DREAMSDEFERRED
HOW
ENRICHING
THE 1%WIDENS
THE RACIALWEALTHDIVIDECHUCK COLLINSDEDRICK ASANTEMUHAMMEDJOSH HOXIESABRINA TERRYCO-AUTHORS:
Chuck Collins directs the Program on Inequality and the Common Good at the Institute for
Policy Studies, where he also co-edits Inequality.org. His most recent book is Is Inequality in
America Irreversible? from Polity Press and in 2016 he published Born on Third Base: A One
Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the
Common Good.
Dedrick Asante-Muhammad is the director of the Bridging the Divide project at the Institutefor Policy Studies where he is an Associate Fellow. He is also principal at Race, Wealth And
Opportunity, LLC. He was previously the Senior Fellow the Racial Wealth Divide Project at
Prosperity Now and hosts the Race and Wealth Podcast.
Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies
and co-edits Inequality.org. He has co-authored a number of reports on topics ranging from
economic inequality, to the racial wealth divide, to philanthropy.
Sabrina Terry is a collaborator with the Bridging the Divide project at the Institute for Policy
Studies. She is a Senior Strategist with the Economic Policy Project at UnidosUS. Sabrina waspreviously Manager at the NAACP Economic Department and served as a Community Plannerat UPROSE.
Acknowledgements: We received significant assistance in the production of this report. We
would like to thank Sarah Gertler for cover and graphics. We’d also like to thank our colleagues
at the Institute for Policy Studies, especially Sarah Anderson, Sam Pizzigati, and Negin Owliaei.
The Institute for Policy Studies (www.IPS-dc.org) is a multi-issue research center that has been
conducting path-breaking research on inequality for more than 20 years.
The IPS Program on Inequality and the Common Good was founded in 2006 to draw attention
to the growing dangers of concentrated wealth and power, and to advocate policies andpractices to reverse extreme inequalities in income, wealth, and opportunity.
The Inequality.org website (http://inequality.org/) provides an online portal into all things
related to the income and wealth gaps that divide us, in the United States and throughout theworld. Subscribe to our weekly newsletter at Inequality.org or follow us on Twitter andFacebook: @inequalityorg
Institute for Policy Studies National Office1301 Connecticut Ave NW, Suite 600, Washington, DC 20036 | Web: www.ips-dc.org Twitter:@IPS_DC | Facebook: http://www.facebook.com/InstituteforPolicyStudies
Institute for Policy Studies New England Office
30 Germania Street, Building L, Jamaica Plain, MA 02130 © 2019 Institute for Policy Studies

1

CONTENTS

KEY FINDINGS

3

A DREAM DEFERRED

6

THE RACIAL WEALTH DIVIDE TODAY

7SOLUTIONS TO REDUCE THE RACIAL WEALTH DIVIDE

15

CONCLUSION

18

METHODOLOGY19

END NOTES

21

2

Key Findings
This report looks at the trends in household wealth among Black, Latino and White
households over the past three decades. It relies on data from the Federal Reserve
Board’s most recent triannual Survey of Consumer Finances.
The Racial Wealth Divide
Over the past three decades, a polarizing racial wealth divide has grown between White
households and households of color. Since the early 1980s, median wealth among Blackand Latino families has been stuck at less than $10,000. Meanwhile, White household
median wealth grew from $105,300 to $140,500, adjusting for inflation.
•

Between 1983 and 2016, the median Black family saw their wealth drop by
more than half after adjusting for inflation, compared to a 33 percent increase
for the median White household. Over that same period, the number ofhouseholds with $10 million or more skyrocketed by 856 percent.

•

The median Black family today owns $3,600— just 2 percent of the $147,000 of
wealth the median White family owns. The median Latino family has assets
worth $6,600 — just 4 percent as much as the median White family. In otherwords, the median White family has 41 times more wealth than the medianBlack family and 22 times more wealth than the median Latino family.

•

If the trajectory of the past three decades continues, by 2050 the median White
family will have $174,000 of wealth, while Latino median wealth will be$8,600 and Black median wealth will be $600. The median Black family is on
track to reach zero wealth by 2082.

•

If current trends continue, it would take the typical Black family over 52
million years to reach the wealth of the Walton family today and Latino
families 24 million years.

•

The proportion of all U.S. households with zero or “negative” wealth,meaning their debts exceed the value of their assets, has grown from 1 in 6 in1983 to 1 in 5 households today. Families of color are much likelier to be inthis precarious financial situation. Thirty-seven percent of Black families and33 percent of Latino families have zero or negative wealth, compared to just3

15.5 percent of White families. One piece of good news: the proportion of
Latino families with zero or negative net worth dropped 19 percent between
1983 and 2016, from 40 percent to 33 percent.
•Black families are about 20 times more likely to have zero or negative wealth(37 percent) than they are to have $1 million or more in assets (1.9 percent).
Latino families are 14 times more likely to have zero or negative wealth (32.8
percent) than they are to reach the millionaire threshold (2.3 percent). White
families are equally likely to have zero or negative wealth (about 15 percent)as they are to be a millionaire (15 percent).

