http://www.ips-dc.org/wp-content/uploads/2017/09/The-Road-to-Zero-Wealth_FINAL.pdf
Key Findings
In our 2016 report,
The Ever
Growing Gap: Without Change, African American and Latino Families Won’t Match White Wealth for
Centuries
, we showed that it if current trends continue, it will take 228 years for the average Black family to reach the level of wea
lth
White families own today. For the average Latino family, matching the wealth of White families will take 84 years.
In this re
port, we look at the racial wealth divide at the median over the next four and eight years, as well as to 2043, when the
country’s population is predicted to become majority non
white. We also look to wealth rather than income to reconsider what it
means t
o be middle class. In finding an ever
accelerating gap, we consider what it means for the American middle class and we explore
what policy interventions could reverse the trends we see today. We find that without a serious change in course, the country
is
heading towards a racial and economic apartheid state.
•
Earning a middle
class income does not guarantee middle
class economic security.
White households in the middle
income quintile
(those earning
$37,201
$
61,328 annually) own nearly eight times as much
wealth
($86,100) as middle
income Black earners
($11,000) and ten times as much wealth as middle
income Latino earners ($8,600). This disconnect in income earned and wealth
owned is visible across th
e entire income spectrum between these groups.
•
If the middle class were to be defined by wealth rather than by income, Black and Latino families
in the
middle
income quintile
would need to earn 2
3 times as much as White families in order to enter the mid
dle class. If we were to define the middle class in
terms of wealth, households would need to own
between
$68,000
$
204,000 in wealth to qualify for the middle class. Under these
terms, o
nly
Black and Latino households
in the highest income
quintile (those earning more than $104,509)
would qualify for
middle
class status or higher, compared to White households
in the top three income
quintiles who already own wealth in excess
of this threshold
. In fact,
only Black and La
tino households with an advanced degree have enough wealth to be considered middle
class, whereas all White households with a high school diploma or higher would be considered middle class.
•
Defining class in terms of wealth instead of income, roughly 70%
of Black and Latino households would fall below the $68,000
threshold needed for middle
class status, whereas only about 40% of White households would fall below the middle class. In
contrast, roughly 13% of Black and Latino households could be considered
to have “upper
wealth” (meaning they own at least
$204,000 in wealth), compared to 40% of White households.
•
The accelerating decline in wealth over the past 30 years has left many Black and Latino families unable to reach the middle
class.
Between 1983 an
d
2013, the wealth of median Black and Latino households decreased by
75% (from $6,800 to $1,700) and 50%
(from $4,000 to $2,000), respectively, while median White household wealth rose by 14% (from $102,200 to $116,800).
If current
trends continue, by 2020 median Black and Latino households stand to lose nearly 18% and 12%, respectively, of the wealth the
y
held in 2013.
In that same timeframe, m
edian White household wealth would see an increase of 3%. Put differently, in j
ust under
four years from now
,
median White households are projected to own 8
6
and 68 times more wealth than Black and Latino
households
, respectively
.
•
By
2024,
median Black and Latino households are projected to own 60
80% less wealth than they did in 19
- By then, the
continued rise in racial wealth inequality between median Black, Latino and White households is projected to lead White
households to own 99 and 7
5
times more wealth than their Black and Latino counterparts
, respectively
.
•
I
f the racial wealth divide is left unaddressed and is not exacerbated further over the next eight years, median Black househo
ld
wealth is on a path to hit zero by 2053
—
about 10 years after it is projected that
racial minorities will comprise the majority o
f the
nation’s population
.
M
edian Latino household wealth is projected to hit zero
twenty years later, or by 2073
. In sharp contrast,
median White household wealth would climb to $137,000
by 2053
and $147,000 by 2073.
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