縮小種族貧富差距的經(jīng)濟(jì)影響+The+Economic+Impact+of+Closing+the+Racial+Wealth+Gap

PublicSectorPractice

Theeconomicimpact

ofclosingtheracial

wealthgap

August2019

Theeconomic

impactof

closingtheracial

wealthgap

ThepersistentracialwealthgapintheUnitedStatesisa

burdenonblackAmericansaswellastheoveralleconomy.Newresearchquantifiestheimpactofclosingthegapandidentifieskeysourcesofthissocioeconomicinequity.

Authors

NickNoel

DuwainPinder

ShelleyStewartIII

JasonWright

Preface

Thisyear,McKinseywillbringtogetherpublic-,private-,andsocial-sectorleadersinthesecondannualBlackEconomicForuminpartnershipwiththeExecutiveLeadershipCouncilandSigmaPiPhiFraternity(BetaIotaBoulé).Thefocuswillbeoncreatinginitiativesthatcanbepilotedandscalednationwidetonarrowtheracialwealthgap.

Tosupportthisconversation,wemeasuredtheimpactofclosingtheracialwealthgapand

identifieditsmajorcauses.Additionally,tohelpbringamorestrategicapproachtothisspace,

McKinseyhascollaboratedwith15leadingscholarsandpractitionersacrossthepublic,private,andsocialsectorsandtappedintoexistingcomprehensivescholarshiptodevelopanewfamily-wealth-generationframework.Ifadopted,thisapproachcouldhelpdifferentpartnerswork

togethermoreseamlessly,increasingtheimpactofcurrenteffortsaswellasidentifyingareaswhereadditionalhelpmaybeneeded.

Inleadingthisresearch,wereceivedvaluablecontributionsandinsightsfromMcKinsey

colleagues,includingNickNoelandDuwainPinder.Thisreportwasdevelopedincollaboration

withMcKinseyGlobalInstituteEconomicsResearch.WewishtothankVivienSingerandKrzysztofKwiatkowskifortheircontributions.

Whilethisreportisthefirstinaseriesofpublicationsontheracialwealthgapandthemost

promisingwaystocloseit,preliminaryareasofinterestincludepreparingblackworkersforthe

economiceffectsofautomationandaddressingblackfamilies’needsrelatingtofinancialservicesandproducts.Wehopethatthisreportanditssuccessorswillinspirediscussionsandresponsesthatwillpositivelyaffectblackfamilies—andtheentireeconomy.

ShelleyStewartIII

Partner,NewJersey

JasonWright

Partner,Washington,DC

4Theeconomicimpactofclosingtheracialwealthgap

TheUnitedStateshasspentthepastcenturyexpandingitseconomicpower,anditshows

inAmericanfamilies’wealth.Despiteincomestagnationoutsidethecircleofhighearners,

medianfamilywealthgrewfrom$83,000in1992to$97,000in2016(in2016dollars).1

Beyondtheoverallgrowthintop-linenumbers,

however,thegrowthinhouseholdwealth(definedasnetworth—thenetvalueofeachfamily’sliquidandilliquidassetsanddebts)hasnotbeeninclusive.In

wealth,blackindividuals,families,andcommunitiestendtolagbehindtheirwhitecounterparts.Indeed,themedianwhitefamilyhadmorethantentimes

thewealthofthemedianblackfamilyin2016

(Exhibit1).Infact,theracialwealthgapbetween

blackandwhitefamiliesgrewfromabout$100,000

in1992to$154,000in2016,inpartbecausewhitefamiliesgainedsignificantlymorewealth(with

themedianincreasingby$54,000),whilemedianwealthforblackfamiliesdidnotgrowatallinrealtermsoverthatperiod.