•

Low levels of Black and Latino wealth, combined with their growing
proportion of the population, is a key factor in the overall decline inAmerican median household wealth from $84,111 in 1983 to $81,704 in 2016.

In a Deeply Unequal Economy
The widening of the racial wealth divide has coincided with the extreme concentrationof U.S. wealth. The wealthiest 0.1 percent of households have grown richer while
millions of families face poverty and deep-seated economic insecurity.
• The median American family saw their wealth drop 3 percent between 1983
and 2016, while the richest 0.1 percent have seen their wealth jump 133
percent.
• During this same period, the annual increase for White median family wealth
was about $1,000. Latino median family wealth went up by $66 annually andBlack median family wealth dropped $83 annually. Meanwhile, the average
household in the top 1 percent saw their wealth jump by half a million dollars
annually.
• The richest dynastic families in the United States have seen their wealthexpand at a dizzying pace. The three wealthiest families — the Waltons, theKochs, and the Mars — have seen their wealth increase nearly 6,000 percent
since 1983.
• The Forbes 400 richest Americans own more wealth than all Black households
plus a quarter of Latino households.
• Jeff Bezos, founder of Amazon, owns $160 billion in total wealth. That is 44
million times more wealth than the median Black family and 24 million times
more wealth than the median Latino family.

4

Moving Forward
The racial wealth divide and growing economic inequality are often analyzed as two
separate and concurrent trends, when in fact, they are mutually reinforcing outcomes oflarger economic issues. Both the racial wealth divide and the unequal economy werecreated and perpetuated by public policies that favored Whites and continue to favor
the very wealthy. Public policies aimed at reducing both trends will be critical tocreating a more equitable economic system and a more just society overall. Suchpolicies could include, but are not limited to:• A baby bond program to help low-wealth households build wealth• A tax on the wealthiest 0.1 percent to reduce distortions caused by concentrated
wealth and generate revenue marked for expanding opportunity for low-wealthhouseholds• An audit of federal government policies to evaluate their impact on the racial
wealth divide• Targeted reparations to address the legacy of racism in wealth building

5

A Dream Deferred
January 15, 2019, the release date of this report, would have been the 90thbirthday of Dr. Martin Luther King, Jr. Dr. King envisioned a future in which deep
racial inequalities were eradicated and he worked tirelessly towards that mission. His
tragic assassination occurred while he was organizing the Poor Peoples Campaign, hislast great effort to ensure economic justice as a cornerstone of civil rights.
The Institute for Policy Studies released a study in 2018, in conjunction with thereconvened Poor People’s Campaign, auditing the progress the United States has madein achieving Dr. King’s vision of ending the intertwined evils of racism, poverty, andmilitarism.1 Among its findings, the report found that the poverty rate in 2018 is almost
exactly the same as that in 1968. The poverty rate did decline by almost half during the
1960s. But the failure to advance the economic policies of the civil rights movement,
encapsulated in the historic 1967 Freedom Budget and advocated for in the Poor
People’s Campaign, led to the erosion and prevention of much further progress in
reducing racial economic inequality.
Just as racial economic inequality is the foundation of racial inequality, similarly
the racial wealth divide is the foundation of racial economic inequality. For this reason,
our report focuses on the racial dimensions of wealth inequality in America. Household
wealth is the sum total of assets held by a family minus total household debt—
essentially what a family owns minus what they owe. Wealth is a critical measure offinancial security because it buffers families from the ups and downs of income changes
and economic cycles and allows households to take advantage of socio-economic
opportunities. Families with little or negative wealth live precariously on the edge ofseeing a minor unexpected expense, such as a health care or car repair bill, turn intofull-blown economic calamity. Furthermore, wealth is a key determinant for otherimportant non-financial outcomes. Wealth creates a platform of stability that enables
positive education, health, and social outcomes for families that can afford to takeadvantage of opportunities and/or services—which then leads to more family wealth.
In light of Dr. King’s pursuit of economic justice, this report highlights how
historic racial wealth disparities have been perpetuated and increased by the trend
towards extreme inequality in the United States. It also puts the racial wealth divide in
the context of overall wealth inequality trends. The difference in wealth ownership byrace is one of the ways that past policies have manifested into today’s disparities, where
several centuries of racial advantage and discrimination in asset-building are reflectedin concrete “net-worth” numbers. Like two strands of the same thread of DNA, the6historic racial wealth divide and the more recent “top heavy” concentration of wealth infewer hands, are two trends that interact and influence one another.
This report specifically tracks the growing racial wealth divide in the UnitedStates looking at the trends in household wealth accumulation from 1983 to 2016 as well
as looking forward to project what the future might bring if these trends continue. The
33-year history corresponds with the earliest data available from the Federal Reserve’s
triannual Survey of Consumer Finances (SCF) in 1983 and the most recent data
available from 2016. Also included are figures from the 2018 Forbes 400 ranking, themost recent figures available for the extreme wealth holdings of the wealthiest 400
individuals in the United States. All dollar figures have been adjusted to inflation to2018 dollars, except where specifically noted, and all figures in this analysis are median
wealth data rather than average (or mean) wealth.
Dreams Deferred expands on and updates two previous reports from theProgram on Inequality and the Common Good at the Institute for Policy Studies, incollaboration with Prosperity Now: “The Ever-Growing Gap: Failing to Address the
Status Quo Will Drive the Racial Wealth Divide for Centuries to Come,” in 2016,2 and“The Road to Zero Wealth: How the Racial Wealth Divide is Hollowing Out
America’s Middle Class” in 2017.3 This report also builds on extensive research on thegrowing concentration of wealth in the United States catalogued in the “Billionaire
Bonanza” report series released in 2015, 2017, and 2018.4 The most recent edition
focused on the growing power and influence of intergenerational wealth dynasties.
Dreams Deferred presents a snapshot of the racial wealth divide in the UnitedStates today, looking at the current state of household wealth, income, homeownership,
debt, and other economic factors. It also reviews long-term trends that led to thiscurrent moment, as well as, the historical policies and contributors to this deepening
divide. Finally, we shift our focus to solutions to address this growing divide with aneye towards bold, paradigm shifting ideas and policies.

