Racial Wealth Inequality Rampant in United States - Urban Institute Study

WASHINGTON (Sputnik) — The great wealth disparity between white and non-white Americans continues because of differences in retirement savings and homeownership, according to an Urban Institute study.

“In 1963, the average wealth of white families was $117,000 higher than the average wealth of nonwhite families,” the study said. “By 2013, the average wealth of white families was over $500,000 higher than the average wealth of African American families ($95,000) and of Hispanic families ($112,000).”

White American families make more than seven times the wealth of African American families and six times the wealth of Hispanic families in 2013 on average, the study shows.

The ratio has remained extremely high over the 1963-2013 period, which the study focused on, and has deteriorated.

Minorities are less likely to own homes, and have lower rates of retirement savings than their white counterparts, which exacerbate the wealth inequality, the report shows.

“In 1983, 68 percent of white families owned their home, compared with 45 percent of African American families and 41 percent of Hispanic families,” the study said. “By 2013, the racial homeownership gap improved slightly for Hispanics, but it grew worse for African Americans. African Americans and Hispanics were also less likely to own homes than whites at the same income level.”

White American families have over $100,000 more in liquid retirement savings than their African American or Hispanic American counterparts, the study showed. But, the reason lies beyond better savings measures, the study said.

“African Americans and Hispanic families have slightly less access to retirement saving vehicles and lower participation when they have access,” it said. “Hispanic workers are less likely to participate in employer retirement plans than African American workers but have similar average liquid retirement savings.”

African American families, in comparison to White American and Hispanic American families, are more likely to shoulder the burdens of student loans, the study showed. In 2013, 42 percent of African Americans aged 25-55 had student loan debt, compared with 28 percent of whites, according to the study.

Federal policies should be reformed to promote asset building by lower income families, the study recommended as a prescription to the problem. Policies to change include limiting the mortgage interest tax deduction and establishing automatic savings in retirement plans as ways to curb the racial wealth inequality in the United States.

The Urban Institute is a Washington DC-based think tank that carries out economic and social policy research.