State of the Facts
According to data from the Federal Reserve, in 1990, white households owned 90.7% of household wealth in the United States, whereas Black households owned 3.8% and Hispanic households owned 2.1%. These numbers have changed little over the past 30 years, with white households now owning 85.5% of wealth in 2019, and Black households owning 4.2% and Hispanic households owning 3.1%. Most of the white wealth decline is due to other racial groups attaining a share wealth.
Another way to look at this is the net worth, or assets (such as stocks and real estate) minus liabilities (such as loans and mortgages left to pay), by race. The average net worth per capita among white Americans is roughly $437,000 per person, whereas this value is $105,000 among Black people and $53,000 among Hispanic people.
Age is also critical to understand who owns wealth in the United States. Older people, having had more time to accumulate income, are more likely to have higher wealth than younger people, even if they may have lower levels of wage income. Americans 55 and older collectively own 72% of wealth in the United States, with Americans 70 and older owning 28% alone.
Differences in wealth ownership by age and generational group help explain part, but not all, of the disparities in wealth by race group. According to data from the Census Bureau, 35% of white Americans are 55 and older, whereas only 24% of Black Americans are and only 16% of Hispanic Americans are. Hence, a part of the reason why wealth ownership is much lower among Black and Hispanic Americans may be due to the fact that they are relatively younger on average than white Americans. Black and Hispanic populations may be younger for a variety of reasons, including differences in life expectancy—Black Americans’ life expectancy is 3.5 years less than that of white Americans—as well as immigration trends.
The following chart shows how the white population is more likely to be older, earn more income and hold more wealth than Black and Hispanic populations.
While the assets of white households are equally split between real estate, equity and mutual fund shares, pensions, and other assets, the assets of other racial groups are less diversified. Almost two-thirds of Black wealth is composed of real estate and pensions, with 38% coming from pension assets alone. Similarly, 61% of Hispanic wealth and 56% of wealth from other races is composed of just these two asset types.
Wealth held in real estate plummeted across all racial groups during the 2008 Great Recession. However, while wealth held in real estate has just begun to reach pre-recession levels among Black and Hispanic individuals, as well as Americans of other races, that same wealth already reached pre-recession levels in 2016 for white Americans.
The gap in homeownership rates between white and Black Americans has also widened since the recession. In 2004, 49.3% of Black Americans and 75.5% of white Americans owned homes, with a gap of 26.2 percentage points. In the first quarter of 2020, 44.0% of Black Americans owned homes, while 73.7% of white Americans did, a gap of 29.7 percentage points.
Racial financial inequality is often discussed in terms of income inequality. While income inequality is important, it is essential that it is complemented by an understanding of wealth inequality. Inequities in holdings of wealth are particularly central to perpetuating economic immobility across generations.
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