The State of U.S. Wealth Inequality

Average Wealth by Primary Race or Ethnicity, First Quarter of 2023

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

This bar chart shows the average inflation-adjusted wealth for Black, Hispanic and white households in the first quarter of 2023. Black families had about $960,000 less wealth, on average, compared with white families, while Hispanic families had about $970,000 less wealth, on average, than white families. In other words, Black families had 24 cents for every $1 of white family wealth, while Hispanic families had 23 cents per every $1 of white wealth. Racial and ethnic wealth gaps have changed very little over the past few decades.

Distribution of U.S. Households and Wealth by Primary Race or Ethnicity, First Quarter of 2023

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTE: Racial and ethnic groups are mutually exclusive; they are based on the primary race or ethnicity of the survey respondent.

White households continue to own a disproportionately greater share of total family wealth. Though only representing 63.9% of households, white households owned 82.3% of total family wealth in the first quarter of 2023; this is 29% more wealth than their representation in the U.S. might predict. In contrast, Black families accounted for 14.2% of households and owned 4.4% of total family wealth (69% less wealth given their household share), while Hispanic families represented 10% of households and owned 3% of total family wealth (70% less wealth).The Federal Reserve Board’s Distributional Financial Accounts groups households based on the primary race/ethnicity of the survey respondent. Groups in the public dataset are mutually exclusive. The question on race includes white, Black/African American, and Hispanic/Latino as options. In the public dataset, the remainder of respondents are grouped into a diverse “other or multiple races” group, which includes Asians, American Indians, Alaska Natives, Native Hawaiians, Pacific Islanders, other races and multiple racial identifications. Because the diversity of this category of other or multiple races potentially masks great intragroup wealth variation, it is not a focus in The State of U.S. Wealth Inequality.

Cumulative Changes in Average Wealth by Race and Ethnicity

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTES: Vertical bars indicate recessions. Wealth was inflation-adjusted to 2021 dollars.

Since the end of the Great Recession, white and Black wealth have followed similar growth trends, on average. Hispanic wealth, however, fell for several years before recovering rapidly. Barring the early dip at the start of the COVID-19 recession, average wealth rose substantially for all groups during the pandemic. However, while the relative gains were the greatest among Hispanic families, the absolute gains fell short of those for white families given the underlying racial wealth gap (shown in earlier figures). For all groups, some of the wealth gains have eroded in the past couple of years as economic headwinds (e.g., inflation, expiration of pandemic-related support) put pressure on household finances. Overall, white average wealth grew 58%, from $804,000 to $1,268,000, since the end of the Great Recession, Black wealth grew 52%, from $202,000 to $308,000, and Hispanic average wealth grew 79%, from $167,000 to $298,000.

Average Wealth at Age 34 by Generation

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTES: The values are calculated when each generation was relatively young. The data are based on the quarter and year when the generation’s average age was 34: baby boomers, 1989:Q3; Gen Xers, 2006:Q2; and millennials/Gen Zers, 2023:Q1.

Younger American (millennial and Gen Z) families had lower family wealth, on average, than Gen Xers and boomers did when both generations were at the same average age (34). In the first quarter of 2023, younger Americans owned 69 cents for every $1 of wealth owned by Gen Xers, on average, at the same age (2006:Q2). Younger Americans owned 72 cents for every $1 of wealth owned by boomers, on average, at the same age (1989:Q3).

Generational Shares of U.S. Households and Wealth at Same Age

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTES: Shares are calculated when each generation was relatively young (at the average age of 34). The data are for the quarter in the year when the generation was at that average age.

When households are younger, they tend to have lower levels of wealth. To address this issue, we compared household and wealth shares across generations when their members were relatively young (at the average age of 34).

Each generational group owned less wealth than their share of the household population. Baby boomers represented 42.2% of households in the third quarter of 1989, yet they owned only 21.1% of total family wealth in 1989; this is 50% less wealth than their representation in the U.S. might predict. Gen X families accounted for 28.1% of households and owned 9.7% of total family wealth (66% less wealth given their household share) in 2006. Younger American (millennial and Gen Z) families represented 31.2% of households and owned 5.6% of total family wealth (82% less wealth) in 2023. The baby boomers’ shortfall was the smallest of the generations.

Average Wealth by Generation

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

This figure shows average, inflation-adjusted family wealth of three different generations during their young- to mid-adult years. Values are centered on the average age of the generation, based on the age of the reference person within households. For example, the average age of younger American (millennials and Gen Zers) families (born 1981 or later) in the first quarter of 2023 was 34, and Gen Xers (born 1965-1980) had an average age of 34 in the second quarter of 2006.

While trailing Gen Xers for the beginning of their adult lives, younger American families’ average wealth began to surpass that of Gen Xers at age 30. However, as of the first quarter of 2022, they had fallen behind again, reflecting the current macroeconomic conditions affecting this generation.

Between ages 34 and 50, the average wealth of Gen Xers and boomers has crossed various times, which is indicative of larger macroeconomic forces. For example, in 2006 Gen Xers’ average wealth was higher than that of boomers in 1989, but it fell sharply during the Great Recession and took years to recover.

