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Has Wealth Inequality in America Changed over Time? Here Are Key Statistics


Wednesday, December 2, 2020

By Ana Hernández Kent, Policy Analyst, and Lowell R. Ricketts, Lead Analyst, Center for Household Financial Stability

If you Google “wealth inequality in America,” you may find our blog post What Wealth Inequality in America Looks Like: Key Facts & Figures. In it, we showed the state of wealth and income inequality in the U.S. using 2016 data—at the time, the most recently available—from the Federal Reserve Board’s Survey of Consumer Finances.

So, how has wealth inequality in the U.S. changed over time? What does the wealth distribution in America look like now? Well, groups that historically have had low wealth had notable increases in median wealth from 2016 to 2019. For Black families, Hispanic families and families with a high school degree (but no more), these impressive gains ranged from 25% to 60%.

Groups that historically have had higher wealth, like white families and families with at least a bachelor’s degree, gained only 4% to 5% more wealth in the same time period. However, since these families had higher wealth to begin with, small percentage gains translated into large gains in dollar terms. Thus, wide wealth gaps remained, and wealth levels among Black, Hispanic and less educated families remained low—making it difficult for these groups to fully participate in the economy and have financial stability.

In this article, we’ll use updated (2019) data from the Fed’s latest Survey of Consumer Finances, which was released this year, to refresh our previous primer on wealth inequality.

How U.S. Wealth Was Concentrated in 2019

Wealth is what a family owns, minus what they owe. In this one-minute video, see how $96.1 trillion in total American family wealth was distributed among the U.S. population of 129 million families in 2019.

What is the Survey of Consumer Finances?

The Federal Reserve Board’s Survey of Consumer Finances (SCF) is considered the gold standard on wealth data in the United States. It is conducted every three years, most recently in 2019, and allows researchers to explore the finances of specific groups—for example, “college-educated Blacks”—with detail that would not be possible in other datasets.

The Federal Reserve Board’s Bulletin also summarizes changes between the 2016 and 2019 SCF. Our estimates may differ slightly due to accessing the public versus private datasets and slight variation in demographic definitions.

Just a note: Though the most recent SCF data are from 2019, they do not capture the impact of the pandemic on families’ economic well-being and wealth, which has the potential to erode some of the gains seen that year.

Center for Household Financial Stability

See our team’s latest report, The Real State of Family Wealth, for reflections on the early impacts of the COVID-19 pandemic.

Let’s begin by looking at family wealth and wealth inequality for different demographic groups:

  • Race and ethnicity: non-Hispanic, white; non-Hispanic, Black and Hispanic of any race. Note that families are grouped by the primary racial and ethnic identity of the survey respondent. Our definition uses both race and a separate question on ethnicity (added in 2004). The Federal Reserve Board only uses responses to the question on race (which includes Hispanic as an option) for greater comparability to earlier surveys; thus, our estimates will differ from those published by the Board. The remainder of respondents fall into a diverse “other race” group (not included here), which includes Asians, American Indians, Alaska Natives, Native Hawaiians, Pacific Islanders, other races and multiple racial identifications.
  • Education: GED or less than high school, on-time high school degree, associate degree, bachelor’s degree and post-graduate degree.
  • Age.

At the St. Louis Fed’s Center for Household Financial Stability, we’ve found these demographics are strong indicators of which families are more likely or less likely to experience economic resilience and upward mobility.

We see demographics as relatively stable across time and strongly associated with family wealth. Estimates may differ from earlier articles due to inflation adjustment to 2019 dollars and changes in assignment of demographic characteristics for households. All demographic characteristics for the family were taken from the survey respondent, generally the most financially knowledgeable person. Think of family wealth as what a family owns, minus what they owe.

Black families made gains, but the wealth gap with white families remains large.

The wealth gap between Black and white families remains large, despite Black families’ real (i.e., inflation-adjusted) wealth gains in dollar terms.

In 2019, the typical non-Hispanic Black family had about $23,000 of wealth. That’s up 32%, from $17,000 of wealth in 2016 (using unrounded numbers). By “typical,” we mean a family at the middle or median. (The median is a useful approximation of the typical family’s experience because it’s not as likely to be affected as the average by the inclusion of data on extremely high- or low-wealth-holding families.)

That’s also 12 cents per dollar of the typical non-Hispanic white family, which had about $184,000 of wealth in 2019. Non-Hispanic white family wealth was up 4%, from $177,000 in 2016.

The median wealth gap between white and Black families

median wealth gap between white and Black families (Details in article)

Notes: White and Black median family wealth and share of Black families below white family median. Dollar values are adjusted to 2019 dollars using the consumer price index for all urban consumers (CPI-U) and rounded to the nearest $1,000.

Sources: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

The graphic above displays white and Black median family wealth from 1989 to 2019. Also shown are the share of Black families with less than the typical white family at the median (i.e., the 50th percentile). For example, while half (50%) of white families had less than $184,000 in 2019, the majority (82%) of Black families had less wealth.

