Ronald Straight, Howard University
The disparity in wealth in the United States between African Americans and whites has long been recognized with the difference in wealth accumulation by African Americans reported to be one-tenth to one-fifth of that of white Americans. Previously I used the Survey of Consumer Finances (SCF) data from 1995 and found that the disparity was quite evident overall, but disappeared for college-educated upper-income earners in their peak earning years.
This paper extends that analysis using the SCF 1998 data. The popular press reports some concern that the strong stock market result would exacerbate the differences between economic classes. During the period under review, the stock market was showing strong growth, as was the economy.
A preliminary review of the differences in net worth finds clear progress in all areas, except for those, black or white, in the older, upper income category.
Overall, the median family had a net worth of nearly $60,000, in 1995 (in 1998 dollars), which grew to nearly $72,000 by 1998, with financial assets growing from about $11,000 to over $17,000. During this period the value of the median primary residence grew from about $53,500 to $65,000. There remains a large disparity in the net worth—with black families having about 12 percent of the net worth of white families in 1995 and 16 percent in 1998.
For those families described as lower income, younger families, the level of net worth is modest, but there has been much change between 1995 and 1998. From the 1995 data, black families had a little less than 10 percent of the white families net worth of $5,100. However the 1998 data show that the gap is much reduced with black families now having 95 percent of the net worth of white families. This is due to black families net worth growing over 3.6 times, but also because white families net worth is reduced to less than half of the 1995 level.
For upper income ($50,000-150,000), older families, the net worth of black families in 1995 was over 5 percent higher than that of white families. However, the 1998 data show that the net worth of black families is 13 percent lower. A doubling of financial assets, the 36 percent decline in the value of the primary residence (with housing debt down 88 percent), and the 77 percent decline in vehicle values for black families are the most striking changes. Narrowing the upper income range to $50,000-125,000, results in black families reporting net worth equal to 92 percent of that for white families. Black families have larger amounts invested in the stock market and higher values in financial assets.
Work continues on validating the above initial results. Sample size, particularly for African American families in the upper income group is small. Broadening group descriptions may help, but will require that the 1995 data be re-run as well. This work and consideration of other statistical measures will be completed by the IAES Conference.