US racial wealth gap keeps growing by generation

UNSPLASH

The mean household wealth gap between Black Americans and their white counterparts grew to more than $1 million in 2022, according to researchers at Duke University's Samuel DuBois Cook Center for Social Equity.

America’s rich are getting richer, and the racial wealth gap is widening, according to Duke University research.

The intersection of accumulated racial discrimination and transfer of assets to younger generations is fueling the gulf according to a paper authored by researchers at Duke’s Samuel DuBois Cook Center for Social Equity. While there is greater wealth in the Black community, it isn’t keeping pace with white people who leave generational windfalls to their heirs.

“When it comes to wealth inequality, a rising tide lifted all boats … inequitably,” said lead author Fenaba Addo, associate professor of public policy at UNC-Chapel Hill and faculty affiliate at Duke’s Samuel DuBois Cook Center for Social Equity. “Black-white wealth inequality persists, and it has expanded with the onset of the pandemic.”

The study “Setting the Record Straight on Racial Wealth Inequality” was published in the May edition of AEA Papers and Proceedings.

From 2019-22, the most recent years in which the Federal Reserve’s Survey of Consumer Finances collected household wealth data, the mean gap in net worth between Black and white households grew by 38% – from $841,900 to $1.15 million. The gulf also outpaced inflation during that period.

A long-held belief that Black households with lower education attainment are less likely to generate wealth that can be passed on to future generations is inaccurate, the research found. Middle-income Black households have less than a third of the wealth of white households in the same peer group. Even Black households led by someone with a college degree have less wealth than white households led by a person with a high school diploma or GED.

“Misleading narratives about wealth creation and the persistence of wealth inequality need to be challenged and corrected,” Addo said. “We aimed to do this with our paper.”

In addition to Addo, the paper’s co-authors were William Darity Jr., the Cook Center’s founding director and professor of public policy, African and African American studies and economics at Duke, and Samuel Myers Jr., director of the Roy Wilkins Center for Human Relations and Social Justice at the University of Minnesota.

The authors found a more meaningful determinant of the wealth gap is what they call the “intergenerational transmission chain” in which gifts and inheritances often overlooked by economists enable younger generations to live with economic security and opportunity. In essence, the authors wrote, wealth – and poverty – tend to generate more of the same.

“The story of Black-White wealth inequality in the United States is one of the typical white households consistently having more and the typical Black household holding a relatively small percentage of white wealth,” the authors wrote.

The study also highlights policies that could close the chasm, such as changing federal tax laws that enable the rich – who are primarily white – to pass their wealth on at minimum expense. Another idea is reparations for Black Americans whose ancestors were enslaved, which the authors say would increase Black household wealth while not affecting white families’ assets.

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