The Racial Wealth Divide TodayMedia headlines in 2018 focused heavily on the reduction in the Black
unemployment rate, which reached historic lows.5 President Trump was quick to claim
credit for this improvement in January 2018, tweeting, “Somebody please inform Jay-Z
that because of my policies, Black Unemployment has just been reported to be at the
LOWEST RATE EVER RECORDED!”6 These headlines (and boasts) were in the context
of economic indicators that showed a booming economy with rising GDP and atemporary boom in stock prices.

7

Household wealth figures released by the Federal Reserve in late 2017 also
showed a slight uptick in median household wealth across the board, including Black,
Latino, and White families. Following the popular press, one could easily conclude that
racial wealth divide is indeed closing and we as a nation are building a more fair andequitable economy. Unfortunately, this conclusion is far from reality.
Going beyond one economic indicator and looking more holistically at where thecountry is in terms of racial economic parity reveals a deep, pervasive and ongoing
racial economic division. The basic trend outlined in our findings shows wealthconcentrating into fewer and fewer hands over time. These hands are overwhelmingly
White. Meanwhile, non-Whites, particularly Black and Latino households, continue tostruggle near or in asset poverty (See Methodology for discussion of other racial
groups). Asset poverty, different than just lacking income, means families lack theamount of wealth required to cover their basic needs for at least three months.

Wealth at the Middle
Today, the median family in the United States owns $81,704. That means half thefamilies in the country own less than that figure and the other half own more. Median
wealth is a better representation of a typical family than average wealth since it avoids
the upward pull of extremely high net worth families. In 1983, the median family
owned $84,110 in today’s dollars—signifying a 3 percent reduction in median wealth in
33 years. In other words, despite three decades of economic growth, great leaps inproductivity, and other advances, the typical U.S. family at the statistical middle of thewealth distribution not only saw zero benefit, but saw their wealth go down.
This reduction was not experienced evenly across racial groups. Median White
family wealth today is $146,984, up from $110,160 in 1983. That represents an increaseof $36,000 or about a 30 percent increase. So, the median White family wealth not only
did not go down but went up by tens of thousands of dollars while Black and Latino
wealth bounced around mostly at asset poverty levels. Median Latino families saw theirwealth go up and down between a little more than $4,000 to almost $11,000. In 2016
median household wealth for Latinos was $6,300. Black median families fared the worst
over the past 33 years, seeing their wealth move from a record high of $12,000 in 1995 toa record low of $1,700 in 2013. In 2016, the median Black household wealth was a low of$3,400. If the trends of the past three decades continue, the median Black family is on
track to reach zero wealth by 2082
Averaging out the trend lines of the past 33 years, annual growth in household
wealth by race showed great disparities. Median White families saw their wealth grow8

by about $1,000 per year, while median Latino families saw a much smaller annual
increase in wealth of $66 a year. Conversely, the median Black families saw their wealthdecrease by $83 per year. By comparison, the average family in the top 1 percent saw
their wealth increase $479,878 a year over the past 33 years.

Looking at median household wealth figures dramatizes just how stark the gap
is between the typical White, Black, and Latino families. The median Black family withjust over $3,500 owns just 2 percent of the wealth of the nearly $147,000 the medianWhite family owns. The median Latino family with just over $6,500 owns just 4 percentof the wealth of the median White family. Put differently, the median White family has
41 times more wealth than the median Black family and 22 times more wealth than the
median Latino family. So even if Black and Latino families make advances, they arestarting from a position that is exponentially behind where the typical White family istoday.

