We reported last month that the median wealth of black American families is expected to fall to zero by 2053.
That's a scary reality to face, and recent Federal Reserve data investigating race and wealth supports that projection.
According to the Washington Post, the Fed found that one in seven white American families are now worth $1 million. This is double the number of white millionaires there were 25 years ago.
While a full 15 percent of white families now have a million to their name, less than two percent of black families can say the same. There's been barely any growth in the number of black millionaires over the past 25 years; right now, one in 50 black families have at least $1 million.
Things aren't slowing down for white families, either. The Fed found that the average white family had $930,000 in assets in 2016. By 2020, the average white family will have over $1 million in assets.
That's right, in three years time, the average white American family will be millionaires.
That statistic comes with a caveat. That average is inflated by the the wealthiest white families in America. The median holdings for a white American family in 2016 was $171,000. Still not too shabby.
“We have growing wealth disparities among whites as well, but the white group is so much further ahead that the class of elite blacks is nowhere near the class of elite whites,” Darrick Hamilton, an economist at the New School in New York, told the Post.
Why is that?
A few reasons. First, there's the matter of home ownership. Homes are expensive, and a house is a large part of a family's wealth.
75 percent of white families own homes. Less than 50 percent of black families own homes. And thanks to redlining, restrictive covenants and urban renewal, the homes black families own are often worth less than the homes of white Americans.
“If you are a black homeowner, you are more likely to have a lower value on your home because of neighborhood segregation,” Valerie Wilson, director of the Economic Policy Institute’s program on race, ethnicity, and the economy, said. “Blacks couldn’t purchase in white communities where values were rising faster.”
In 2016, the average white family's home was worth twice the average black family's home. And white families are more likely to trade up to more expensive, more valuable homes over time. Black families, on the other hand, are more likely to lose their homes or stay in the first home their purchased over time.
There's also the matter of stocks, bonds and retirement accounts. White families are more likely to have all three. 60 percent of white families own stocks; less than 33 percent of black families have those sorts of investments.
Black families that own stocks tend to have less money invested than their white counterparts. The median value of a white family's stock market holdings was $50,000 in 2016; for black families, that number was $12,000.
Finally, in the immortal words of JAY-Z, "generational wealth, that's the key."
25 percent of white families received some sort of inheritance money. Just eight percent of black families got any inheritance money. The Fed also found that white families are more likely to have jewels, valuable cars and boats to leave behind.
Hamilton told the Post that he fears measures being discussed by the current administration will only make the gap between black and white grow faster.
“The racial disparities in wealth, which is the paramount indicator of economic opportunity, security and overall well being, remains stark,” Hamilton said. “And if the Trump tax plan, which includes the elimination of the estate tax, is made into law, it will only get even larger.”
