Authors: Melany De La Cruz-Viesca, Zhenxiang Chen, Paul M. Ong, Darrick Hamilton, and William A. Darity Jr.
Abstract: The rapid growth of asset poverty in the United States is a troublesome sign that millions of families nationwide lack the resources necessary to secure a more stable financial future. These include the resources that would provide a financial reserve in periods of uncertainty (e.g, job loss, illness, etc.), enable a home purchase, assure quality secondary education for children, and insure retirement income. In addition, many families are challenged to earn sufficient income to afford basic needs like housing, food, transportation, and medical care. Wealth is iterative; it allows families to make investments in homes, education, child well-being, and business development, thereby offering better opportunities for future generations.
The findings in this report from the National Asset Scorecard for Communities of Color (NASCC) survey reveal major disparities in wealth accumulation across various racial and ethnic groups in Los Angeles. The NASCC survey was developed to supplement existing national data sets that collect data on household wealth in the United States but rarely collect data that is disaggregated by specific national origin.
The NASCC survey collects detailed data on assets and debts among subpopulations, according to race, ethnicity, and country of origin. This report features estimates for U.S.-born blacks, blacks who are recent immigrants from Africa (African blacks), Mexicans, other Latinos, Asian Indians, Chinese, Filipino, Japanese, Korean, and Vietnamese in the Los Angeles Metropolitan Statistical Area (MSA). Our analysis shows that with respect to types and size of household assets and debt, there are significant differences across race, ethnicity and ancestral origin. The report explores what factors are related to wealth accumulation for particular racial and ethnic groups, such as historical context, local asset markets, and intergenerational wealth transfers. Wealth is the paramount indicator of economic inequality.
Key Findings
- White households in Los Angeles have a median net worth of $355,000. In comparison, Mexicans and U.S. blacks have a median wealth of $3,500 and $4,000, respectively. Among nonwhite groups, Japanese ($592,000), Asian Indian ($460,000), and Chinese ($408,200) households had higher median wealth than whites. All other racial and ethnic groups had much lower median net worth than white households-African blacks ($72,000), other Latinos ($42,500), Koreans ($23,400), Vietnamese ($61,500), and Filipinos ($243,000).
- Racial and ethnic differences in net worth show the extreme financial vulnerability faced by some nonwhite households. U.S. black and Mexican households have 1 percent of the wealth of whites in Los Angeles-or one cent for every dollar of wealth held by the average white household in the metro area. Koreans hold 7 percent, other Latinos have 12 percent, and Vietnamese possess 17 percent of the wealth of white households.
- The median value of liquid assets for Mexicans and other Latinos is striking, zero dollars and only $7, respectively, whereas, the median value of liquid assets for white households was $110,000. This not only implies possible financial hardship in the long term, but it also makes short-term financial disruption much more likely.
- Japanese households had by far the highest median total value of assets at $595,000. Asian Indians ($460,000), Chinese ($408,500), and white households ($355,000) were also among those with high median values of total assets. Filipino and African black households fall in the middle of the distribution-$243,000 and $152,000 respectively. Median total asset values for all other racial and ethnic groups were significantly lower.
- Mexicans were the least likely to be banked and most likely to lack financial savings.
- Wealth differentials across racial groups in the Los Angeles NASCC survey are far more pronounced than income differentials. White households (40.7 percent) were far more likely to hold assets in stocks, mutual funds, and investment trusts. Only 18 percent of African black, 21.5 percent of U.S. blacks, 7.6 percent of Mexicans, 7.3 percent of other Latinos, 23.6 percent of Korean, and 9.9 percent of Vietnamese owned stocks, mutual funds, or other investments or trusts. The percentage of Chinese, Japanese and Asian Indian that have these types of financial assets was much higher when compared with whites-48.8 percent, 60.8 percent, and 58.6 percent, respectively.
- White households are more likely to be homeowners (68 percent), along with Chinese (68 percent) and Japanese (64 percent) households. By contrast, approximately two-fifths of U.S. blacks, 44 percent of African blacks, and 45 percent of Mexican households were homeowners. Fifty-seven percent of Filipinos were more likely to own a home, which was slightly higher than 53 percent of Vietnamese. Both Korean (40 percent) and Asian Indian (40 percent) households were among the least likely groups to be homeowners.
- Similar to homeownership, owning a vehicle has far-reaching repercussions. Those who own vehicles have access to job opportunities beyond the zones of public transportation. It enables them to work late or take unusual shifts because they have their own transportation. Those least likely to own a vehicle were U.S. black (72 percent) and Vietnamese (83 percent) households. In comparison, 87 percent of whites in the Los Angeles MSA own a vehicle.