9

Wealth at the Top
Wealth is concentrating at an incredibly rapid rate in the United States in ourincreasingly top-heavy economy. Looking at the racial wealth divide in the context of
this updraft of wealth is illuminating. Just three men—Jeff Bezos, Bill Gates, andWarren Buffett—own more wealth today than the entire bottom half of the country
combined. 7 The extreme concentration of wealth in the United States is not limited tojust the three wealthiest people. The top 1 percent owns 39.6 percent of the nation’s total
household wealth,8 up from 33.8 percent in 1983. Meanwhile, the bottom 90 percent of
the population owned 32 percent of the nation’s wealth in 1983, a figure that has
dropped to 21 percent in 2016.9
Economists Emmanuel Saez and Gabriel Zucman looked at the composition of
wealth in the United States over a longer time period utilizing tax return records andhighlighting the fluctuating patterns of wealth between the top 0.1 percent (the richest
one-tenth of one percent) and everyone else.10 They found that over the 20th century, thebottom 90 percent went from owning about 20 percent of the nation’s wealth in the late
1920s, to a high of 35 percent in the mid-1980s, and back down to 23 percent in 2012.11
The top 0.1 percent followed similar fluctuations but have exceeded their early 20th
century rates. Saez and Zucman show the top 0.1 percent owned 22 percent of thenation’s wealth in 2012, nearly equal to the combined wealth of the bottom 90 percent.
In 1979, the wealth of the top 0.1 percent had declined to just 7 percent of the nation’s
wealth. By 2012, the top 1 percent owned 42 percent of the nation’s total wealth.12
Wealth shifted from the rich to the rest of us in the middle of the 20th century and thenback to the rich over the next three decades.
Much of this concentration of wealth is within intergenerational wealthdynasties. Three dynastic wealth families—the Waltons, the Kochs, and the Mars—haveseen their wealth increase nearly 6,000 percent since 1982 (compared to a 3 percent
decrease for the median American household). The dynastic wealth of the Waltonfamily grew from $690 million in 1982 (or $1.81 billion in 2018 dollars) to $169.7 billion
in 2018, a mind-numbing increase of 9,257 percent. If current trends continue, it would
take the typical Black family over 52 million years to reach the wealth of the Waltonfamily today and Latino families 24 million years.

10

Total Wealth by Race
Category
Population*
Households*
Median Wealth
Mean Wealth
Total WealthTotal
322,792,580
127,586,000$81,704$698,410$89.1 trillionWhite
200,693,970
84,681,000$146,984$916,010$77.6 trillion

Black
39,748,680
16,158,000$3,557$132,129$2.1 trillion

Latino56,456,680
17,318,000$6,591$173,452$3.0 trillion

All figures adjusted to 2018$*Population and Household figures from US Census13

The racial composition of the Forbes 400 list further underscores the racialized
distribution of wealth inequality in the United States. Just two members of the 2018
Forbes 400 are Black—investor Robert Smith (#163, with $4.4 billion) and televisionmogul Oprah Winfrey (#298, with $2.8 billion). Michael Jordan, with a net worth of$1.65 billion, falls short of the $2.1 billion required to join the Forbes 400, but remains the
only other African American on the Forbes Billionaires list.14 There are four Latino
members of the Forbes 400. Included in this group: Arturo Moreno, a billboard
billionaire and owner of the Los Angeles Angels baseball team (#271, with $3 billion)
Jorge Perez, the condo king of Miami (#316, with $2.6 billion), the brothers Alejandro
and Andres Santo Domingo (tied for #190, with $3.9 billion). The Santo Domingobrothers’ father is the Colombian billionaire Julio Mario Santo Domingo Pumarejo—
another illustration of dynastic wealth.
Looking just at the past 33 years of data from the Survey of Consumer Finances,
wealthier households have captured most wealth over the past three decades. The top
0.1 percent grabbed 16 percent of the total gain in household wealth over this period.
Looking a little broader, the top 20 percent of wealth owners captured 97.4 percent of
the total wealth gained. That leaves just 2.6 percent to be shared by the bottom 80
percent of the country, just over 100 million families. Policies are skewed to help
households with wealth continue to gain and maintain their wealth.
The proportion of millionaires residing in the U.S. has grown in the last three
decades with the majority being White households. The number of households with $10
million or more has skyrocketed 856 percent since 1983 from 66,500 to 635,800.15 The
number of millionaire households jumped 279 percent from 2.4 million to 9.1 million.
White households remain more likely to transition into millionaire status than
Latinos and Blacks. The percentage of White families that are worth a million dollars
has increased from 7 percent in 1992 to 15 percent in 2016.16 Only about 2.3 percent of
Latino households and 1.9 percent of Black households had a net worth over a million
dollars in 2016. By contrast, as we show in the next section, 37 percent of Black families
11and 32.8 percent of Latino families have zero or negative wealth. That means Black
families are about 20 times more likely to have zero or negative wealth (37 percent) thanbe a millionaire (1.9 percent). Latino Families are 14 times more likely to have zero or
negative wealth (32.8 percent) than be a millionaire (2.3 percent). White families are as
likely to have zero or negative wealth (about 15 percent) as they are to be a millionaire(15 percent).

