of George Floyd, Ahmaud Arbery, Breonna Taylor and others, we write to call attention to an underlying economic inequity that may be contributing—at least in part—to the heightened racial tensions we’re all witnessing today.

Our Center was established to study the extent and sources of financial vulnerability of U.S. families. We have consistently found that blacks have about 10 cents for every dollar in wealth held by whites. This is a gap that has been virtually unchanged for at least three decades despite commendable (though uneven) progress on several fronts, including post-secondary educational attainment, income and political representation. With the median black family having a total net worth (or what a family owns minus what a family owes) of roughly $16,000—compared to about $163,000 for whites—it’s more challenging to realize economic resilience and security, as well as achieve upward economic mobility and the American Dream.

Our research suggests that structural and historical factors—such as being excluded from the Homestead Act in the 19th century and experiencing “redlining” in the 20th century—continue to suppress the ability of black Americans to accumulate wealth. When we compared black and white families with similar ages, education levels and family structures, we found that a significant racial wealth gap remained. Accordingly, to promote racial economic equity, we as a nation must also consider structural or institutional responses. It’s not enough to only enable families to make better financial choices. We have to ensure that they have better financial choices to make.

Our Center’s research is one contribution among many to the Federal Reserve System’s commitment to promoting racial equity. The Fed’s community development staff works to lift up a more accurate understanding of the root causes of race-based economic inequities.

Below are links to some of our most salient research efforts thus far around racial and other wealth gaps in the U.S. We hope you find these resources helpful, and we look forward to sharing new research and ideas with you in the coming months and years.

Ray Boshara, Director
William R. Emmons, Lead Economist
Ana Hernández Kent, Policy Analyst
Lowell R. Ricketts, Lead Analyst


More from the Center for Household Financial Stability

Just How Severe Is America’s Racial Wealth Gap?

What Wealth Inequality in America Looks Like: Key Facts & Figures

Economic Vulnerability and Financial Fragility

Which Families Are Most Vulnerable to an Income Shock such as COVID-19?

College Is Not Enough: Higher Education Does Not Eliminate Racial and Ethnic Wealth Gaps

Homeownership and the Racial Wealth Divide

Is College Still Worth It? The New Calculus of Falling Returns

Three Reasons Why Millennials May Face Devastating Setback from COVID-19

Chicago Tribune: For blacks, college is not an equalizer

The views expressed by the Center for Household Financial Stability do not reflect official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.