The Effect of Race or Ethnicity on Income and Wealth

About one-fourth of the U.S. is accumulating wealth, while the remaining three-fourths are not. And research is showing that race, education and age increasingly determine whether someone is a “thriver” or a “struggler.”

In this video, researchers Ray Boshara, William Emmons and Bryan Noeth—all representing the St. Louis Fed’s Center for Household Financial Stability—discuss their research on how a family’s race or ethnicity is related to its financial attainment.

Among the findings, they noted that black and Hispanic families earned median incomes that were about 40 percent less than those of white families. Asian families, on the other hand, have experienced faster growth in median incomes than white families and now have the highest median incomes among the groups studied.

Regarding wealth, Asian and white families have more liquid balance sheets on average than black and Hispanic families. Liquidity (or the ability to quickly access the assets) helps buffer families against financial shocks.

Additional Resources

• Center for Household Financial Stability: The Demographics of Wealth: Race, Ethnicity and Wealth
• On the Economy: What Roles Do Age and Birth Year Play in Income and Wealth?
• On the Economy: An Overview of the Connection between Education and Wealth