For many decades the median net worth of Black families in the United States has been one tenth of the median net worth of non-Hispanic Black families. A recent U.S. Census Bureau report released data on household wealth. The statistics show that the median net worth of non-Hispanic White households was $139,300. For Black households, the median net worth was $12,780. Thus, the median net worth of White households was nearly 11 times the median net worth of Black households.
Components of family wealth, such as stocks, bonds, money in the bank, and real estate, produce interest, dividends, or rental income which are commonly used to offset or pay college costs. Wealth also includes the value of a family’s home. This important asset can be sold or borrowed against to provide funds for college expenses. Households that have lower levels of wealth often must borrow money in order to send their children to college. This has resulted in far higher levels of student loan debt for African American college students.
Now a new report from scholars at Duke University in North Carolina and Northwestern University in Illinois, finds that the racial wealth gap is even larger for families with children, the same families that eventually will have to pay for college. The researchers found that in 2016, Black households with children had only one penny of wealth for every dollar held by their White counterparts.
The researchers found that Black households with children did not regain lost wealth after the Great Recession, but instead lost wealth at all income levels. Even those in the top percentile of wealth regained only about half of their 2004 level of wealth by 2016. Home ownership rates among Black households with children declined by nearly one-fifth in the aftermath of the Great Recession.
Christina Gibson-Davis, professor of public policy and sociology at Duke University and a co-author of the study, states that “it’s no surprise that Black families were hit harder by the Great Recession, when they had almost no wealth, no cushion.”
The authors warn that the current wealth gap for families with children will have long-lasting effects. “Wealth is central for child well-being, for acquiring education and skills, and for their outcomes later in life. We also know that most children will have the same wealth position as their parents,” said Professor Gibson-Davis. “Any child – Black, Brown, or White – who grows up without a lot of wealth is likely to have low wealth as an adult.”
The full study, “A Penny on the Dollar: Racial Inequalities in Wealth Among Households with Children,” was published on the website of the journal Socius: Sociological Research for a Dynamic World. It was co-authored by Christine Percheski, professor of sociology at Northwestern University, and may be accessed here.