Class, Wealth, and Social Mobility

The Samuel DuBois Cook Center researchers are documenting the magnitude of racial and ethnic disparities in wealth in the United States, particularly in the aftermath the Great Recession.

They aim to:

  • Identify sources of unequal wealth accumulation across populations using data from sources such as the Panel Study of Income Dynamics,
  • Resolve whether differences in net worth are due primarily to differences in behavior (savings and portfolio management), differences in income, or differences in patterns of inheritance,
  • Establish the most effective means of addressing intergroup inequality in wealth, and
  • Assess and compare the effectiveness of financial literacy programs, individual development accounts, child trust accounts, and community wide asset building initiatives.


The National Asset Scorecard for Communities of Color

Principal Investigator, William (Sandy) Darity, Jr.
Co-principal Investigator, Darrick Hamilton
Postdoctoral Associate, Mark Paul
Statistician, Khai Zaw

The research team is conducting a five-city study of wealth disparities among communities of color in the United States, with an emphasis on African Americans, Latinos, Asians and Native Americans.

Researchers began the study by conducting phone interviews in Boston, Los Angeles, Miami, Tulsa, and Washington, D.C. They collected data on the financial status of households based on the residents’ national origin.

For example, instead of obtaining data on the net worth position of Latinos taken collectively, the Network is interested in the net worth position of persons of Mexican, Puerto Rican, Cuban, and Dominican origin in the cities being surveyed.

Now in Phase 3, researchers are conducting 600 face-to-face interviews in ethnically and racially diverse Los Angeles, to gather information about their net worth. National origin subgroups include white non-Hispanics, Cambodians, blacks who are recent African or Caribbean immigrants to the U.S., Mexican Americans, "native" blacks, and Puerto Ricans. The interviews will be conducted by RTI. Phase 3 of the project adds a new element to emphasize race and ethnicity as key units of analysis.

Researchers are also analyzing the data from the five cities to obtain information about the respondents’ phenotypes.

Prior to the study, little was known about the detailed assets and debts of Asian subgroups, such as Asian Indians, Cambodians, Chinese, Filipinos, Japanese, Koreans and Vietnamese.

In conjunction with the Center for Global Policy Solutions, the project yielded a major report, “Beyond Broke,” released in May 2014.

As a result, some preliminary findings from the study resulted in an opportunity to bring these issues before Congressional leaders. A parallel multi-city wealth study also will be performed targeting communities of color in the United Kingdom.

Other major reports from the NASCC study include:

The Color of Wealth in the Nation's Capital

The authors document assets, debts, and net worth for racial and ethnic groups living in the DC metropolitan area from a 2013–14 phone survey.
Key Findings:

  • White households in DC have a net worth 81 times greater than Black households. In 2013 and 2014, the typical White household in DC had a net worth of $284,000. Black American households, in contrast, had a net worth of $3,500.
  • Home values are significantly lower for Black families. Much of Americans’ net worth is in their homes. Yet here, too, there are sharp disparities. The typical home value for Black households in DC is $250,000, about two-thirds of the home value for White and Latino households.
  • More distressing, homeownership disparities are not a function of education. Higher education is closely tied to higher incomes, which should make homeownership more attainable. But in DC, 80 percent of Whites with a high school diploma or less are homeowners, while fewer than 45 percent of all Blacks in the District are homeowners. Fifty-eight percent of Black households do not own homes.

A Long History of Blocked Wealth

  • These enormous wealth disparities did not arrive with the housing crisis or recession. Black people in DC have faced more than two centuries of deliberately constructed barriers to wealth building, and some of the highest barriers were embedded by design in law. Whether enslaved, barred from jobs in lucrative sectors, diverted from a stake in land giveaways, seeing their neighborhoods targeted for “urban renewal,” or watching their housing options squeezed by federal redlining, Black families in the District have had little chance to build wealth. 
  • A short history of the barriers to building assets:
    • 1840s: “Free” Black people are governed by Black Codes that prohibit them from owning and operating eating establishments and taverns and that deny them licenses for any trade other than driving carts or carriages.
    • 1862: White people who enslaved Black people in the District are compensated for their “financial loss” after emancipation in the District, but Black people are not compensated for being held in bondage.
    • 1870s: President Johnson returns most of the land confiscated during the Civil War to Southern Confederates. His actions constrain freed Black people from building wealth by acquiring land and limit Black people to working for others and obtaining whatever income they can under highly restrictive conditions.
    • 1940s: Barry Farms, a community developed at the end of the Civil War by 500 freed Black families, is largely demolished to create space for public housing and is further devastated by the decision to have Suitland Parkway cut through the community, destroying individual and community assets.
    • 1950s: White flight to suburbs begins. Black families are excluded from most suburban developments, confining them to central cities. The White population in the District falls 33 percent, and the Black population climbs 47 percent.
    • 1960s–70s: Urban renewal sweeps cities “clean.” DC’s largely Black southwest neighborhoods are targeted by eminent domain. More than 500 acres are bulldozed, along with 1,500 businesses—including many Black-owned businesses—and 6,000 homes. Approximately 23,000 residents, predominantly Black, are displaced with little compensation. The 5,800 new homes are to be inhabited by 13,000 middle- and upper-middle-class residents.

