Racial Wealth Gap United States | What It Is and How to Build Black Wealth
This explainer defines the racial wealth gap United States, traces its roots, and outlines strategies Black families can use to protect and grow assets. The gap spans home equity, savings, investments, retirement funds, and debt. Federal Reserve data show the median gap widened between 2019 and 2022, driven by redlining’s legacy, labor market bias, appraisal discrimination, and unequal access to wealth-building policy. Practical steps include entrepreneurship, stronger financial planning, and diversifying beyond home equity into starter portfolios of stocks and bonds. For tailored guidance, JPMorgan Chase offers advisors and tools.

The racial wealth gap is one of the most persistent markers of inequality in the United States today — and it’s still growing. Understanding the nature of the wealth gap and how it continues to affect Black Americans is extremely important.

By defining the wealth gap, exploring the historical roots of racial income inequality, and looking more closely at the wealth gap we still see in America, we can start to identify different strategies that Black families can use to protect and grow their money, despite the systemic barriers they might face.

What Is the Racial Wealth Gap?

The racial wealth gap refers to differences in financial assets like home equity, savings and investments, retirement funds, and debts between different racial groups. When many think of a “wealth gap,” they may think it only applies to income inequality, but it goes far beyond that. For many Black families, that wealth gap extends to generational wealth and assets that they can pass on to their children and grandchildren.

The wealth gap between Black and white households is much bigger than you think. According to data from the Federal Reserve’s Survey of Consumer Finances, between 2019 and 2022, median wealth went up by about $67,000 for white households and $17,000 for Black households, meaning the racial wealth gap increased by $49,950. That means the total financial difference between median white households and median Black households was $240,120. 

This drastic difference in wealth is due to persistent systemic barriers, like redlining, unequal educational and employment opportunities, discriminatory lending, appraisal bias, and exclusion from wealth-building public policies.  

How Systemic Barriers Have Historically Impacted Black Wealth

To truly understand the wealth gap, it’s essential to understand the barriers that have shaped it:

Redlining and housing discrimination: For decades, Black families were denied access to mortgages in certain neighborhoods, undermining homeownership and making it harder for Black families to build equity. Even though the Fair Housing Act of 1968 prohibited discrimination in housing based on factors like race and ethnicity, the effects of this discrimination can still be felt throughout Black communities.

Income inequality and labor market bias: Black households often experience lower income and higher rates of unemployment than white households. Unfortunately, unequal education isn’t always to blame. Statistics show that even when a Black household is led by someone with a college degree, their income is still about 20% less than white households.

Lack of asset diversification: In 2022, nearly half of Black household wealth came from home equity. White households, on the other hand, had a more balanced mix of investments. Homeownership can be an excellent foundation for generational wealth; having more diverse assets means better financial stability for the future.

Empowering Strategies to Build and Protect Wealth

Despite these long-standing systemic obstacles, there are some steps you and your family can take to improve wealth and build a better future:

Start your own business: According to a study by the Black Caucus Foundation, Black business owners have a net worth that is 12% higher than non-business owners. As you build your net worth, you also have the chance to lift up your community. Starting a small business opens doors for others, too, creating jobs, sparking opportunities, and showing future entrepreneurs what’s possible.

Improve financial planning and literacy: Get a clear picture of what your net worth looks like by breaking down your assets. Take a close look at your finances, then create a budget and start an emergency fund.

Diversify your assets: Homeownership is an excellent foundation for building generational wealth, but having a diversified portfolio will give you and your loved ones more stability in the future. Consider purchasing some stocks and bonds. If you’re new to investing, there are investment resources for beginners that can make the process a whole lot easier.

Building Black Wealth, One Step at a Time

Decades of systemic discrimination created the racial wealth gap. Though individual actions can’t get rid of these obstacles, you can make informed and educated decisions that will help your family grow their wealth and protect their assets. The first step to getting through the barriers that have occurred over time is understanding the wealth gap and its historical roots. Then, by learning how to spread out your assets and improving your financial planning and literacy, you can move closer to financial equity for you and your loved ones.

For more help with financial planning, banking, investing, and more, reach out to JPMorgan Chase. Its team of expert advisors and bankers are standing by and ready to help you.

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