Thewideningracialwealthgapdisadvantagesblackfamilies,individuals,andcommunitiesandlimits

blackcitizens’economicpowerandprospects,andtheeffectsarecyclical.Suchagapcontributesto

intergenerationaleconomicprecariousness:almost70percentofmiddle-classblackchildrenarelikelytofalloutofthemiddleclassasadults.2Otherthanitsobviousnegativeimpactonhumandevelopmentforblackindividualsandcommunities,theracial

wealthgapalsoconstrainstheUSeconomyasawhole.Itisestimatedthatitsdampeningeffect

Exhibit1

Thereisawideandpersistentgapinwealthbetweenwhiteandblackfamilies.

Medianfamilywealthin1992–2016byethnicity/race,$thousand1

200

150

100

50

0

USUS

recessionrecession

White

10×

Hispanic

Black

199219951998200120042007201020132016

12016dollars.

Source:“2016surveyofconsumerinances,”FederalReserveBoard,September2017,

1“2016surveyofconsumerfinances,”FederalReserveBoard,September2017,.

2Socialmobilitymemos,“Fivebleakfactsonblackopportunity,”blogentrybyEdwardRodrigueandRichardV.Reeves,January15,2015,.

Theeconomicimpactofclosingtheracialwealthgap5

Optimist’sscenario:Assumingsmallerwealthgapin20282

Pessimist’sscenario:Assuminglargerwealthgapin20282

Exhibit2

Byclosingtheracialwealthgap,theUSGDPcouldbe4to6percenthigherby2028.

RealGDPincreasefromclosingracialwealthgap,$trillion1

1.5

1.0

0.5

0

20192020202120222023202420252026202720283

Dependingon

assumptions

regardinggrowth

inracialwealthgap,

realGDPcouldbe

4–6%higherby

2028ifgapis

closed,translating

toanincreaseof

$2,900–$4,300in

GDPpercapita4

12018dollars.

2Assumesthat,overtime,wealthgapwillcloseinlinearfashion,reachingscenario’sassumedtargetsby2028.

3$2,631billion–$3,990billioninnominaldollars.

4$7,500–$11,400innominaldollars.

Source:“2016surveyofconsumerinances,”FederalReserveBoard,September2017,;OxfordEconomics;

McKinseyGlobalInstituteanalysis

onconsumptionandinvestmentwillcostthe

USeconomybetween$1trillionand$1.5trillion

between2019and2028—4to6percentofthe

projectedGDPin2028(Exhibit2;seealsosidebar“Quantifyingtheeconomicimpactofclosingthe

racialwealthgap”).

Despitetheprogressblackfamilieshavemadeincivicandeconomiclifesincethepassageofthe

CivilRightsActof1964,theyfacesystemicand

cumulativebarriersontheroadtowealthbuildingduetodiscrimination,poverty,andashortage

ofsocialconnections(includingrolemodelsand

mentorsintheircommunities)asbothmechanisms

andresultsofracialeconomicinequity.3Theseadverseelementshavehelpedmaintaina

persistent—andwidening—wealthgap.

Becauseunderstandingthescopeofaproblemisvitaltosolvingit,weusethisreporttoquantifytheeconomicimpactofclosingtheracialwealthgap,

identifytheunderlyingissuesthathelpperpetuate

thegap,andsetthestagefordiscussionsabout

waystoclosethegap.Unsurprisingly,thebarriers

towealthbuildingforblackfamiliesarenumerous

enoughtomeritin-depthexploration,sowehave

dedicatedthisreporttounderstandingthepieces

ofblackAmericans’financiallivesthataddupto

significantlylessthanthoseoftheirwhitepeers.

Tohelpbreakdownandarticulatetheproblemsthat

contributetothewealthgap,wehavedeveloped

anewframeworktocapturethefactorsthat

perpetuateit.Ourresearchfoundthateconomic

barriersaffectblackfamiliesacrossthefollowing

dimensions(seesidebar“Componentsofwealth

generationforafamily”):

—Communitycontext.Thecollectionofpublic

andprivateassetsinagivencommunity

—Familywealth.Thenetvalueofafamily’spoolof

financialandnonfinancialassets

3RajChettyetal.,RaceandeconomicopportunityintheUnitedStates:Anintergenerationalperspective,OpportunityInsights,March2018,revisedJune2019,.

