Fed: Pre-virus econ­omy failed to close racial gaps

Typ­i­cal white fam­ily has 8 times wealth of Black fam­i­lies

Daily Southtown - - Business - By Christophe­r Rugaber

WASH­ING­TON — The solid growth that the United States en­joyed be­fore the vi­ral pan­demic par­a­lyzed the econ­omy last spring failed to re­duce racial dis­par­i­ties in Amer­i­cans’ in­come and wealth from 2016 through 2019, ac­cord­ing to a Fed­eral Re­serve re­port Mon­day.

Though Black and His­panic house­holds re­ported sharper gains in wealth than white house­holds did, those in­creases weren’t enough to no­tice­ably nar­row the racial gaps. The typ­i­cal white fam­ily pos­sessed eight times the wealth of Black fam­i­lies and five times the wealth of His­panic fam­i­lies in 2019, the Fed said.

The Fed’s Sur­vey of Con­sumer Fi­nances, re­leased ev­ery three years, an­a­lyzed in­comes and wealth in 2019. The sur­vey found that in­come for the typ­i­cal U.S. fam­ily rose 5%, ad­justed for in­fla­tion, from 2016 to 2019 to $58,600. That was weaker than the9% in­come gain the typ­i­cal fam­ily got from 2013 through 2016.

The sur­vey pro­vides a trove of in­for­ma­tion on fam­ily fi­nances in the United States, from the per­cent­age of house­holds that own stock (53%) to the pro­por­tion that have a re­tire­ment ac­count (50%).

While the re­port shows in­creases in in­come and wealth for lower-in­come and Black fam­i­lies, many econ­o­mists worry that the pan­demic has re­versed those gains. Job losses this year have been con­cen­trated among lower-in­come work­ers in the restau­rant, ho­tel, re­tail and travel in­dus­tries. Those work­ers are dis­pro­por­tion­ately non­white.

Some mea­sures did show a nar­row­ing of in­come dis­par­i­ties.

Av­er­age in­come among the wealth­i­est one-tenth of fam­i­lies fell 6%, largely be­cause of a steep fall among the rich­est 1%, Fed­eral Re­serve econ­o­mists said. By con­trast, av­er­age in­comes among the bot­tom 60% of fam­i­lies rose.

Yet av­er­age fig­ures can be skewed by huge in­comes at the very top.

The Fed re­port noted that while av­er­age in­comes for all fam­i­lies fell 3% from 2016 through 2019, ex­clud­ing the rich­est 1%, av­er­age in­comes rose 3.1%. In­come for the rich­est Amer­i­cans can fluc­tu­ate more sharply year to year than in­come for lower-in­come earn­ers, Fed econ­o­mists said, and likely fell be­cause of smaller gains from stock, bond and prop­erty sales.

Econ­o­mists look at me­dian in­comes, which re­flect the mid­point of all earn­ers, as a way to fil­ter out the ex­tremes. Me­dian in­come among the poor­est one­fifth of Amer­i­cans rose 3%, while me­dian in­come for the rich­est one-tenth in­creased 6%, the Fed said.

The me­dian fam­ily in­come for whites grew 6%. For Black house­holds, it was slightly bet­ter at 7%. For His­panic fam­i­lies, in­comes fell 1%. Me­dian in­come for white fam­i­lies last year was $69,000, com­pared with $40,300 for Black fam­i­lies and $40,700 for His­pan­ics.

Poorer Amer­i­cans and Black and His­panic house­holds did gain wealth from 2016 through 2019, mostly from an in­crease in home own­er­ship and home val­ues. But those in­creases came from such low lev­els that they didn’t much nar­row over­all in­come dis­par­i­ties, the Fed said.

JOSEPH RUSH­MORE/THE NEW YORK TIMES

Peo­ple wait for help with un­em­ploy­ment claims in Tulsa, Ok­la­homa. Fam­i­lies made gains in in­come and net worth lead­ing up to the pan­demic, Fed­eral Re­serve data show.

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