Jul 13, 2020 - Economy

The myth of closing the racial wealth gap with individual accomplishment

Data: Federal Reserve; Chart: Axios Visuals

The increasing number of Black millionaires and billionaires and the success of people like former President Obama have led many to speculate that the racial wealth gap in the U.S. is closing, but in fact the opposite is happening.

The big picture: Data shows that over the last 30 years, even as individual Black Americans have seen increased success, the overall wealth gap has widened.

What's happening: As of 2016, 15% of white families were millionaires, according to the latest data from the Fed, compared to 7% in the Fed's 1992 Survey of Consumer Finances.

  • The percentage of Black households worth more than $1 million rose from about 1% in 1992 to a little less than 2% in 2016.

Between the lines: The widening wealth gap has happened despite the fact that Black Americans increased their holdings of financial assets to 96.7% in 2016 from 63.5% in 1989.

  • Fed data show white Americans get more help accumulating wealth — 26% of white families reported receiving an inheritance, compared with 8% of Black families and 5% of Hispanics.

Education also makes much less difference than being white as Black Americans with Master’s degrees have about a 7% chance of becoming a millionaire compared to a 37% chance for white Americans, St. Louis Fed data show.

  • White Americans with a high school education have about the same likelihood of becoming a millionaire as Black Americans with a Master's degree.

The bottom line: “It’s a false narrative to say race doesn’t matter in the United States,” William Emmons, a senior economic adviser at the St. Louis Fed, told Bloomberg in 2016. “It demonstrably does in the results we keep coming upon.”

Editor’s note: This piece was corrected to show 26% of white families received an inheritance (not 25%).

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