Urban Wire Less than Equal: Wealth Building among White, Black and Hispanic Families
Caroline Ratcliffe, Signe-Mary McKernan
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Over the past 30 years, wealth disparities in the United States have worsened. While high-wealth families—those in the top 20 percent—saw their average wealth more than double, low-wealth families (those in the bottom 20 percent) saw their average wealth fall well below zero. As for those in the middle, their average wealth inched up only 13 percent.

A striking dimension of this wealth inequality—disparities by race and ethnicity—is highlighted in our new brief, coauthored with Eugene Steuerle and Sisi Zhang, and in the video above. On average, white families have six times the wealth of black and Hispanic families. So for every $6.00 a white family has in wealth, black and Hispanic families have only $1.00 (e.g., $632,000 vs. $103,000). The income gap, by comparison, is much smaller, although still substantial. On average, white families have twice the annual income of black and Hispanic families. For every $2.00 of income white families earn, black and Hispanic families earn $1.00.

While these ratios have not changed much over time, the real dollar value of the gap has grown. The average wealth of white families was $230,000 higher than the average wealth of black and Hispanic families in 1983. This grew to over $500,000 by 2010 (figure 1).

Are there other time dimensions to this disparity? Yes. The racial wealth gap grows sharply with age (figure 2). In 1983, whites in their thirties had an average net worth of $184,000. Today, these whites, who are in their early sixties, have accumulated $1.1 million in wealth, on average. In contrast, black families have seen their wealth go from $54,000 to $161,000 and Hispanic families from $46,000 to $226,000. White families started with about 3.5 to 4 times more wealth than families of color in their 30s, but had 7 times more wealth in their 60s. In other words, these initial racial differences grow over the life cycle both absolutely and relatively.

Though the United States is one of the wealthiest countries, this prosperity remains out of reach for many Americans. Blacks and Hispanics, who strive to make a better life for themselves and their families, are not on the same wealth-building paths as whites. They are less likely to own homes and retirement accounts, so they miss out on these traditionally powerful wealth-building tools. Families of color also lost a greater share of their wealth in the aftermath of the Great Recession.

A common misconception is that poor or even low-income families cannot save. Evidence from savings programs and research shows they can.

Wealth is where the economic opportunity lies. Social safety net programs emphasize consumption, and many even discourage saving by making families ineligible if they have a few thousand dollars in savings in some states. Wealth-building policies, on the other hand, are delivered as tax subsidies for homeownership and retirement. Families of color are less likely to be able to use these tax subsidies, so benefit little or not at all. Without fair policies, paths to building wealth can vanish. Reforming policies like the mortgage interest tax deduction so it benefits all families, and helping families enroll in automatic savings vehicles, will help improve wealth inequality and promote saving opportunities for all Americans.


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The Urban Institute podcast, Evidence in Action, inspires changemakers to lead with evidence and act with equity. Cohosted by Urban President Sarah Rosen Wartell and Executive Vice President Kimberlyn Leary, every episode features in-depth discussions with experts and leaders on topics ranging from how to advance equity, to designing innovative solutions that achieve community impact, to what it means to practice evidence-based leadership.


Research Areas Wealth and financial well-being
Tags Asset and debts Racial and ethnic disparities Wealth inequality Inequality and mobility Latinx communities