6Theeconomicimpactofclosingtheracialwealthgap

Quantifyingtheeconomicimpactofclosingtheracialwealthgap

Estimatingtheeconomicimpactofclos-ingtheracialwealthgapisadauntingtaskbecausethegapistheproductofcomplexinteractionsamongsocial,historical,polit-ical,andinstitutionalforces.Toaccountforasufficientlycomprehensiverangeoffac-torswhileofferinganaccessibleconcept,weturnedtotheOxfordmodel,anecono-metricsmodelwidelyusedforforecasting.Wemodeledeconomicoutcomesforthe

UnitedStatesundertwodistinctscenariostomeasuretheimpactonGDPthatwouldresultfromclosingthewealthgapover

the2019–28timeframeandusedincome,tangibleinvestments,andstock-market

investmentsascomponentsofwealthinourmodel.

Inthefirstscenario(theoptimist’ssce-

nario),weestimatetheeffectofnarrowingthewealthgapbetweenblackandwhite

Americansfromits2016level.Wecalcu-

latetheeconomiceffectsbyassumingthateachgroup’swealthcontinuestogrow

attheir1989–2016rates(0.8percent

peryearonaverageforwhitepeopleand3percentforblackpeople).Giventhis

optimisticassumptionthatblackwealth

growsfasterthanwhitewealth,thewealthgapwouldnarrowbutstillbesubstantiallylarge(7.7times).Closingthatgapin

thisscenariowouldadd$1trillionto

the2028economy.

Inthesecondscenario(thepessimist’s

scenario),weassumethewealthgapwill

widenfromnowto2028,withwhitewealthgrowingat3.4percentperyear,itsaveragegrowthratefrom1992to2007,theperiodinthepast20yearsinwhichitgrewthe

mostquickly.Conversely,weassumethatblackwealthwilldeclineby3.4percentperyear,therateatwhichitdeclinedfrom

2004and2016,theperiodinthepast

20yearsinwhichitdeclinedthemost

quickly.Giventhispessimisticassumptionthatblackwealthdeclinesdramaticallyaswhitewealthrisesdramatically,thewealthgapwouldgrowsignificantly(22.7times).

Closingtheracialwealthgapinthissecond

scenariowouldadd$1.5trilliontothe

economyin2028.

Tounderstandhowclosingthewealthgap

wouldaffecttheeconomy,weusethethree

componentsofGDPforwhichthegaps

betweenwhiteandblackAmericansare

thelargest:housing(asaproxyfortangible

investments),1consumption,2andstock-

marketinvestments.3

Tocreatethetwoscenarios,wecalculat-

edthetotalvalueoftherelevantgapsin

wealth-buildingactivitiesandcalculated

theshareofeachinthetotalgap.Tangible

investmentswere50percentofthegap,

privateconsumptionmadeup23percent,

andstock-marketinvestmentsmadeupthe

remaining27percent.Finally,wepropor-

tionallyweightedeachofthecomponents,

appliedeachtothevalueoftheentire

wealthgap,and“shocked”themodelby

increasingthevalueofeachcomponent

ofthewealthgaptoassessthepotential

impactonGDP.

1“2013–2017ACS5-yearestimates,”USCensusBureau,November28,2018,.Weusedcurrentdataonhomeownershipandcalculatedthenumberofblackfamiliesthatwouldneedtobecomehomeownerstoattainhomeownershipparitywithwhitefamilies.Wethenmultipliedthatfigurebymedianhomeprices(around

$300,000)tocalculatethehousinggap.

2“Consumerexpendituresurveys,”USBureauofLaborStatistics,2017,.Wecalculatedthedifferenceinaverageannualconsumptionexpendituresbetweenblackandwhitefamilies.Wethenmultipliedthatdifferencebythetotalnumberofblackfamilies,whichresultedintheconsumptiongap.

