Authors: Khaing Zaw, Jhumpa Bhattacharya, Anne Price, Darrick Hamilton, and William Darity, Jr
Introduction: Wealth is the key to ensuring economic security and it is what enables families to build a better future. Wealth – what you own minus what you owe – acts as the fence between temporary setback and economic catastrophe; it allows us to live and retire with dignity and security. Without savings or wealth of some form, economic stability is built on a house of cards that quickly crumbles when income is cut or disrupted through job loss, reduced work hours or reduced wages, or if families suffer from an unexpected health emergency. Wealth is also tied to the well-being of the next generation, as it provides parents with the ability to help pay for their children’s college education, and can also be passed down from generation to generation. In fact, the intergenerational transfer and impact of wealth is one of the reasons why racial wealth inequities have become entrenched.
… for every dollar of wealth owned by the typical white family, the median black family owns only five cents.”
Despite the growing role that women in general play in supporting the financial well-being of their families, significant racial differences remain. Black women historically have had higher rates of labor force participation than white women, and, in 2013, 66.9 percent of black mothers were their household’s breadwinners. Black women have the highest growth rate of college enrollment than any other group and are increasingly working in management, professional, and related jobs. While these are impressive advances, black women still face tremendous roadblocks to building wealth.
While pay inequity is among the most widely documented economic disparity for black women, another gap exists that is even more damaging to future generations – the wealth inequity. Income is mainly used for daily necessities, but wealth constitutes resources that improve life chances. This research paper summarizes patterns of household wealth among black and white women by college education, family structure, and age using the Panel Study of Income Dynamics (PSID). The PSID is the longest running longitudinal household survey in the world. It contains nationally representative household data for each survey year, and we use results from the 2013 wealth module which surveys the value of assets and debts held by households.
We find that with limited wealth, single women without a college degree, irrespective of race, are just one financial crisis or job loss away from catastrophe. Also, wealth differences among white and black women persist despite type of family structure, marriage, age, or education. Black women fall far below parity in wealth with white women, and unmarried black women typically fare the worst. Finally, our findings reveal that black women do not experience gains in wealth that typically are expected with aging or increased educational attainment. Young, single black women with a college degree face particularly dramatic stumbling blocks in accumulating wealth.
Key Findings
- Single white women without a college degree have $3,000 more in median wealth than single black women with a college degree.
- Single white women with a bachelor’s degree have seven times the wealth of their black counterparts, $35,000 and $5,000 in median wealth, respectively.
- Married white women without a college degree have nearly four times the wealth of their black counterparts.
- Single black women aged 60 and older and with a college degree have a mere $11,000 in wealth, which is in stark contrast to the $384,400 in median wealth among single white women that age with a bachelor’s degree.
