14 February 2024
A new government report says wealth inequality by race increased in the United States during the COVID-19 pandemic.
The New York Federal Reserve Bank carried out the study and released the report. It said strong performance in financial markets and large gains in the stock market in 2021 were partly to blame for the increase.
The report found that the net worth of whites individually outgrew that of Blacks individually by 30 percentage points. Whites outgrew Hispanics by nine percentage points. The findings cover the years 2019 through half of 2023.
The period saw a high level of government financial support and a surprisingly strong job market. The unemployment rate for Black Americans is now at 5.3 percent, near a record low. The overall unemployment rate is 3.7 percent. Earnings for a Black full-time worker are up 7 percent on average since before the pandemic.
Closing the racial wealth divide, or gap, is especially difficult because a much larger number of white households have money in stocks and mutual funds. A separate Federal Reserve study showed that as of 2022, about 66 percent of white households had investments in stocks. In comparison, 39 percent of Black households owned stock. Stock investment was found to be even lower among Hispanic households, at 28 percent.
Government support, including additional unemployment assistance and COVID-linked payments to Americans, helped prevent a recession, the report says. But financial asset prices rose so quickly with the reopening of the economy through 2021 that racial wealth inequalities increased. Those asset prices fell, or declined, in 2022, after the Federal Reserve increased interest rates. But "those declines did not fully offset the earlier rises," the report's writers said.
The report noted that Black households have more wealth contained in pensions than in stocks, mutual funds and exchange-traded funds, or ETFs.
More than 50 percent of Black financial wealth is invested in pensions, the New York Fed found. Less than 20 percent of Black wealth is contained in private businesses, corporate equities, and mutual funds. In contrast, less than 30 percent of white financial wealth is invested in pensions. About 50 percent is invested in businesses, equities, and mutual funds.
"Black workers are still more likely to be unionized, which may play a part in the pension story," said Janelle Jones, Vice President of Policy and Advocacy at the Washington Center for Equitable Growth.
"Whether folks are exposed to the ability to invest in the stock market — whether or not it's something they grow up doing — we know that's different for white families than for people of color," Jones said.
Blacks are also less likely than whites to receive money and property from family members who die, she said
Owning a business is another part of financial wealth. Separate data show Black-owned businesses suffered more during the pandemic.
Less than 10 percent of all U.S. business owners are Black. And many Black-owned businesses are in industries that were hit hardest when COVID first spread, reported research group Economic Policy Institute after examining U.S. government data.
Hotel, food service, retail, health care, and social assistance industries suffered the greatest number of pandemic-linked job losses. About 28 percent of Black-owned businesses are found in those industries, compared with just under 20 percent of white-owned businesses, says the U.S. Bureau of Labor Statistics.
The U.S. Treasury reported Wednesday that economic conditions are improving for Black households. Deputy Secretary Wally Adeyemo noted rising employment numbers and wages for Black Americans since before the pandemic. He also praised an increase in Black business ownership and action in the stock market.
But, Adeyemo suggested that some policy measures still might be needed to balance financial wealth in the U.S.
"The gap between Black and white wealth in America is still too great," he said.
I'm Caty Weaver.
Dan Novak adapted this story for VOA Learning English based on reporting by The Associated Press.
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Words in This Story
gap — n. a space between two people or things
mutual fund — n. a type of investment in which the money of many people is used to buy stock from many different companies
asset — n. something that is owned by a person, company, etc.
pension — n. an amount of money that a company or the government pays to a person who is old or sick and no longer works
equity — n. fairness or justice in the way people are treated
inheritance — n. money, property, etc., that is received from someone when that person dies
retail — n. the business of selling things directly to customers for their own use