TED BARLOW CRIES OUT FOR HELP….Ted Barlow points to an article in USA Today that summarizes a new Federal Reserve report on income and wealth in America and wonders if this can be true:
Median net worth for whites rose 17% to $120,900 but fell 4.5% to $17,000 for minorities.
Says Ted: “Can that be right? According to the chart in this story, African-American household income is 56% of white non-hispanic household income, but African-American net worth is only 14% of white non-hispanic net worth?”
The simple answer is “yes indeed.” Wealth is extremely concentrated in high income groups, and there are lots of high-income whites and very few high-income blacks and other minorities. The full Federal Reserve Report is here, and the figures for wealth are in Table 3. Here’s the median wealth by income category for 2001:
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Bottom 20%: $7,900
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20-40%: $37,200
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40-60%: $62,500
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60-80%: $141,500
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80-90%: $263,100
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Top 10%: $833,600
If minorities are strongly concentrated in the two bottom categories ? and they are ? then it’s easy to see that their median wealth is indeed around $17,000. And if the top 20% is overwhelmingly white ? and it is ? then it’s easy to see how their enormous wealth pulls up the average for all whites.
Other charts in the report tell the story: minorities own virtually no financial assets (Table 5); they own homes at much lower rates than whites (Table 8); and their debt levels are about the same as whites (Table 11). Add it all up, and minorities have low incomes, fewer (and certainly less valuable) houses, lower inheritances, very little in the way of stocks and mutual funds, and the same high debt rate as whites.
Hopefully it’s all clear now….