The Color of Wealth in Los Angeles

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. Existing research primarily has focused on the net worth position of broadly defined ethnoracial groups, such as Latinos or Asians taken collectively. The NASCC data for Los Angeles includes asset and debt information on a number of disaggregated groups, thereby improving understanding of key disparities in income and wealth. These groups include the following in Los Angeles: Mexicans, other Latinos (inclusive of Puerto Ricans, Cubans, Salvadorans, other South Americans, other Central Americans, and Europeans), Asian Indians, Chinese (inclusive of Taiwanese), Japanese, Korean, Filipino, and Vietnamese. Among African Americans, data are disaggregated by nativity—U.S. black descendants and recent immigrants from the African continent.

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—U.S. black ($30,000), Mexican ($5,000), other Latino ($43,000), Korean ($28,400), and Vietnamese ($40,000) households. The data reveal an astounding racial wealth divide in the Los Angeles metropolitan area.

  • Mexicans were the least likely to be banked and most likely to lack financial savings. In the NASCC sample, Mexicans (47.1 percent), other Latinos (54.6 percent), U.S. blacks (68.1 percent), and Vietnamese (54.8 percent) are far less likely to own checking accounts than white (90.1 percent) and Japanese (93.3 percent) households. Mexicans, other Latinos, and

  • Vietnamese also owned savings accounts at a lower rate than white households—39.8 percent of Mexicans, 44 percent of other Latinos, and 37.4 percent of Vietnamese owned a savings account  compared with 71.9 percent of whites. Fifty-six percent of U.S. black and 57.8 percent of Korean households held a savings account.

  • 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.
  • In the authors' analysis of debt, the outcomes were nuanced. Although some households of color are less likely to own homes, among home owners they are more likely to have high debt to equity ratios on their homes, especially 88.1 percent of Filipinos, 80.5 percent of other Latino, 77.1 percent of Mexican, 78.4 percent of U.S. black, and 76.3 percent of African black 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.
  • Chinese households (16.7 percent) were least likely to have credit card debt, followed by 25.6 percent of Asian Indian and 27.7 percent of white households. More than one-third of Mexican and 38.7 percent of other Latino households were likely to have credit card debt. In contrast, approximately half of Filipino, 57.3 percent of U.S. black, and 64.7 percent of African black households were likely to have credit card debt.
  • The percentage of white households that reported having student loan debt was 15.3 percent. Other Latino (4.8 percent), Japanese (8.1 percent), and Asian Indian (4.5 percent) households were the least likely to have student loan debt. In comparison, U.S. black (20.5 percent), Korean (15.9 percent) and Filipino (15.5 percent) households were more likely to have student loan debt. Although obtaining a college degree provides greater lifetime earnings potential than only a high school diploma, clear disadvantages are associated with a debt-burdened college degree. 

Read the full report here

The Color of Wealth in Boston

The widening wealth gap in the United States is a sign that millions of families nationwide do not have enough in assets to offer better opportunities for future generations. Wealth allows families to make investments in homes, in education, and in business creation. On the basis of data collected using the National Asset Scorecard for Communities of Color (NASCC) survey, we found that, when analyzed by race, wealth accumulation is vastly unequal. By means of the NASCC survey, researchers have collected, for the first time, detailed data on assets and debts among subpopulations, according to race, ethnicity, and country of origin -- granular detail ordinarily unavailable in public datasets. In this analysis we focus on estimates for U.S. born blacks, Caribbean blacks, Cape Verdeans, Puerto Ricans and Dominicans in the Boston Metropolitan Statistical Area (MSA). Our analysis shows that with respect to types and size of assets and debt held, the data collected on white households and nonwhite households exhibit large differences. The result is that the net worth of whites as compared with nonwhites is staggeringly divergent.

Key Findings

  • The typical white household in Boston is more likely than nonwhite households to own every type of liquid asset. For example, close to half of Puerto Ricans and a quarter of U.S. blacks don't have either a savings or checking account, compared to only 7% of whites.
  • Whites and nonwhites also exhibit important differences in assets that associated with homeownership, basic transportation, and retirement. Close to 80% of whites own a home, whereas only one-third of U.S. blacks, less than one-fifth of Dominicans and Puerto Ricans, and only half of Caribbean blacks are homeowners. And while most white households (56 percent) own retirement accounts, only one-fifth of U.S and Caribbean blacks, and 8 percent of Dominicans have them.
  • Although members of communities of color are less likely to own homes, among homeowners they are more likely to have mortgage debt. Nonwhite households are more likely than whites to have student loans and medical debt.
  • Nonwhite households have only a fraction of the net worth attributed to white households. While white households have a median wealth of $247,500, Dominicans and U.S. blacks have a median wealth of close to zero. Of all nonwhite groups for which estimates could be made, Caribbean black households have the highest median wealth with $12,000, which is only 5 percent of the wealth attributed to white households in the Boston MSA.