This illustrates vastly different, longstanding wealth outcomes between the groups. As a group, Black families owned 3% of total household wealth—an amount unchanged from 2016—despite making up 15% of households. White families, on the other hand, owned 85% of total household wealth—down slightly from 87% in 2016—but made up 66% of households.

Hispanic families made bigger gains, but their wealth gap with white families also remains large.

The typical Hispanic family of any race had $38,000 of wealth in 2019. That amount is up an impressive 60%, from $24,000 in 2016 (using unrounded numbers). That’s also 21 cents per dollar of white median wealth.

Similarly to Black families, Hispanics in 2019 owned 4% of total household wealth—up slightly from 3% in 2016—while making up 13% of households.

The graphic below displays white and Hispanic median family wealth from 1989 to 2019, as well as the share of Hispanic families with less than the white family median. You can observe that the majority of Hispanics, 76%, had less wealth than the median white family (i.e., the 50th percentile) in 2019.

The median wealth gap between white and Hispanic families

Hispanic wealth gaps (Details in article)

Notes: White and Hispanic median family wealth and share of Hispanic families below white median. Dollar values are CPI-U adjusted to 2019 dollars and rounded to the nearest $1,000.

Sources: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

The wealth gap favoring college-educated families is still growing.

Thirty-nine percent of families had at least a four-year college degree in 2019, up from 36% in 2016. As a collective group, highly educated families continue to have considerably more wealth than less educated families.

Families headed by someone with at least a bachelor’s degree had 77% of the wealth pie in 2019 and $310,000 in median wealth. That is up from their holding of 75% of the wealth pie in 2016, with $293,000 in median wealth.

Meanwhile, the typical family without a bachelor’s degree had $66,000 in wealth in 2019, up from $54,000 in 2016. The wealth gap between these broad groups grew by about $5,000, even though it declined in percentage. That is, while the wealth of less educated families grew more rapidly in percentage terms (narrowing that gap), more educated families had greater median wealth to start with and thus their absolute growth in dollar terms was larger.

Wealth gaps by educational attainment

educational wealth gap (Details in article)

Notes: Median (50th percentile) family wealth. Dollar values are CPI-U adjusted to 2019 dollars and rounded to the nearest $1,000.

Sources: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

The graphic above displays the educational wealth gap from 1989 to 2019. We show median household wealth values of five educational groups. An in-depth look at the data also reveals a more complex story.

Family respondents with:

  • a GED, or with less than a high school diploma, had $18,000 in median wealth in 2019. That means this group had about $2,000 (8%) less median wealth in 2019 than in 2016 in inflation-adjusted dollars.
  • a high school degree, or some college but no degree, had $79,000 in median wealth in 2019. Family respondents with, at most, an on-time high school diploma had about $16,000 (25%) more wealth in 2019 than in 2016.
  • an associate degree or certificate had $102,000 in median wealth in 2019. Their wealth was unchanged from 2016 to 2019.
  • a terminal bachelor’s degree had $243,000 in median wealth in 2019. So, they had about $12,000 (5%) more wealth in 2019 than in 2016.
  • a postgraduate degree had $484,000 in median wealth in 2019. That means from 2016 to 2019, those with a postgraduate degree had about $25,000 (5%) more wealth.

Those with, at most, a high school diploma saw large gains in percentage terms. However, this was still less than those with a postgraduate degree in absolute terms. The least educated were the only group to see a loss in median wealth between 2016 and 2019.

The wealth gap between older and younger families continues to widen.

The median wealth of younger families (ages 25-35) has remained fairly flat between 1989 and 2019. In contrast, the wealth of older families (ages 65-75) grew rapidly between 1995 and 2007 and has nearly recovered to those levels.

Of course, the people in these groups change over time. In 1989, the younger group was made up of younger baby boomer families. In 2019, those in the younger group were millennial families. They had $24,000 in median wealth, or 9 cents per dollar of the $269,000 in median wealth held by older, mainly boomer families.

While inflation-adjusted younger family wealth barely budged between 1989 and 2019, older families in 2019 had much more median wealth than older families in 1989.

Wealth gaps by age

age wealth gap (Details in article)

Notes: Median (50th percentile) family wealth of 25- to 35-year-olds and 65- to 75-year-olds. Dollar values are CPI-U adjusted to 2019 dollars and are rounded to the nearest $1,000.

Sources: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

The graphic above displays the wealth gap for older and younger families from 1989 to 2019. It shows the median household wealth of families headed by 65- to 75-year-olds, as well as the median household wealth of families headed by 25- to 35-year-olds. In 1989, these values were $174,000 and $27,000, respectively. In 2019, these values were $269,000 and $24,000, respectively.

Overall wealth inequality remains high.

The demographic breakdowns above illustrate large wealth gaps. Looking at the population as a whole, without demographic lenses, offers a broader, though less nuanced, snapshot on how wealth is distributed. On average, families across the wealth distribution accumulated more wealth between 2016 and 2019.