3“2016surveyofconsumerfinances,”FederalReserveBoard,September2017,.Wecalculatedtheaveragedifferenceinthetotalvalueofstocksheldbyblackandwhitefamilies.Wethenmultipliedthatdifferencebythenumberofblackfamiliestocalculatetheinvestmentgap.

—Familyincome.Thecashflowafamilyreceivesfromentrepreneurshiporitsmembers’

participationinthelabormarket

—Familysavings.Thetoolsandbenefitsafamilycanaccesstoturnincomeintosavingsand

wealthforfamiliesandthecommunity

Thissameframeworkwillhelpusidentifysolutionsinsubsequentreports.Indeed,thepublic,private,

andsocialsectorswillneedtocontributetorectifystructuralinequitiesthatcontributetotheracial

wealthgap.Anumberofsimultaneousandmutually

reinforcinginitiativeswilllikelybenecessary.This

workwillbeneithersimplenoreasy,buttargeted,

productiveeffortswilllikelystrengthenthe

economy,increaseeconomicandsocialequity,andimprovethequalityoflifeforfamilies.

Unmetneedsinfamily-wealthbuilding

Theidealwealth-buildingscenariorequires

favorablecircumstancesacrossthedimensions

ofcommunitycontext,familywealth,family

income,andfamilysavings.Ouranalysisfound

closing

Theeconomicimpactof

theracialwealthgap7

Componentsofwealthgenerationforafamily

Fourelementsaccountforthemajorityofafamily’sabilitytobuildwealthacrossageneration:communitycontext,familywealth,familyincome,andfamilysavings.Withineachstage,familiesbeginwithdif-feringinitialendowmentsandgothroughdifferentprocessesanddecisionpoints

whilefacingvaryinglevelsofconstraints

ontheiroptions.Weidentifiedtheseinputsafterperformingaliteraturereviewof

morethan100studiesandarticlesthat

explorethestateofandcontributorsto

theracialwealthgapandthenconductedproprietaryresearchtounderstandthe

wayinwhichtheobstaclesweidentifiedfit

together.Weusedourfindingstoconstruct

awealth-generationframeworkforfamilies.

Incollaborationwith15scholarsandprac-

titionersfromthepublic,private,andsocial

sectors,wethentestedandrefinedthe

validityofourframeworkoverthecourse

of2018.1

Exhibit

Interactionsamongtheelementsoffamily-wealthgenerationcanpromoteeconomicstability,helppropelfamiliestowardprosperity,orimpedeprogress.

.Asset-generatedwealth.Income-generatedwealth

Familywealth

afectsfamilyincomeandsavings/ability

tosave;aggregatedfamilywealthhelps

contributetoandformcommunitycontext

Familyincome

afectsdisposable

incomeavailable

tosave

Communitycontext

canliftordepress

familywealth,income,

andsavings

Familysavings

feedintofamily

wealthofnextgeneration

1Inearlieriterations,thewealth-generationframeworkwassometimesreferredtoasa“middle-classblack-familyjourney.”SeeNewatMcKinseyBlog,“NewresearchhighlightsgapbetweenraceandearningpowerintheUS:Meettheauthors,”blogentry,October22,2018,McK.

8Theeconomicimpactofclosingtheracialwealthgap

Componentsofwealthgenerationforafamily(continued)

Communitycontext

Communitycontextreferstowherefam-iliesbeginthewealth-buildingprocess.

Eachcommunityiscomposedofthe

collectionofpublicandprivateassetsin

agivencommunity.Theseassetsoverlapwiththeeconomic,social,cultural,and

politicalnetworksandinstitutionsthat

tendtoreinforceexistingsocioeconomicpatterns.Forinstance,communitieswithhighlevelsofeconomicactivityandrich

socialnetworkstendtoproducemore

affluentfamiliesandcontainassets(suchashomesandbusinesses)thatarevaluedmorehighly.Conversely,communitiesthatlackeconomicactivityandconnectionstoopportunitiestendtoperformpoorly.