Wealth at the Bottom
One in five U.S. families has zero or negative net wealth today, meaning theyowe more money than they own. This is up from one in six in 1983. In the 2017
Billionaire Bonanza report, zero or negative wealth households were coined the“Underwater Nation.”17 These families live on the edge of precarity, one minor
economic setback away from tragedy. Black and Latino families are twice as likely tohave zero or negative wealth as White families. The proportion of Black families withzero or negative wealth rose by 8.5 percent from 34 percent to 37 percent between 1983
and 2016. White families also saw an increase from 11.3 percent in 1983 to 15.5 percent
in 2016, a jump of 37 percent. One piece of good news: the proportion of Latino families
with zero or negative net worth went down over the past 30 years from 40 percent in1983 to 33 percent in 2016, a drop of 19 percent.

12

The proportion of families that are liquid asset poor has increased in the past
decade. Four in ten families could not come up with $400 cash if they needed it in an
emergency, according to a 2017 study from the Federal Reserve.18 This is actually an
improvement from 2013 when it was five in ten families.

Economic Indicators Other Than Wealth
While this report focuses primarily on wealth, household income, or the amounta family is paid in a year, contributes to a deeper understanding of the racial economic
divide. Median household income in 2016 for all families was $61,723 in today’s dollars.
White median household income was only slightly higher at $62,769. Black and Latinohousehold median income was significantly lower at $36,615 and $40,800 respectively.
White median families were paid 1.7 times Black median families and 1.5 times Latino
median families respectively. This ratio did not change considerably between 1983 and2016. Black, White, and Latino median families all saw their income rise over that
period with Black median income rising at the fastest at 19 percent. However, Black
median income was lower than Whites and Latinos in 1983 and remains lower in 2016.
Another major indicator of economic well-being is the rate of homeownership.
The national homeownership rate remained virtually unchanged between 1983 and2016. It was 63.4 percent in 1983 and 63.7 percent in 2016. As with income,homeownership is also heavily skewed towards White families. In 2016, 72 percent ofWhite families owned their home, compared to just 44 percent of Black families.
Between 1983 and 2016, Latino homeownership increased by a dramatic nearly 40
percent, but it still remains far below the rate for Whites, at just 45 percent.

13

Black and Latino families that do manage to buy their own homes do not receive,on average, the same return on investment as White home owners. As sociologist
Thomas Shapiro and his colleagues point out in a 2015 study, median White households
accrue $1.34 for every $1 that median Black households accrue as a result of
homeownership. Median White households accrue $1.54 for every $1 in wealth that
accrues to median Latino households because of homeownership. 19
A study from Edward Wolff published in October 2018 showed that another key
factor in understanding the racial wealth divide is the much greater reliance of families
of color on Social Security.20 The definition of wealth used in this report excludes Social
Security and pension wealth that families generate throughout their working years andcan utilize in retirement. Including these two assets in household wealth, a figure
Professor Wolff calls “augmented wealth,” Blacks and Latinos move to having almost
30 percent of the average augmented wealth of Whites. Social Security made up 46
percent of the total augmented wealth of Black households in 2016 and about 44 percent
among Latinos. Social Security wealth constituted just 20 percent of augmented wealthfor Whites.
14

Solutions to Reduce the Racial Wealth Divide
The racial wealth divide is expanding considerably and shows no signs ofshrinking. Historic and current public policies are largely to blame for this dynamic.
Smart, targeted public policy has the capacity to bridge the divide. As our report shows,
we cannot address the racial wealth divide outside the context of the overall surge ofwealth inequality in the society at large. We need policy solutions that focus on
reducing overall concentrations of wealth and power, as well as, policies targeted toaddress the racial dimensions of wealth disparity.
There are a number of bold and paradigm-shifting policy options and ideas thathave the potential to reduce racial wealth divisions. Our proposed list is neither
exhaustive nor conclusive. It is intended to offer a place to start when considering how
to move forward given the severity of the problem we describe. Much of the following
draws from our previous work on this topic.
Tax the Top and Invest in Shared Prosperity
Given the extreme concentration of wealth in the United States, it is impossible toaddress the racial wealth divide without also addressing our deeply unfair tax
structure. As stated earlier, giving tax cuts to the wealthiest households and mostprofitable corporations, as the 2017 Trump tax cuts did, only exacerbates the racial
wealth divide. We need to restore progressive tax rates on the wealthy that have been
dismantled over the last several decades.
Raising taxes on the wealthy could take many forms, including:••

Wealth tax: A direct tax on wealth paid by the wealthiest one tenth of one
percent could generate significant revenue to be reinvested in creating andrestoring opportunities for low wealth households to prosper. A 1 percent
annual tax on the wealthiest 0.1 percent of households, those with wealth over
$20 million, would generate an estimated $1.899 trillion in revenue over the next
decade, according to a forthcoming report by the Institute for Taxation andEconomic Policy. Conversely, raising no tax thresholds in existing tax programs
designed to benefit low-income populations to include more moderate-income
households would increase wealth-building opportunities.
Inheritance tax: The federal estate tax has been significantly weakened, mostrecently through the 2017 Trump-Republican tax cut. Taxing inherited wealth asincome would help break up current and future wealth dynasties.
15

•

Taxing capital gains as ordinary income: There remains no serious justification
for taxing capital gains at significantly lower rates than we currently tax middle
class workers.

