The COVID-19 pandemic threatened the economic stability of workers worldwide. According to Pew Research, 25 million people lost their jobs in the U.S. between February and April 2020. However, while it took years for America’s employment level to bounce back, a recent report published by the Board of Governors of the Federal Reserve System found that many American households saw a 37% increase in wealth from 2019 to 2022 after inflation. Unfortunately, lower-income, Black households didn’t enjoy the same upswing. A new Pew Research study found that contrary to other less affluent households, debt in lower-income Black households is still a significant problem.
According to the report, lower-income Black households reduced their debt from $10,100 to $4,000 from 2019 to 2021. The majority of these households still retained a significant amount of debt, unlike their white, Hispanic, and Asian counterparts. In addition, around one in four Black households had no wealth or were in debt in 2021 — a much higher number than the one in ten U.S. households that experienced the same thing. However, it is an improvement compared to the 29% of Black households in the same predicament in 2019.
What didn’t change during the pandemic was wealth gaps among different races and ethnic groups. On average, white households had 13 times as much wealth as Black households in 2019 and nine times as much two years later. White households also had five times as much wealth as Hispanic households in 2021 and three times as much as multiracial households. However, Asian households had more wealth on average than white households in 2021.
The study found that the wealth gap between white and Black households is most prevalent in lower-income households. Among that socioeconomic bracket, white households had more than 21 times as much wealth as lower-income Black households.
More affluent Black households had a different experience during and in the wake of the pandemic. They comprised the overwhelming majority (90%) of overall group wealth in 2021. However, middle- and upper-white households still had three times as much wealth as their Black counterparts.
As to why households experienced an increase in wealth, the study noted that the CARES Act provided for tax credits or stimulus payments that influenced that reality. The payments had the after-tax income of the average American household increase by 3.5% from 2019 to 2021, the Census Bureau hypothesized. They also helped reduce the poverty rate in 2020.
Rising home prices and a savings increase due to the pandemic’s restrictions also affected the wealth boost noted in the study.