Study shows wealth inequality between the races has skyrocketed
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After decades of tracking income disparities between black and white families, a new study reveals that income equality does not always lead to wealth equality when it comes to race.
A report released Monday by the Institute on Assets and Social Policy at Brandeis University in Waltham, Mass., found the wealth gap between black and white families and individuals being tracked in the study more than quadrupled over the course of a generation, and that the middle-income white families in the study accumulated a higher net worth than high-income African-Americans.
The escalating gap, according to the study researchers, was largely caused by assets being passed down within families and the fact that white families have historically had more wealth to pass down.
"About one in every four white families inherit money, and their average inheritance is $10,000," said Thomas Shapiro, director of the IASP and author of "The Hidden Cost of Being African American: How Wealth Perpetuates Inequality."
"That provides a huge head start," he said. "Less than 8 percent of African-American families inherit wealth, and when they do, the average inheritance is $900."
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CHARTUsing economic data taken from a nationally representative set of 2,000 families tracked from 1984 to 2007, researchers found that an initial wealth gap of $20,000 between black and white families mushroomed over the 23-year period to $95,000.
The project defined wealth, or net worth, as the amount of assets a person had -- such as cash, stocks and bonds -- minus liabilities -- obligations such as credit card debts, car loans and student loans. Home equity was not considered because researchers said families who sold their homes would most likely need to replace them.
Wealth can make a difference in families helping their children with down payments on homes and paying for college. It also can provide a financial cushion if and when individuals have a financial setback.
First Published May 18, 2010 12:00 am