Revenue from these tax proposals should be invested in improving the wealth-building
capacity of low-wealth families, especially those who have been historically excluded.
Such opportunity investments could include:•••

Establish Children's Savings Accounts or Baby Bonds. A 2016 report from theAnnie E. Casey Foundation found that if Congress had instituted a robust
universal CSA program in 1979, the White-Latino wealth gap would be fully
closed by now and the White-Black wealth gap would have shrunk by 82 percent
for young adult households.21 This concept has gained some traction in recent
months as Senator Cory Booker (D-NJ) introduced legislation in 2018 to establish
a Baby Bond program.22
Invest in Affordable Housing. As stated earlier in this report, the dramatic racialdivide in homeownership, rooted in the history of redlining and other policies,
leaves millions of Black and Latino families out of the wealth-building potentialof homeownership. Similarly, an increase in affordable housing stock is essential
to assisting rent-burdened households, who are predominantly Black and Latino,
to have more discretionary income that can be dedicated to wealth-building
vehicles. Senator Elizabeth Warren (D-MA) and Representative Cedric Richmond(D-LA) introduced legislation in 2018 titled “The American Housing andEconomic Mobility Act” that could go a long way to reducing this divide.23
Secure Social Security’s solvency for the economic security of all. Social
Security has been an asset that keeps millions of Americans out of poverty and,as has been mentioned, is a particular important asset for communities of color.
Maintaining this program is essential and doable. As former US Secretary ofLabor Seth D. Harris has argued “A few tweaks of the revenue formula, likeadding a small payroll tax surcharge for the wealthiest Americans andexpanding the share of wages that are taxed could extend solvency for decades.”Raise the Floor and Expand Opportunity
Beyond addressing the racial wealth divide through the tax code and public
expenditures, policies can and should be implemented that would have a major impact
on the racial wealth divide. Such policies include:•

Raise the minimum wage to at least $15 an hour. Millions of families remain inpoverty despite working full-time jobs. The federal minimum wage has not

16

•

•

moved since it was increased to $7.25 in 2009. This is below the cost of living inevery major city in the country.
Medicare-for-All health care reform. Medical bankruptcy remains among the top
economic stressors in the country. Despite strides made by the Affordable Care
Act, healthcare is still treated as a privilege rather than right in the United Statesleaving millions of families uninsured and exposed to extreme financial distressas well as personal calamity.
A federal jobs guarantee. Darrick Hamilton and Sandy Darity, Jr., among others,
have proposed a plan to return to full employment through a comprehensive
federal jobs guarantee that would ensure everyone in the country who is able towork can get a job that pays a living wage.24 Public infrastructure and energy
efficient investments to shift the economy away from fossil fuel dependency
could also be used to create good jobs for people of color, who are also
disproportionately harmed by climate change.25

Deepen Our Understanding and Directly Address the Racial Wealth Divide
The Institute on Assets and Social Policy at Brandeis University has created atool for conducting a racial wealth audit of public policy to shed light on what type of
impact policy change would have on address racial wealth inequality.26 Such a tool
could and should be implemented by the federal government to determine the impact
of existing and proposed policy on the racial wealth divide. Policies found to beintensifying the racial wealth divide should be critically re-evaluated, while policies
that reduce the divide should be expanded. Creating a racial wealth audit is well within
the authority of the Executive branch and should be implemented in concert with alegislative agenda that changes policies found by the audit to be unduly hurting
communities of color.
Prior to his retirement, U.S. Representative John Conyers introduced HR 40 for almost
30 years to establish a Congressional study commission on the institution of slavery,
particularly as to how it has harmed the African-American community and explore
means to address this harm. Reparations for people of African ancestry and Indigenous
peoples of the United States are necessary components to addressing the racial wealthdivide.

17

Conclusion“The majority of white Americans consider themselves sincerely committed tojustice for the Negro. They believe that American Society is essentially hospitable to fairplay and to steady growth toward a middle-class utopia, embodying racial harmony.
But unfortunately, this is a fantasy of self-deception and comfortable vanity.
Overwhelmingly America is still struggling with irresolution and contradictions…”-

Where Do We Go From Here: Chaos or Community?
Dr. Martin Luther King Jr.

Too often Dr. King’s “Dream” of making justice a reality for people of color isconflated with the “fantasy of self-deception” that there is “steady growth toward a
middle-class utopia.” Examining the concentration of wealth and ongoing deep racial
wealth inequality in light of Dr. King’s 90th birthday reminds us of the reality King
spoke of in his famous “I Have A Dream Speech”: “the Negro lives on a lonely island ofpoverty in the midst of a vast ocean of material prosperity.” Dr. King also stated in thisspeech that “America has given the Negro people a bad check, a check which has comeback marked ‘insufficient funds.” Over 50 years since this famous dream was sharedwith the nation, we have seen wealth concentrate among the wealthiest Americans anda polarizing racial wealth divide grow between Whites and Blacks and Latinos. We
have also seen how this racial wealth divide has lowered the wealth of the median
American household from 1983 to 2016. As the mid 20th century Civil Rights movement
recognized, a major economic shift in policy is needed to end the racial inequality of thepast and create a new nation with opportunity for all. Our path forward has notchanged significantly from the 1967 Freedom Budget which called for: equitable tax andmoney polices, adequate minimum wage, full employment, and modern health services
for all.
Despite aspirant rhetoric and sensationalized media stories, the racial wealthdivide has not improved over the past three decades. In fact, the divide has grownconsiderably as wealth continues to concentrate at the top leaving the rest of thecountry an increasingly smaller share. This dynamic is the result of public policy thathas contributed to growing the racial wealth divide. A targeted set of policies isimperative to begin to bridge this deep divide for generations to come. Inaction or,
worse, repeating the same mistakes that led to this situation will simply widen further
the divide and create greater economic instability for the country at large.

