RESEARCH

Racial Wealth Gap

 

REASONS BEHIND THE BUILDING AND LOSS OF FAMILY WEALTH 

Quotes by John Messervey: He is an organization behavior consultant who counsels high wealth families throughout the United States and overseas. He often guides families, owners and managers through very difficult conversations and is known for his consultations with very complex family challenges.

"Almost incalculable. Individually, the cost is in the millions; over generations the cost can be in the billions. No one ever said running a family business was easy, but far too much money is lost by unresolved conflict, status quo management and indifferent family owners."

'Absolutely, the primary reason families lose their wealth isn’t estate taxes, poor succession planning or inept heirs. They fail because of multiple unresolved conflicts, family litigation, divorce and far too much energy spent on inter/intra generational differences. Family business owners are smart. They have completed their tax planning, estate transfer strategies and investment allocations. The conflicts are like a constant bell ringing, calling for attention."

Source: https://www.privatefamilyadvisor.com/resources/real-reasons-behind-loss-family-wealth/

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Quotes by Dr. Kirby Rosplock, The Complete Family Office Handbook: A Guide For Affluent Families and the Advisers Who Serve Them; Former Director of Research & Development at GenSprings Family Office

"When a family does not have a shared family vision of the future it become increasing more challenging to keep the family together."


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In a study conducted by JP Morgan Private Bank, researches identified eight best practices that helped families manage their wealth (personal and business) successfully over the long-term. The #1 Family Best Practice: Articulate a Clear and Powerful Vision.

Source: Amy Braden and Dennis Jaffe, The Eight Proactive Principles of Wealthy Families (New York: JP Morgan, 2003), 80-82.

 

Racial Wealth Gap Published by Harvard 

Per the Federal Reserve Bank in Minneapolis in 2018, “The historical data also reveal that no progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years.”

Per Pew Research Center, the wealth racial gap has continued for decades. The typical white American family has roughly 10 times as much wealth as the typical African American family and the typical Latino family. In other words, while the median white household has about $100,000-$200,000 net worth, Blacks and Latinos have $10,000-$20,000 net worth.  


Growing inequality is spoiling the chances to have a better life than the previous generation. Recent numbers show that the top 1 percent has seen their wages grow by 157 percent over the last four decades, while the wages of the bottom 90 percent grew by only 24 percent.

Source: https://news.harvard.edu/gazette/story/2021/06/racial-wealth-gap-may-be-a-key-to-other-inequities/

 

MULTIGENERATIONAL LIFESTYLE FACTS

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Why Living With Your Parents Can Be the Best Money Decision You Make BY MELANIE LOCKERT, Updated August 07, 2021

 

You can save money by not paying:

  • Rent/mortgage

  • Utilities (gas, electricity, internet)

  • Renters or mortgage insurance

You can reduce your debt by paying:

  • Student loans

  • Car loans

  • Etck

Source: https://www.thebalance.com/why-living-with-parents-is-best-money-decision-4146428

RACIAL WEALTH GAP FACTS

WHO OWNS THE WEALTH IN THE USA

According to data from the Federal Reserve, in 1990, white households owned 90.7% of household wealth in the United States, whereas Black households owned 3.8% and Hispanic households owned 2.1%.

 

These numbers have changed little over the past 30 years, with white households now owning 85.5% of wealth in 2019, and Black households owning 4.2% and Hispanic households owning 3.1%. Most of the white wealth decline is due to other racial groups attaining a share of the wealth.

Another way to look at this is the net worth, or assets (such as stocks and real estate) minus liabilities (such as loans and mortgages left to pay), by race. The average net worth per capita among white Americans is roughly $437,000 per person, whereas this value is $105,000 among Black people and $53,000 among Hispanic people.

Source: https://usafacts.org/articles/white-people-own-86-wealth-despite-making-60-population/

USA Facts: White people own 86% of wealth and make up 60% of the population

White wealth is diversified among real estate, equities, and other assets, whereas non-white wealth is mostly in pensions and real estate.

Published on Thu, June 25, 2020 3:47PM PDT | Updated Wed, September 23, 2020 4:48PM PDT

BLACK OWNED BANKS FACTS 

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BLACK EMPOWERMENT FACTS

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DOLLAR LIFE SPAN BY RACE/ COMMUNITY

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Source: https://truthbetold.news/2015/12/does-a-dollar-spent-in-the-black-community-really-stay-there-for-only-six-hours/

Currently, a dollar circulates in Asian communities for a month, in Jewish communities approximately 20 days and white communities 17 days. How long does a dollar circulate in the black community? 6 hours!!! African American buying power is at 1.1 Trillion; and yet only 2 cents of every dollar an African American spends in this country goes to black owned businesses.