Read the full report here

Umbrellas Don't Make It Rain: Why Studying and Working Hard Isn't Enough for Black Americans

Racial wealth differences cannot be explained by education, employment, or income. Economists estimate that, by far, the largest factors explaining these differences are gifts and inheritances from older generations: a down payment on a first home, a debt-free college education, or a bequest from a parent.15 Insofar as we are truly interested in living up to the American promise of economic opportunity for all, we need to acknowledge and address the role of intergenerational resource transfers, non-merit based attributes related to circumstance at birth. Given the roles of intergenerational wealth transfer, and past and present barriers that have kept black families from building wealth, private action and market forces alone cannot be expected to address wide-scale racial wealth inequality. Public sector intervention is needed.

Read the full report here

Financial Resources in Kinship and Social Networks: Flow and Relationship to Household Wealth by Race and Ethnicity Among Boston Residents

This study examines the extent to which family financial transfers occur among Boston residents of color. New data collected for the Boston Metropolitan Statistical Area (MSA), as part of the National Asset Scorecard for Communities of Color (NASCC) survey, for the first time provide detailed information on financial assets that allow analysis to be broken down beyond the traditional black-and-white divide at the metropolitan-area level. 

Particularly striking are differences in parental payments toward higher education expenses and financial support for the down payment of a home. Immigrant status further explains differences between white and nonwhite households as well as between households of color. 

In the absence of family wealth, many groups in Boston, among them immigrants of color and U.S.-born black families, face enormous challenges to better their life and that of their children. There are a number of policy interventions that hold promise for low-wealth families, in particular families of color, to access better economic opportunities for themselves and their children. These include instituting children savings accounts and making higher education more affordable, at the more microlevel, as well as revisiting the U.S. tax code on home mortgage interest deductions and tax of inherited wealth. 

Children’s savings accounts (CSA) have gained a lot of traction recently in the United States. In New England, the Alfond Scholarship Foundation in Maine began in 2009 to award each child born in the state $500 to be used for investing in that child’s future education expenses. Parents or grandparents may contribute to these accounts, thus adding to the funds and encouraging these children’s college education. Other New England states have begun to consider establishing similar mechanisms in their respective states. While these won’t help immigrants access higher education, it would provide avenues for their children to do so. To offset racial differences in intergenerational financial networks, Hamilton and Darity (2010) have proposed a bolder approach of federally financed child trust accounts (baby bonds) set up at birth for all newborns. Baby bonds would provide an explicit mechanism to offset non-merit-based wealth-building advantages associated with the family network in which an individual is born. These accounts would be gradationally funded based on the family wealth position in which the recipient is born. The baby bonds would set up trusts for all newborns that would progressively rise for babies born into the poorest families. When the child becomes an adult, the account could be used for asset-enhancing endeavors, such as purchasing a home, starting a new business, or financing a debt-free college education

Read the full report here

Beyond Broke

Despite overwhelming evidence that the racial wealth gap persists in the U.S., it remains a taboo topic in mainstream policy circles and most officials studiously avoid offering targeted solutions to help close this gap.

Beyond Broke: Why Closing the Racial Wealth Gap is a Priority for National Economic Security uses the most recently available data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP) along with the National Asset Scorecard in Communities of Color (NASCC) to highlight the current state of America’s racial wealth gap. The report also provides an in-depth analysis of housing wealth and liquid wealth, while also evaluating how wealth disparities manifest across racial and ethnic categories and within racial and ethnic subpopulations in four geographically diverse U.S. cities.

The report findings include:

  • Between 2005 and 2011, the median net worth of households of color remained near their 2009 levels, reflecting a drop of 58 percent for Latinos, 48 percent for Asians, 45 percent for African Americans but only 21 percent for whites.
  • Asians and Latinos are twice as likely to live in a state hardest hit by the housing crisis.
  • Hispanic households experienced the largest drop in net worth following the recession.
  • More than half of whites own four or more tangible assets, compared to 49 percent of Asians and only one in five of African Americans and Latinos.
  • For most African Americans and Latinos, checking accounts are their only liquid asset.
  • African Americans (38 percent) and Latinos (35 percent) are over twice as likely as whites (13 percent) to hold no financial assets at all and to have no or negative net worth

Read the full report here

Baby Bonds Program

In collaboration with Darrick Hamilton, Cook Center director William A. Darity has proposed a federal wealth redistribution program aimed at remediating the racial wealth gap. The program calls for the issuance of government backed bonds for each child born into poverty to be redeemed when the child reaches 18 years of age.

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