In 2016, total U.S. household wealth amounted to $92.4 trillion in 2019-adjusted dollars. The 2016 population was about 126 million families. To be in the top 10% of the wealth distribution in 2016, a family needed at least $1.26 million.

In 2019, total wealth had grown to $96.1 trillion. The 2019 population was approximately 129 million families.

  • To be in the top 10%, a family needed $1.22 million or more (slightly less than in 2016). Together, these roughly 12.9 million wealthy families owned 76% of total household wealth in 2019.
  • To be in the middle 40%, a family needed at least $122,000 in wealth. Together, these approximately 51.5 million families owned 22% of U.S. wealth in 2019.
  • To be in the bottom 50% meant a family had less than $122,000 in wealth. That represented about 64.3 million—or half of—families in 2019, owning just 1% of the nation’s wealth. Further, of this group, some 13.4 million families (about 1 in 10) had negative net worth—they didn’t even have a slice of the pie.

The graphic below shows this distribution of total U.S. wealth in 2019.

The distribution of $96.1 trillion in total American wealth

Wealth is what a family owns, minus what they owe.
This is how wealth was concentrated (or not) among the U.S. population of 129 million families.

median wealth gap between white and Black families (Details in article)

Notes: Figures do not add up to 100% due to rounding.

Sources: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

Who is in the top 10% of the wealth distribution?

Which families were more likely to hold the top 10% of wealth in 2019?

  • White families: 13% of white families, compared to 1% of Black families and 3% of Hispanic families.
  • Higher-educated families: 16% of families with at most a bachelor’s degree, and 27% of families with a postgraduate degree—compared to 4% of those with less than a four-year degree.

Who is in the bottom half of the wealth distribution?

Groups more likely to be in the bottom half of the wealth distribution include:

  • Black and Hispanic families: 75% of Black families and 67% of Hispanic families, compared to 41% of white families.
  • Less-educated families: 79% of respondents with a GED or less than a high school diploma, and 58% of those with at most a high school diploma—compared to 31% of those with a bachelor’s degree or more.

How has wealth distribution changed?

In summation, the wealth of the bottom half of families—roughly 64 million families—adds up to only 1% of total U.S. household wealth. This contrasts sharply with income, in which the bottom half of families, or those making less than $59,000, collectively have about 15% of total household income.

The lengthy economic expansion before the pandemic led to growth in wealth holdings for all groups, with proportionately faster growth (though smaller absolute growth) at the bottom.

The average family in:

  • The bottom 50% of the wealth distribution had $22,000 of wealth, or about $5,000 (27%) more than in 2016.
  • The middle 40% of the wealth distribution had $411,000 of wealth, or about $13,000 (3%) more than in 2016.
  • The top 10% had $5,716,000 of wealth, or about $75,000 (1%) more than in 2016.

Despite this growth, the bottom half of families still have modest wealth holdings, which makes it extremely difficult for them to weather financial emergencies in tough times or to gain upward mobility in good times. These findings also underscore the importance of examining wealth by demographics.

Building wealth requires keeping demographics at the forefront.

Solutions aimed at building family wealth should keep demographic differences in mind in order to promote the economic well-being of American families. For example, there are two prominent ways to accumulate wealth:

  1. Earn more income, save more income, or both
  2. Own or receive assets that can appreciate in value, such as a home or stocks.

Progress has continued when it comes to improving opportunities for groups that historically have had low wealth to earn more. But ownership of the appreciating assets that are important to building wealth remains highly uneven, magnifying the role played by demographic factors.

Editor’s Note: This blog post was updated with the addition of a video on the distribution of wealth.

Notes and References

1 Note that families are grouped by the primary racial and ethnic identity of the survey respondent. Our definition uses both race and a separate question on ethnicity (added in 2004). The Federal Reserve Board only uses responses to the question on race (which includes Hispanic as an option) for greater comparability to earlier surveys; thus, our estimates will differ from those published by the Board. The remainder of respondents fall into a diverse “other race” group (not included here), which includes Asians, American Indians, Alaska Natives, Native Hawaiians, Pacific Islanders, other races and multiple racial identifications.

2 Estimates may differ from earlier articles due to inflation adjustment to 2019 dollars and changes in assignment of demographic characteristics for households. All demographic characteristics for the family were taken from the survey respondent, generally the most financially knowledgeable person.

ABOUT THE AUTHORS
Ana Hernández Kent 

Ana Hernández Kent is the senior researcher for the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. Her research interests include economic disparities and opportunity, class and racial biases, and the relationship between psychological factors and the household balance sheet. Read more about Ana’s research.

Lowell R. Ricketts 

Lowell R. Ricketts is the data scientist for the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. His research has covered topics including the racial wealth divide, growth in consumer debt, and the uneven financial returns on college educations. Read more about Lowell’s research.

Tagged ana hernández kentlowell rickettshfscenter for household financial stabilityincomewealthcollegeraceeducational attainmentgenerational gap