Living With a Net Worth of $8:
Boston’s Black Population and the Persistent Wealth Gap
by Anise Vance
This is the fourth in a series of pieces on opportunity, income inequality, and economic mobility. Complementing The Boston Foundation’s Opportunity Forums, and its year-long effort to highlight income inequality, this series will touch on a wide variety of research and topics pertaining to economic mobility. For more on the Opportunity Forums, please visit: www.tbf.org/opportunity
In 1978, William Julius Wilson became the most controversial sociologist in the United States. His newly published study, provocatively titled The Declining Significance of Race: Blacks and Changing American Institutions, stirred critics on both the left and the right. In scholarly, creative, and sometimes harsh language, Wilson, a black American, was accused of selling out his race by some, inspiring class divisions by others, and ignoring social and cultural realities by still more detractors. Indeed, Wilson was beset by commentators from almost every political stripe.
Lost amidst the hyperbole was Wilson’s central argument. A changing political and economic landscape meant that, for the first time since the doomed post-Civil War period of Reconstruction, black Americans were afforded the opportunity to gain wealth. However, opportunities for employment and education were neither evenly nor systematically distributed to blacks, thus resulting in a racial population more furcated along class lines than it had ever been. Critically, Wilson, in predicting that the importance of class to black American experiences would only increase, adopted an assumption that would prove prescient: wealth begets wealth and poverty only impoverishes further.
Over the last four decades, Wilson’s assumption has, sadly, been validated. Black families with the lowest incomes in 1975 saw a decline in their incomes through 2007. Black families with the the highest income saw the greatest positive change — in both real dollars and as percentage growth — amongst all income brackets.
As important as the above data may be, Wilson’s assumption on the creation of wealth may find its greatest significance when applied to analyses between racial populations rather than within those populations. Recently, the Federal Reserve Bank of Boston published The Color of Wealth in Boston, a joint study with Duke University and The New School. With unprecedented granularity*, the study investigates the wealth of Boston’s populations by race, ethnicity, and country of origin. Its findings were unnerving.
While no more than 50% of any population of color in Boston owns a home, almost 80% of white households own, rather than rent, their houses. Digging deeper, only 60% of white homeowners have mortgage debt. Almost 90% of U.S. blacks*, Caribbean blacks, and Dominicans have mortgage debt.
The picture is no more equal when other financial assets are taken into consideration. Less than 10% of U.S. blacks, Caribbean blacks, Cape Verdeans, Puerto Ricans, and Dominicans own stocks. Less than 40% of the population of those same groups own Individual Retirement Accounts or private annuities. Among white households, 39.5% own stocks and 56.2% own an IRA or private annuity. Boston’s wealth disparity is, without question or doubt, persistent across asset-type.
Perhaps the single most disturbing data produced by the Federal Reserve’s study concerns median net worth. A measure of all assets and debts, net worth provides a response to the simple question, how much wealth does one truly own?
The median net worth of Boston’s white households is $247,500. The median net worth of Boston’s U.S. black households is $8. (That is not a typo: eight dollars.)
The wealthiest population of color, Caribbean blacks, has a median net worth of $12,000. The poorest, Dominicans, has a median net worth of $0. The Puerto Rican and other Hispanic populations have net worths of $3,020 and $2,700, respectively.
While William Julius Wilson pointed to greater opportunities for some blacks, clearly those opportunities were not extended to all US blacks or populations of color. With median net worths of $8 and $0, half of Boston’s U.S. black households and Caribbean households own, essentially, nothing. The significant advantage white households gained through generations of wealth accumulation cannot be overemphasized: our current inequality gap is, in great part, the product of a history which saw some access wealth while others were systematically excluded from it. Wealth, as Wilson highlighted, produces more wealth, while the impoverished remain poor.
The next article in this series turns to some of the mechanisms by which communities were excluded from generating wealth. Specifically, we will explore if and how American cities are spatially arranged to support, or challenge, equal opportunity.