Familywealth

Familywealthreferstohowfamilies

developthestockofwealthavailableto

them.Thiswealthreflectsthenetvalueofafamily’spooloffinancialandnonfinancialassets.Forexample,thevalueofafamily’shome,smallbusiness,andretirement

accountsplusafamily’sliquidassetslessthevalueofitscredit-carddebt,businessloans,andstudentloanswouldmakeupthatfamily’swealth.

Familyincome

Familyincomerepresentshowfamilies

cometoearnthecashflowstheyreceive

fromeitherentrepreneurshiportheirpartic-ipationinthelabormarket.Forinstance,a

familymember’ssalaryasabusinessownerandthehourlywagesofasecondfamily

memberbothcounttowardfamilyincome.

Familysavings

Familysavingsrepresenthowfamilies

interactwiththerulesthatgovernsavings

andwealthcreationaswellasthetools

andbenefitsthatfamiliescanaccessto

managehouseholdexpenses,smooth

consumption,andaddtofamilywealthand

communitycontext.Forexample,pretax

commutingbenefits,stateandlocaltax

deductions,andcheckingaccountsare

benefitsandtoolsthathelpfamiliessave.

Interactionsamongtheelementsof

family-wealthgenerationcanpromote

economicstability,helppropelfamilies

towardprosperity,orimpedeprogress

(exhibit).Ofcourse,thecomponentsand

theirinteractionscanalsotetherindividuals

totheirfamilies’socioeconomicstatus.For

instance,afamilythatlivesinanimpov-

erishedcommunityislikelytostruggleto

accumulatefamilywealthandsave.

thatblackfamilies’wealthbuildingisconstrainedbyunmetneedsandobstaclesacrossthese

dimensionscomparedwithwhitefamilies:afactorthatcontributestoawideninggapbetweenwhitefamiliesandblackfamilies.

Communitycontext

The16statesthatarehometo65percentoftheblackresidentsintheUnitedStatesperform

belowthenationalaverageonallcategoriesof

performance.Thiscancompoundthedisadvantagesblackcitizensfacebasedonthecommunitiesthat

theyliveandworkin(Exhibit3).4

Inparticular,thestatesinwhichblackresidentsareconcentratedarewellbelowthenationalaverages

ineconomicopportunity,employment,healthcare

access,healthcarequality,publichealth,andaccesstobroadband.Attheneighborhoodlevel,black

familiesareupto4.6timesmorelikelythanwhite

andHispanicfamiliestoliveinareasofconcentratedpoverty.5Notevenhigh-incomeblackfamiliesare

exempt:theaverageblackfamilywithahouseholdincomeof$100,000livesinaneighborhoodwheretheaverageincomeis$54,000.6

Thiskindofracializeddisadvantagehashistorical

roots.Institutionalforces,suchastheNational

4AndréDua,NavjotSingh,AlySpencer,andTimWard,“High-performingUSstates:Isthereasecrettosuccess?,”February2018,McK.

5MarcParry,“Theneighborhoodeffect,”ChronicleofHigherEducation,November5,2012,.Areasofconcentratedpovertyaredefinedbycensustractsinwhich40percentormoreofthepopulationlivesbelowthefederalpovertyline.

6DavidLeonhardt,“Middle-classblackfamilies,inlow-incomeneighborhoods,”NewYorkTimes,June24,2015,.

closing

Theeconomicimpactof

theracialwealthgap9

48

48

48

47

46

47

40

50

49

46

48

47

41

40

32

31

IL

NJDEMD

VA

NCSC

TN

AR

MSALGA

LA

Exhibit3

Blackfamiliesareconcentratedinafewstatesthathaveunfavorableeconomicandsocialconditions.

