(Re)examining Boston's racial wealth gap
With lots of charts
Boston's wealth is racially segregated. This is what the Federal Reserve Bank of Boston, collaborating with academics from Duke University and The New School, found in 2015. The report they produced found that, on average, white residents of the city have orders of magnitude higher net worths than Black residents, especially those whose families had lived in the U.S. for many generations.
In the greater Boston area, white households are vastly more wealthy than
nonwhite households
Median household net worth by race
Not elsewhere
classified
Caribbean Black
Puerto
Rican
White
$247,500
Other
Hispanic
U.S Black
$8
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
In the greater Boston area, white households are vastly more wealthy than
nonwhite households
Median household net worth by race
Not elsewhere
classified
Caribbean Black
Puerto
Rican
White
$247,500
Other
Hispanic
U.S Black
$8
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
This figure has been cited a lot over the years. There was an entire Spotlight series motivated by it. The Boston Fed is currently working on an update to the 2015 report, slated to be published in the next couple years, which will likely include a single figure destined to be cited just as much.
I think it's worth examining the report's findings more closely than popular media has in the past. Its findings are detailed and give a picture of the structural factors contributing to Boston's wealth gap.
It should also be noted the sample sizes of some groups, including multigenerational Black Americans, are relatively small (some as low as a few dozen people), a caveat not mentioned in earlier coverage. This puts median net worth values thousands of dollars higher or lower than the report's $8 figure within the margin of error. This doesn't invalidate the popular coverage of the report, a Boston Fed researcher said in a recent WBUR interview, because the disparity is still indicative of wildly divergent levels of financial security.
Access to the tools of wealth creation
White households in Boston are over three times more likely to own
stocks than Black households
Percent of households that own stocks by race
39.5%
White
30.3
Not elsewhere
classified
19.4
Other Hispanic
9.6
U.S. Black
9.4
Puerto Rican
8.3
Caribbean Black
6.0
Dominican
5.6
Cape Verdean
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
White households in Boston are over three times more likely to own
stocks than Black households
Percent of households that own stocks by race
39.5%
White
30.3
Not elsewhere
classified
19.4
Other Hispanic
9.6
U.S. Black
9.4
Puerto Rican
8.3
Caribbean Black
6.0
Dominican
5.6
Cape Verdean
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
Stocks are a main avenue for growing one's wealth in the United States. The cumulative value of the stock market tends to increase over time and, for most people, investments in stocks are a way to accumulate money in the long term.
White Bostonians have more secure retirements than their
nonwhite neighbors
Percent of households with a retirement account or other annuity by race
56.2%
White
38.6
Cape Verdean
33.8
N.E.C
28.1
Other Hispanic
21.2
U.S. Black
21.1
Caribbean Black
16.2
Puerto Rican
7.5
Dominican
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
White Bostonians have more secure retirements than their
nonwhite neighbors
Percent of households with a retirement account or other annuity by race
56.2%
White
38.6
Cape Verdean
33.8
Not elsewhere
classified
28.1
Other Hispanic
21.2
U.S. Black
21.1
Caribbean Black
16.2
Puerto Rican
7.5
Dominican
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
Similar to stocks, and individual retirement acounts and annuities -- financial products offered by insurance companies that provide fixed payments at regular intervals, often used to support people in their retirements -- are tools people use to grow wealth. IRAs are often safe, long-term investments that, like the market, are liable to increase over any significant period of time. Annuities are slightly more complicated, but have a simialar general idea. These are methods of taking the money you have today and turning into more money for your future self.
But, crucially, one needs disposable income, sometimes large amounts of it, to make these investments in the first place. They have a barrier to entry that makes them difficult to take full advantage of when you're trying to make ends meet.
White Bostonians are more likely to own their homes outright
Percent of homeowning households with mortgage debt by race
97.0%
Cape Verdean
91.3
Caribbean Black
87.5
Dominican
87.1
Not elsewhere
classified
85.5
U.S. Black
83.6
Puerto Rican
78.4
Other Hispanic
59.7
White
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
White Bostonians are more likely to own their homes outright
Percent of homeowning households with mortgage debt by race
97.0%
Cape Verdean
91.3
Caribbean Black
87.5
Dominican
87.1
Not elsewhere
classified
85.5
U.S. Black
83.6
Puerto Rican
78.4
Other Hispanic
59.7
White
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
Home ownership is a critical source of wealth creation for Americans. Property values across the country have skyrocketed in recent decades. Bostonians who own their homes outright have seen their net worth do the same.
It should be noted that even if you still have mortgage debt, your house has probably become more valuable in recent years. This is a good thing in the long term: you own a mroe valuable asset. But if you're still making monthly payments, that's money you don't have to invest elsewhere or to address sudden expenses.
Avoiding long-term financial burdens
White Bostonians are among the least likely to owe money on medical bills
Percent of households with outstanding medical debt by race
24.1%
Other Hispanic
19.8
Dominican
17.1
U.S. Black
17.1
Caribbean Black
13.9
Not elsewhere
classified
10.9
White
10.6
Puerto Rican
2.0
Cape Verdean
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
White Bostonians are among the least likely to owe money on medical bills
Percent of households with outstanding medical debt by race
24.1%
Other Hispanic
19.8
Dominican
17.1
U.S. Black
17.1
Caribbean Black
13.9
Not elsewhere
classified
10.9
White
10.6
Puerto Rican
2.0
Cape Verdean
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
Medical debt can be debilitating. As can student loans. These are huge balances for most people, and ones they often can't avoud taking on, whether it's because a bachelor's degree is becoming more and more necessary of the job market or because an exorbitantly expensive treatment might save their life.
White Bostonians are less likely than their neighbors to be saddled
with student loan debt
Percent of households with outstanding student loan debt by race
34.4%
Other Hispanic
33.7
Caribbean Black
28.9
Not elsewhere
classified
28.0
U.S. Black
25.5
Cape Verdean
21.1
Dominican
19.4
Puerto Rican
18.9
White
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
White Bostonians are less likely than their neighbors to be saddled
with student loan debt
Percent of households with outstanding student loan debt by race
34.4%
Other Hispanic
33.7
Caribbean Black
28.9
Not elsewhere
classified
28.0
U.S. Black
25.5
Cape Verdean
21.1
Dominican
19.4
Puerto Rican
18.9
White
Source: Federal Reserve Bank of Boston. The “U.S. Black” category denotes multigenerational American Black
families. “Not elsewhere classified” largely represents multiracial households.
Have you thought at any point that this don't sound particularly unique to Boston? That the structural tools of wealth creation largely being in the hands of white people and the structural barrier to wealth creation being higher for Black people sounds like an American thing?
That's pretty much the case! The effect is quite accute in Boston, a historically segregated city, but these are national problems. The racism that has long been a part of our financial institutions and laws in America is having the desired effect.