Association for Public Policy Analysis & Management

The widening wealth gap in the United States is a worrisome sign that millions of families 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 report 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.

Methods.

The NASCC initiative is a pilot survey in targeted metropolitan areas to collect data about the asset and debt positions of racial and ethnic groups at a detailed ancestral origin level.  The instrument was designed primarily to gather information about a respondent’s specific assets, liabilities, financial resources, and personal savings at the household level.  This paper provides a detailed description of the difference in asset and debt ownership and net asset value by race, ethnicity and country of origin.

Findings.

There exist key differences in liquid assets, which may be thought of as representing buffers to income and expenditure shocks. For example, close to half of Puerto Ricans and a quarter of U.S. blacks are unbanked compared with only 7 percent of whites. For every dollar the typical white household has in liquid assets (excluding cash), U.S. blacks have 2 cents, Caribbean blacks 14 cents, and Puerto Rican and Dominicans less than 1 cent.  Whites and nonwhites also exhibit key differences in less-liquid assets that are primarily associated with homeownership, basic transportation, and retirement or health savings. While 56 percent of white households own retirement accounts, only one-fifth of U.S and Caribbean blacks have retirement accounts. Only 8 percent of Dominicans and 16 percent of Puerto Ricans have such accounts. Most whites—79 percent—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.

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.