Thereare16statesinwhichblackpopulationexceedsnationalaverage1

NY

MI

65%

FL

oftheblack

populationis

concentrated

inthese16states

Onaverage,thesestatesscorebelownationalaverageineveryLeadingStatesIndex2categorythatincludes77

metricsofstateperformance

LeadingStatesIndexscores

Averageforstateswithhigher-than-averageblackpopulation

Nationalaverage

55

53

51

51

50

51

49

49

49

Infrastructure

Economy

Qualityoflife

Fiscalstability

EducationHealthcareOpportunityCrimeand

corrections

ThesestatesscorewellbelownationalaverageinLeadingStatesIndex2subcategoriesthatcanacceleratewealth

generation

LeadingStatesIndexscores

Averageforstateswithhigher-than-averageblackpopulation

Nationalaverage

52

53

43

Healthcareaccess

Economicopportunity

Public

health

Employment

Healthcare

quality

Broadbandaccess

1Deinedasstatesinwhichproportionofblackresidentsisgreaterthannationalaverage(13.4%).

2ScoresonLeadingStatesIndexcanrangefrom–150to150.

Source:2017UScensus;LeadingStatesIndexbyMcKinsey,2018

10Theeconomicimpactofclosingtheracialwealthgap

236

2.3×

2.6×

83

8

HousingActof1934,contributedtostructural

racialandsocioeconomicsegregation,limiting

manyblackfamilies’housingoptionstothosein

D-ratedneighborhoods,whicharecharacterizedbydistressedhousingstock,lower-incomeresidents,andoveralldecline.7Themajorityofblackfamilies

haveremainedintheseneighborhoods.Such

circumstancesoftenmakeitmoredifficultfor

familiestobuildwealthwithinasinglegeneration,letaloneacrossgenerations.

Familywealth

Equitycapital,liquidsavings,credit,andaccessto

investableassetsarekeytoastablebaseoffamilywealth.Blackfamilieshaveunevenaccesstoeach

ofthesecomponents,whichconstrainstheirabilitytodevelopmaterialanddiversifiedassetportfolios.Blackfamiliesbeginwithlowerlevelsofwealth:only8percentofblackfamiliesreceiveaninheritance,

comparedwith26percentofwhitefamilies(Exhibit4).8Whenaninheritancedoescome,itis35percentofthevalueofthatofawhitefamily.9Thisdifferencein“starter”wealthalsoaffectsothercomponents

ofthewealth-generationprocess:recentresearchshowsthatblackcollegegraduates’wealthactuallydeclinesaftergraduationbecausetheyaremore

likelythanwhitecollegegraduatestosupporttheirparentsfinanciallyinsteadoftheotherwayaround.10

Inadditiontosupportingfamilymembersfinancially,blackfamiliesare1.3timesmorelikelythanwhite

familiestohavestudentdebt,andtheyhave

balancesthatare1.7timeshigherthanthoseof

whitefamilies.11Becauseeducationisanintangibleassetthatcannotserveascollateral,blackfamiliesthatfacetemporaryfinancialdifficultiesareoftenunabletoservicetheirstudentloans.Atscale,thisdynamicmeansthatblackborrowersare2.3timesmorelikelythanwhiteborrowerstodefaulton

Exhibit4

Blackfamiliesbeginwithlower

endowmentsofequitycapitalbecauseofdiferencesinratesofinheritance.

Averageinheritancevaluein2013,

$thousand

Shareofpopulation

receivinginheritance

in2016,%

26

WhiteBlack

WhiteBlack

Source:“2016surveyofconsumerinances,”FederalReserve

Board,September2017,;JefreyP.Thompson

andGustavoA.Suarez,“Exploringtheracialwealthgapusingthe

surveyofconsumerinances,”FederalReserveBoard,August2015,

studentloans—thistranslatestoroughlyoneoutofeverytwoundergraduateblackstudents.12

Blackconsumersare73percentmorelikelythanwhiteconsumerstolackacreditscore.13Black

consumersalsofacediscriminationincredit

accessbasedonwheretheyliveviaaphenomenoncalled“creditredlining.”AFederalReserveBoard

study(usingdatafromamajorcreditbureau)of

morethan285,000peoplefoundthatconsumers

livinginneighborhoodswherewhiteresidentsare

predominantweremorelikelytogetcreditcards

thanconsumerslivinginneighborhoodswhereblack

7TerryGross,“A‘forgottenhistory’ofhowtheU.S.governmentsegregatedAmerica,”NPR,May3,2017,.

