Less Than Equal: Racial Disparities in Wealth Accumulation
When it comes to economic gaps between whites and communities of color in the United States, income inequality tells part of the story. But let’s not forget about wealth. Wealth isn’t just money in the bank, it’s insurance against tough times, tuition to get a better education and a better job, savings to retire on, and a springboard into the middle class. In short, wealth translates into opportunity.
Policymakers often focus on income and overlook wealth,1 but consider: the racial wealth gap is three times larger than the racial income gap. Such great wealth disparities help explain why many middle-income blacks and Hispanics haven’t seen much improvement in their relative economic status and, in fact, are at greater risk of sliding backwards.
How Have Wealth Inequality and Income Inequality Changed Over Time?
Wealth is not just for the wealthy. The poor can have wealth too—and that wealth can accrue over time or provide collateral for borrowing, giving families a way to move up and out of poverty. A home or a car can offer benefits far beyond their cash value. And even a small amount of savings can help families avoid falling into a vicious cycle of debt when a job loss or financial emergency hits. Wealth disparities have worsened over
“Less Than Equal: Racial Disparities in Wealth Accumulation”
By Signe-Mary McKernan, Caroline Ratcliffe, Eugene Steuerle, Sisi Zhang
The Urban Institute, April 2013