The 2016 Survey of Consumer Finances was released last week, providing extensive new data on the assets and liabilities of American families. Many touted gains in wealth for minorities, while failing to deal with the darker nuances the underlying data shows. By looking at several key data points we see a story that both digs deeper, and challenges the narratives of relative wealth growth being told.
Median wealth is being shown as having increased to $162,700 for the middle white American family, and to $16,600 for the middle black American family. But what isn’t being said is that the Federal Reserve includes the family car in these numbers.
As noted by Professor Edward Wolff, it would be better to use a wealth concept that excludes these kinds of consumer durables, as they are not readily convertible to cash, their consumption value typically far outweighs their resale value, and they are not generally regarded as wealth (including in the national accounts).
When we exclude the family car, we get a somewhat different wealth narrative than the one being told across media platforms nationally. Without the family car, the middle black family has a net worth of $4,160. The middle white American family in contrast is still worth $140,600. This means, using an accounting model that more accurately excludes the family car, the median white family is worth over 33 times that of the median black family.
There is a similarly daunting gap between black families at the 99th percentile and their white counterparts. The 99th percentile black family is worth a mere $1,574,000 while the 99th percentile white family is worth over 12 million dollars. This means over 870,000 white families have a net worth above 12 million dollars, while, out of the 20 million black families in America, fewer than 380,000 are even worth a single million dollars. By comparison, over 13 million of the total 85 million white families are millionaires or better.
Lastly intra-race wealth disparities tell a far too often overlooked story. Wealth is not distributed unevenly just among whites. The data shows that the top 20% of black families control 95% of the little American black wealth that does exist. The interesting angle is to look at the wealth disparity within race without the family car. Without the family car the 99th percentile white family is worth $12 million. This means they are worth just fewer than 86 times as much as the median white family using the same accounting. But the telling narrative is to look at the intra-race black wealth disparity. Without the family car the 99th percentile black family is worth $1,574,000. This would make them worth 378 times as much as the median black family using the same accounting.
To learn more, tune into Dash Radio 10/6/17 DashTalk Station, or Tonetalks Youtube and listen to Matt Bruenig and Attorney Antonio Moore discuss more about the new 2016 Federal Reserve Survey of Consumer Finances.