Wednesday, September 30, 2020

Covid-19 Recession Endangers Black Wealth

First, the good news. The median net worth of Black households climbed 33 percent between 2016 and 2019, after adjusting for inflation. This was a much bigger increase than the 18 percent rise in the median net worth of all households during those years and far surpassed the 3 percent increase in the median net worth of non-Hispanic white households.

There's more good news. The wealth gap between non-Hispanic whites and Blacks narrowed between 2016 and 2019. Non-Hispanic white households had 10 times the wealth of Blacks in 2016. They had only 8 times the wealth in 2019.

Now for the bad news. The median net worth of Black households was just $24,100 in 2019. Sure, this is 33 percent more than in 2016, but it isn't much of a buffer during a pandemic. 

Median household net worth by race and Hispanic origin of householder, 2019
Non-Hispanic whites: $189,100
Hispanics: $36,100
Blacks: $24,100

Now for the really bad news. The gains made by Black households in the past few years are endangered by the coronavirus pandemic. To start with, Black households had less of a financial buffer than non-Hispanic whites or Hispanics. Now, the buffer is eroding in the struggle to stay afloat during the Covid-19 Recession. 

Blacks have been hit hard by Covid-19—physically and financially. As of mid-September, 1 in 1,020 Blacks has died of coronavirus, according to APM Research Lab—a higher rate than any other race or Hispanic origin group. The 52 percent majority of Blacks say they or someone in their household has experienced a loss of employment income since March 2020, according to the Census Bureau's Household Pulse Survey fielded in September. Thirty-two percent of Blacks expect to lose employment income in their household in the next four weeks. Among Black homeowners, 16 percent could not make last month's mortgage payment. Among Black renters, 24 percent missed last month's rent. Forty-three percent of Blacks have had trouble paying bills during the pandemic, according to a Pew Research Center survey. Forty percent have had to use money from their savings or retirement account to make ends meet. One in three has had to borrow money from friends or family to stay afloat. 

We won't know how much damage the Covid-19 Recession inflicts on Black household wealth until the results of the 2022 Survey of Consumer Finances are released in the fall of 2023. But, it's not looking good. The gains of the past few years may be wiped out. 

Source: Federal Reserve Board, 2019 Survey of Consumer Finances

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