INEQUALITY IN WEALTH: IT'S BOTH A RACE AND CLASS THING

The wealth or net worth of the average Black household is far beneath that possessed by their White counterparts. Indeed, depending on the data source and time period examined, most studies estimate that Black households hold anywhere from 8 to 15 cents for every dollar of wealth in the hands of White households [For example, click here or here or here or here]. Regardless of how you slice it, we’re definitely dealing with a pennies versus dollars phenomenon.

As indicated above, most studies focus on the wealth gap between groups— that is, they concentrate on examining how net worth varies across race and ethnicity. The upshot of this is that the average Black family tends to get hit harder than their White counterparts by the job and income loss that often accompanies economic downturns. In other words, Black households and individuals are less protected against economic precarity and less well positioned to pass down wealth intergenerationally (after all, you can’t pass down what you ain’t got).

As Harris and Wertz note:

Wealth is essential for economic security because it can be used for consumption, which is directly connected to wellbeing. Wealth is also a resource households can draw from in times of economic hardship, enabling them to smooth consumption over time despite temporary income loss or instability. Moreover, wealth is necessary for individual economic mobility and growth of the economy as a whole. Wealth gives households the ability to pursue an education, take employment or investment risks, move to new neighborhoods, buy a home, and start a business. The ability to take these risks and be resilient to economic shocks has positive spillovers to the entire economy.

Scholars such as Oliver and Shapiro trace the existence of this huge wealth disparity between Blacks and Whites to what they call “the sedimentation of racial inequality”— that is, the cumulative effect of anti-Black racism has caused Black wealth to “settle” at the bottom of the hierarchy of net worth and to persist across generations.

So, if there’s one thing that these and similar studies make clear, it’s this:

Race matters, and it matters a lot.

WHAT ABOUT CLASS?

But the Black/White racial divide is not only a matter of race. The distribution of wealth also reflects the class structure of capitalist societies. There’s a number of ways in which this can be demonstrated, one of which is to examine the wealth gap within groups.

To be precise, when you peer within any demographic or racial/ethnic group, it’s apparent as all get out that the vast majority of wealth within that group is highly concentrated in the hands of a few.

Take, for instance, a recent study by the Pew Research Center. The Pew researchers, Rakesh Kochhar and Mohamad Moslimani, employ data from the Census Bureau’s Survey of Income and Program Participation (SIPP) to divide each racial (and ethnic) group into four categories based on where they fall along the spectrum of the wealth distribution of that particular racial (and ethnic) household: “Poorer,” “more solvent,” “wealthier,” and “richer”:

“Poorer,” “more solvent,” “wealthier” and “richer” refer to a household’s wealth status relative to other households of the same race and ethnicity. Poorer households rank in the bottom 25% when compared with other households of the same race and ethnicity; more solvent households place from the 25th up to and including the 50th percentile; wealthier households from the 50th up to and including the 75th percentile; and the richer are in the top 25%. The bottom 1% and the top 1% are excluded prior to the ranking so extreme values do not affect estimates for poorer and richer households

Think of it this way: There’s 100 Black households arrayed from those with the lowest to the highest net worth or wealth. The bottom 25 Black households are the “poorer” ones; the next 25—in terms of the amount of wealth possessed— constitutes the “more solvent”; the next 25 are the “wealthier” group of Black households and, of course, the top 25 would be the “richer.” White (and other) households are divvied up in a similar fashion.

One of the ways the Pew researchers gauge wealth inequality within a particular group is by doing this: In each racial group, they simply take the ratio of the median wealth of “richer” households in that group to that of the wealth of that group’s “more solvent” households.

Stated less cumbersomely, the Pew researchers compare the median wealth of the “richer” Black households to the median wealth of the “more solvent” Black households; and the median wealth of the “richer” White households to that of the median wealth of the “more solvent” White households.

And what exactly do these researchers find? Well, let’s begin with this one:

• The 2021 median net worth of the “more solvent” and the “richer” Black households clocked in at $6,700 and $414,200. In other words, the median wealth of the richest Black households was 67 times higher than the median wealth of the “more solvent” Black households.

• The 2021 median net worth of the “more solvent” and “richer” White households registered at $128,400 and $1,507,800, respectively. Thus, the median wealth of the “richer” White households was 12 times higher than the median wealth of the “more solvent” households.

And then there’s this related matter: The vast majority of wealth is concentrated in the hands of the richest 25% of households. This is not only true for U.S. households as a whole; it also accurately describes the reality for all Black and all White households. In fact, the Pew study finds that Black wealth is especially concentrated in the hands of the richest Black households:

• Among all U.S, households, the $8 out of every $10 in net worth is concentrated in the hands of the richest 25% households.

And when the data is disaggregated by race, here’s what’s found:

• In 2021, nine out of every ten dollars of Black wealth—90%!— was in the hands of the richest 25% of all Black households.

• In that same year—2021— 78% of all White wealth was concentrated in the hands of the richest 25% of all (White) households.

WRAPPING UP

There’s no doubt that wealth varies across racial and ethnic groups: Black households, on average, possess pennies in net worth for every dollar of wealth held by the average White household.

But wealth is extremely concentrated in the hands of richest households—and that holds true in general, as well as for all racial and demographic groups: The vast majority of White and Black wealth is held by the richest households in each group.

In short, discussions about the racial wealth divide that treat, say, Blacks and Whites, as if they’re monolithic groups is way too simplistic. If anything, racial capitalism manifests itself as a concentration of wealth both between and within groups.

Accordingly, policies that address the wealth divide comprehensively must simultaneously focus on class and race.

The issue is not simply one of generating wealth; it must also be about how that which is generated gets distributed.

It’s both a race and class thing.