18

Methodology
The majority of the figures cited in this report come from just a few sources.
Chief among them is the Survey of Consumer Finances (SCF), a triannual study
produced by the Federal Reserve designed to capture the current economic conditionsof the country.
This report focuses on a measurement of household wealth developed by the
New York University economist Edward Wolff that differs from the Fed’s net worth
calculation in that it excludes durable goods such as automobiles that can’t be converted
into cash without dramatically reducing their value. Other durable goods such as
televisions, furniture, and appliances are excluded by the Fed. This measurement, in
Wolff’s words, “reflects wealth as a store of value and therefore a source of potential
consumption.”27 Net worth excluding durable goods reflects, in our view, a moreaccurate depiction of household wealth. As a result of this methodology, some figuresin this report may be lower than other studies relying on SCF data. For a more complete
description of the rationale behind this measurement, see “Household Wealth Trends in
the United States, 1962 to 2016: Has Middle Class Wealth Recovered?” by Professor
Wolff. This measurement is in keeping with our two previous racial wealth divide
reports as well as our Billionaire Bonanza report series.
Racial categories in the SCF are limited to non-Hispanic, presented in this study
as White, Black or African American non-Hispanic, presented in this study as Black,and Hispanic or Latino presented in this study as Latino. The SCF also includes “other”
which incorporates a diverse group that includes those identifying as Asian, American
Indian, Alaska Native, Native Hawaiian, Pacific Islander, or other races. This makes it
difficult to provide a meaningful analysis of wealth dynamics for these populationgroups. This report does not include such aggregated data. A future report is needed tofocus on developing understandings and estimates of how racial wealth inequality
effects these communities in the disaggregate.
The SCF is a critical instrument in studying racial wealth indicators, such as
assets and debts, but its methodology includes an oversampling of high net worth
individuals. Given the demographic composition of high net worth individuals, weunderstand this results in an undersampling of people of color, women, etc. We also
acknowledge this will portray slightly more favorable depiction of communities ofcolor.

19

All figures in this report are adjusted for inflation to 2018 dollars using the
Bureau of Labor Statistics CPI-U unless otherwise noted. For further questions about
our methodology, please contact the authors.

20

End Notes
1

Institute for Policy Studies, “The Souls of Poor Folk: Auditing America 50 Years After the Poor People’s

Campaign Challenged Racism, Poverty, the War Economy/Militarism, and Our National Morality,” April
2018. https://ips-dc.org/souls-of-poor-folks/
Chuck Collins, Dedrick Asante-Muhammed, Emanuel Nieves, Josh Hoxie. “The Ever-Growing Gap:
Failing to Address the Status Quo Will Drive the Racial Wealth Divide for Centuries to Come” Institute for
Policy Studies and Prosperity Now. August 2016.
https://ips-dc.org/report-ever-growing-gap/
2

Chuck Collins, Dedrick Asante-Muhammed, Emanuel Nieves, Josh Hoxie. “The Road to Zero Wealth:
How the Racial Wealth Divide is Hollowing Out America’s Middle Class” Institute for Policy Studies andProsperity Now. September 2017. https://ips-dc.org/report-the-road-to-zero-wealth/3

See the Billionaire Bonanza series:
Chuck Collins and Josh Hoxie. “Billionaire Bonanza: The Forbes 400 and the Rest of Us” Institute for Policy
Studies. 2015. https://ips-dc.org/billionaire-bonanza/
4

Chuck Collins and Josh Hoxie. “Billionaire Bonanza 2017: The Forbes 400 and the Rest of Us” Institute for
Policy Studies. 2017. https://inequality.org/research/billionaire-bonanza-2017/
Chuck Collins and Josh Hoxie. “Billionaire Bonanza 2018: Inherited Wealth Dynasties in the 21st-Century
U.S.” Institute for Policy Studies. 2018. https://inequality.org/great-divide/billionaire-bonanza-2018inherited-wealth-dynasties-in-the-21st-century-u-s/Justin Fox, "Black Unemployment Is at an All-Time Low, But ..." Bloomberg. May 4, 2018.
https://www.bloomberg.com/opinion/articles/2018-05-04/Black-unemployment-is-at-an-all-time-low-butthere-s-a-catch
5

Justin Fox, "Black Unemployment Is at an All-Time Low, But ..." Bloomberg. May 4, 2018.
https://www.bloomberg.com/opinion/articles/2018-05-04/Black-unemployment-is-at-an-all-time-low-butthere-s-a-catch
6

