The blog of the Urban Institute
August 5, 2013

The racial wealth gap was wide in 1963 and it remains large today




While these ratios have not changed much over time, the size of the gap has grown. The average wealth of white families was $230,000 higher than the average wealth of black and Hispanic families in 1983. This gap grew to over $500,000 by 2010.

There is another dimension to this disparity. The wealth gap between whites and people of color also grows sharply with age. Whites in their 30s and 40s have about 3.5 times more wealth than African Americans and Hispanics in the same age group. By the time they reach their early to mid-60s, whites have seven times the wealth of African Americans and Hispanics. In other words, the average wealth gap has grown over time, and it also grows over the course of people’s lives.

What does the wealth gap mean?


Wealth is where the economic opportunity lies. A common misconception is that poor or even low-income families cannot save. Evidence from savings programs and research shows they can. But social safety net programs emphasize consumption, and many even discourage saving by making families ineligible if they have a few thousand dollars in savings.

Wealth-building policies, on the other hand, are delivered as tax subsidies for homeownership and retirement. Families of color are less likely to be able to use these tax subsidies, so they receive little to no benefit from them. Without fair policies, paths to building wealth can vanish. Reforming policies like the mortgage interest tax deduction so it benefits all families, and helping families enroll in automatic savings vehicles, will help improve wealth inequality and promote saving opportunities for all.

Photo by Stephen B. Morton/ AP