Average Wealth by Education, First Quarter of 2023

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTE: College represents families with at least a bachelor’s degree; other education levels represent the families’ highest completed education.

This figure shows the average inflation-adjusted wealth for families by education level in the first quarter of 2023. Families headed by someone with some college education (but no four-year degree) had 30 cents in wealth for every $1 held by families headed by a college graduate. Those with a high school diploma owned 23 cents for every $1 of college-graduate wealth, and those with less than a high school diploma had 10 cents for every $1.

Distribution of U.S. Households and Wealth by Education, First Quarter of 2023

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTE: College represents families with at least a bachelor’s degree; other education levels represent the families’ highest completed education.

In the first quarter of 2023, households headed by a college graduate owned the disproportionately highest share of total family wealth. They owned 72.6% of total family wealth despite making up only 38.8% of households, an advantage of 87% greater wealth than we might expect based on their household representation. Families headed by someone with some college education but no degree, those with at most a high school diploma, and those with less than a high school diploma collectively owned 44%, 57% and 82% less wealth, respectively, than we might expect based on their household representation.

Cumulative Changes in Average Wealth by Education

 

SOURCES: Distributional Financial Accounts and Institute for Economic Equity calculations.

NOTES: College represents families with at least a bachelor’s degree; other education levels represent the families’ highest completed education. Vertical bars indicate recessions. Wealth was inflation-adjusted to 2021 dollars.

This figure shows the average inflation-adjusted wealth of families with a given educational attainment. On average, all families have greater wealth than similarly educated families did after the Great Recession ended. In the first quarter of 2023, the wealth of families with a college degree was 34% greater on average than similar families in 2009 (increasing from $1,374,000 to $1,842,000). In contrast, families with some college had 33% more wealth (increasing from $413,000 to $550,000), and those with just a high school diploma had 39% more than similar families had in 2009 (increasing from $301,000 to $419,000). The least educated group, those without a high school diploma, had 24% more than they had in 2009 (increasing from $146,000 to $181,000). The disparity in dollar values of those gains reflect the underlying educational wealth gap, a gap that has expanded considerably over the past few decades.

1. The State of U.S. Wealth Inequality replaces the Real State of Family Wealth, a product launched in 2020.
2. Average wealth estimates are much higher than median wealth estimates and therefore are more representative of wealthier families’ experiences. However, median (i.e., the middle of the distribution) data on household wealth aren’t available on a quarterly basis. Our latest data on median wealth gaps by demographic group are available here.
3. Wealth holdings of younger Americans include households headed by someone born in 1981 or later. This group comprises households from two generations: millennials and Gen Zers. In future releases, wealth holdings will be broken out for each of these generations once the underlying data allow us to do so.
4. The Federal Reserve Board’s Distributional Financial Accounts groups households based on the primary race/ethnicity of the survey respondent. Groups in the public data set are mutually exclusive. The question on race includes white, Black/African American and Hispanic/Latino as options. In the public data set, the remainder of respondents are grouped into a diverse “other or multiple races” group, which includes Asians, American Indians, Alaska Natives, Native Hawaiians, Pacific Islanders, other races and multiple racial identifications. Because the diversity of this category of other or multiple races potentially masks great intragroup wealth variation, it is not a focus in The State of U.S. Wealth Inequality.

The State of U.S. Wealth Inequality is produced by the Institute for Economic Equity. We use the Federal Reserve Board’s Distributional Financial Accounts (DFAs) as our data set, which give quarterly estimates of nominal, aggregate U.S. household wealth. Wealth, or net worth, is defined as the sum of assets less liabilities. We make two important adjustments to the DFAs:

• We adjust for inflation using the consumer price index, yielding household wealth values in real terms. This adjusts for changes in the purchasing power of a dollar over time.
• We also adjust for household population. This allows us to account for changing group sizes and to express wealth in terms of the average family’s household finances.

The result is average, inflation-adjusted household wealth values, available from 1989 onward on a quarterly basis.

The State of U.S. Wealth Inequality supplements our other research that generally uses median wealth instead of average wealth—producing different estimates of racial, generational and educational wealth gaps.

The Federal Reserve Board creates the DFAs by combining data from the triennial Survey of Consumer Finances (SCF) and the quarterly Financial Accounts of the United States. See a paper by the Board of Governors of the Federal Reserve System for a discussion of how the estimates are constructed. Many of our reports, such as the Demographics of Wealth series, use the SCF instead of the DFAs. The SCF is an extensive survey that allows us to examine median household wealth (wealth at the middle or 50th percentile), which we believe is more representative of a demographic group’s typical economic experience than is average wealth. However, the SCF is released only every three years, with the most recent survey featuring 2019 data.

While we prefer the depth of information provided by the SCF data, the DFAs allow us to study wealth trends in a more timely fashion, though with less flexibility than the SCF and an inability to examine median household wealth. Because specific DFA estimates change from quarter to quarter as data are updated, we advise placing more weight on trends than on specific values. Overall, as average wealth trends roughly track median wealth trends, we find large wealth gaps and low levels of wealth among vulnerable groups using both the SCF and DFAs. Because of how wealth is distributed, average wealth estimates are much higher than median wealth estimates and therefore are not representative of a typical (i.e., median) family’s experience.