Chuck Collins and Josh Hoxie. “Billionaire Bonanza 2018: Inherited Wealth Dynasties in the 21stCentury U.S.” Institute for Policy Studies. 2018. https://inequality.org/great-divide/billionaire-bonanza2018-inherited-wealth-dynasties-in-the-21st-century-u-s/
7

8 Edward N. Wolff, “Household Wealth Trends In The United States, 1962 To 2016: Has Middle Class

Wealth Recovered” National Bureau Of Economic Research. November 2017.
https://www.nber.org/papers/w24085
Edward N. Wolff, “Household Wealth Trends In The United States, 1962 To 2016: Has Middle Class
Wealth Recovered” National Bureau Of Economic Research. November 2017.
https://www.nber.org/papers/w24085
921

Emmanuel Saez and Gabriel Zucman. “Wealth Inequality In The United States Since 1913: Evidence
From Capitalized Income Tax Data” The Quarterly Journal of Economics Vol. 131 May 2016 Issue 2.
https://www.nber.org/papers/w20625
10

Emmanuel Saez and Gabriel Zucman. “Wealth Inequality In The United States Since 1913: Evidence
From Capitalized Income Tax Data” The Quarterly Journal of Economics Vol. 131 May 2016 Issue 2.
https://www.nber.org/papers/w20625
11

12 Emmanuel Saez and Gabriel Zucman. “Wealth Inequality In The United States Since 1913: Evidence

From Capitalized Income Tax Data” The Quarterly Journal of Economics Vol. 131 May 2016 Issue 2.
https://www.nber.org/papers/w20625“Table AVG1. Average Number of People per Household, by Race and Hispanic Origin, Marital Status,
Age, and Education of Householder: 2018” US Census.
https://www.census.gov/data/tables/2018/demo/families/cps-2018.html
13

Mfonobong Nsehe. "The Black Billionaires 2018" Forbes March 7, 2018https://www.forbes.com/sites/mfonobongnsehe/2018/03/07/the-Black-billionaires-2018/#1f6ebf365234
14

Tracy Jan. "1 in 7 white families are now millionaires. For black families, it’s 1 in 50." Washington Post.
October 3, 2017. https://www.washingtonpost.com/news/wonk/wp/2017/10/03/white-families-are-twiceas-likely-to-be-millionaires-as-a-generation-ago/?noredirect=on&utm_term=.bb4d416bd99c
16

Chuck Collins and Josh Hoxie. “Billionaire Bonanza 2017: The Forbes 400 and the Rest of Us” Institutefor Policy Studies. 2017. https://inequality.org/research/billionaire-bonanza-2017/17

Federal Reserve. “Report on the Economic Well-Being of U.S. Households in 2017” Federal Reserve.
May 2018. https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-ushouseholds-201805.pdf
18

Sullivan, Laura, Tatjana Meschede, Lars Dietrich and Thomas Shapiro. “The Racial Wealth Gap: Why
Policy Matters” Demos. 2015. https://www.demos.org/publication/racial-wealth-gap-why-policy-matters
19“Investing in Tomorrow: Helping Families Build Savings and Assets,” Annie E. Casey Foundation,
January 2016, www.aecf.org/resources/investing-in-tomorrow-helping-families-build-savings-andassets/.
21

Sarah Kliff. "An exclusive look at Cory Booker’s plan to fight wealth inequality: give poor kids money"
Vox. October 22, 2018. https://www.vox.com/policy-and-politics/2018/10/22/17999558/cory-booker-babybonds
22

22Madeleine Carlisle. "Elizabeth Warren’s Ambitious Fix For America’s Housing Crisis”. The Atlantic.
September 25, 2018. https://www.theatlantic.com/politics/archive/2018/09/elizabeth-warrens-fix-americashousing-crisis/571210/
23Mark Paul, William Darity, Jr., And Darrick Hamilton. “The Federal Job Guarantee - A Policy toAchieve Permanent Full Employment.” Center on Budget and Policy Priorities. March 9, 2018.
https://www.cbpp.org/research/full-employment/the-federal-job-guarantee-a-policy-to-achievepermanent-full-employment
24

Basav Sen. “Energy Efficiency with Justice: How State Energy Efficiency Policy Can Mitigate Climate
Change, Create Jobs, and Address Racial and Economic Inequality,” Institute for Policy Studies, August
2018. https://ips-dc.org/report-energy-efficiency-with-justice/
25

Thomas Shapiro, Tatjana Meschede and Laura Sullivan. “The Racial Wealth Audit: Measuring How
Policies Shape the Racial Wealth Gap” Institute on Assets & Social Policy, Brandeis University. 2015.
http://heller.brandeis.edu/iasp/pdfs/racial-wealth-equity/racial-wealth-gap/racial-wealth-audit.pdf
26

Edward N. Wolff. “Household Wealth Trends In The United States, 1962 To 2016: Has Middle Class
Wealth Recovered” National Bureau Of Economic Research. November 2017.
https://www.nber.org/papers/w24085
27

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