The Racial Wealth Gap

What accounts for the enormous gap in the wealth of blacks versus non-Hispanic whites? The wealth gap is far greater than the income gap. The net worth of black households was just $6,314 in 2011, according to the Census Bureau, a fraction of the $110,500 net worth of households headed by non-Hispanic whites.

Homeownership is one reason for the wealth gap. Non-Hispanic white households are much more likely than black households to own their home—72 versus 44 percent. Homeownership makes a big difference because a house is, for most Americans, their most valuable asset. Another important reason, however, is inheritance. According to a study published in Demography ("Do Racial Disparities in Private Transfers Help Explain the Racial Wealth Gap? New Evidence from Longitudinal Data," June 2014, $39.95), the larger inheritances and cash gifts received by non-Hispanic whites in a 10-year period account for a substantial 12 percent of the racial wealth gap.

Not only is inheritance already an important factor in the black-white wealth gap, but it may become an even bigger factor in the future. "Increases in large gifts and inheritances for white non-Hispanic families over time suggest a worsening of the white-black wealth gap in years to come," the researchers conclude.