8LisaJ.Dettlingetal.,“Recenttrendsinwealth-holdingbyraceandethnicity:Evidencefromthesurveyofconsumerfinances,”FederalReserveBoard,September27,2017,.

9DaveBuchholz,JeffLarrimore,andJeffThompson,“FederalReservesurveysoftheeconomicwell-beingofUShouseholds:SCFandSHED,”UrbanInstitute,January21,2016,.

10TatjanaMeschedeetal.,“‘Familyachievements?’:Howacollegedegreeaccumulateswealthforwhitesandnotforblacks,”FederalReserveBankofSt.LouisReview,Firstquarter2017,Volume99,Number1,pp.121–37..

11BrenoBraga,“Racialandethnicdifferencesinfamilystudentloandebt,”UrbanInstitute,July25,2016,.

12JennieH.Wooetal.,Repaymentofstudentloansasof2015among1995–96and2003–04first-timebeginningstudents:Firstlook,NationalCenterforEducationStatistics,October2017,.

13Whoarethecreditinvisibles?Howtohelppeoplewithlimitedcredithistories,ConsumerFinancialProtectionBureau,December2016,.

closing

Theeconomicimpactof

theracialwealthgap11

residentsarepredominant.14Thesefactorsresultinacredit-denialrateonloans(suchasmortgages)thatistwicetherateofthoseforwhiteconsumers.15

Thedifficultyofaccessingcreditforhardassetsandanoutsizestudent-loandebtleavesblackfamilies

withless-diversifiedassetportfolios.Only7percentofblackAmericans’assetsareinbusinessequity

(oftenaproductofentrepreneurship),comparedwith16percentforwhitefamilies.16ButevenwhenitcomestothemostcommonwayforAmericans

toholdwealth,onlyabout40percentofblack

familiesownahome,comparedwith73percentof

whitefamilies.17Whenblackfamiliesdoownhomes,theirhomesarelesslikelytoappreciateinvalue—

andtheyappreciatemoreslowlywhentheydo.

Neighborhooddifferencesandthequalityofhomescanexplainonlypartofthislowrateofappreciation.Researcherspositthatracialanimuscanaccountfortheremainingdifferenceinappreciationbetween

black-ownedandwhite-ownedhomes.18

Anadditionalpathwaytobuildingwealthisthroughinvestmentsinsecurities,butblackfamiliesare

lesslikelytoownstocksthanwhitefamiliesare,

partlybecauseblackfamilieshavefewerfunds

withwhichtoinvest,andpartlybecauseblack

communitieshavehistoricallystruggledtotrust

thestockmarket.Asof2016,middle-classblackfamiliesaremakingprogresstowardclosingthe

investmentgap:67percentofblackAmericans

withincomesofatleast$50,000wereinvestedinthestockmarketormutualfunds,comparedwith86percentofwhiteAmericans.19In2010,thesplitwas60percentand79percent,respectively.Butholdingsecuritiesisnotenough.BlackAmericansmustmatchwhiteAmericans’levelofinvestmentinsecuritiesbeforetheycanderivecomparable

benefitsfromtheseinvestments.

Familyincome

BlackAmericanscanexpecttoearnupto$1millionlessthanwhiteAmericansovertheirlifetimes.20Thisdiscrepancyistheproductofalifetimeofdivergingcircumstances.Forinstance,withoutaresource-

richcommunityorfamilyoforigin,individual

familiesmayimprovetheireconomicpositionswiththeirearnings.Afamilycanincreaseitsearning

potentialbyattainingmoreeducationtodevelop

itsstoreofhumancapital.