Source: https://moneymaven.io/blackwealthchannel/community-building/asians-keep-a-dollar-in-their-community-120-times-longer-than-african-americans-2ZvNTGNxpkClloXlXK_wMQ

THE GREAT WEALTH TRANSFER

Baby Boomers, the generation of people born between 1944 and 1964 (age 54-74), are expected to transfer $30 trillion in wealth to younger generations over the next many years. This jaw-dropping amount has led many journalists and financial experts to refer to the gradual event as the “great wealth transfer.”

In no prior time in the history of America has such a vast amount of wealth moved through the hands of generations.

Reference: https://www.forbes.com/sites/markhall/2019/11/11/the-greatest-wealth-transfer-in-history-whats-happening-and-what-are-the-implications/#70f866ad4090.  Article: The Greatest Wealth Transfer In History: What’s Happening And What Are The Implications by Mark Hall, Contributor, Technolgy Business Leader.

WHAT ARE THE EIGHT PROACTIVE PRINCLIPLES OF WEALTHY FAMILIES?

The process of articulating a family's vision is one aspect of building continuity and the bridges that will endure through generational wealth and business transfers.  In a study conducted by JP Morgan Private Bank, researchers identified eight best practices that help families manage their wealth successfully over the long-term.  

The eight best practices are:

  1. Articulate a clear and powerful vision

  2. Cultivate entrepreneurial strengths

  3. Plan strategically to mitigate risks and capture opportunity

  4. Build unifying structures to connect family, assets, and environment

  5. Clarify roles and responsibilities

  6. Communicate, communicate, communicate

  7. Help members develop competencies

  8. Provide independence, including exit options

Reference: The Complete Family Office Handbook: A Guide For Affluent Famiies and The Advisors Who Serve Them. By Kirby Rosplock, PhD.  Published by John Wiley & Sons, Inc., Hoboken, New Jersey, 2014.

Amy Braden and Dennis Jaffe, The Eight Proactive Principles of Wealthy Families (New York: JP Morgan, 2003), 80-82.

WHAT ARE THE NINE CHARACTERISTICS OF STRONG, HEALTHY FAMILIES?

Based on various assumptions about what a strong family does, researchers have developed lists of structural and behavioral attributes that characterize successful families. Despite differences in discipline and perspective, there seems to be a consensus about the basic dimensions of a strong, healthy family. The following constructs, which are often interrelated and complex, will be identified, defined, and described briefly as they exist in strong, healthy families:

  • communication

  • encouragement of individuals

  • expressing appreciation

  • commitment to family

  • religious/spiritual orientation

  • social connectedness

  • ability to adapt

  • clear roles

  • time together

The presence of effective communication patterns is one of the most frequently mentioned characteristics of strong families. Researchers characterize the communication patterns of strong families as clear, open, and frequent. Family members talk to each other often, and when they do, they are honest and open with each other (Stinnett and DeFrain, 1985; Lewis, 1979; Epstein, 1983; Olson, 1986).

For specific information regarding the constructs listed about, go to the reference below.

Reference: 

U.S. Department of Health and Human Services

RESEARCH ON SUCCESSFUL FAMILIES

MARIA KRYSAN, KRISTIN A. MOORE, AND NICHOLAS ZILL

CHILD TRENDS

MAY 10, 1990

Website: https://aspe.hhs.gov/basic-report/research-successful-families

MIDDLE-CLASS HOUSEHOLDS

In 2016, the typical middle-class black household had $17,150 in wealth versus $171,000 for the median white household per the Historical Survey of Consumer Finances. You have to combine the net worth of 11.5 black households to get the net worth of a typical white U.S. household.

UPPER-CLASS HOUSEHOLDS

There is a far larger number of white millionaires than black millionaires per the Historical Survey of Consumer Finances. In 2016, around 15.2 percent of all white families in the United States had a net worth of one million U.S. dollars or more. This compares to only 1.9 percent of Black families.  

Share of U.S. families who are millionaires by ethnicity 2016

Published by Erin Duffin, Jun 17, 2020

OVERALL RACIAL WEALTH GAP

If you take the net worth of all white households and divide it by the number of white households, you get $951,348. If you do the same thing for black households, you get $139,797. The difference between these figures — $811,551 — is the best representation of the overall racial wealth gap. That is how much more wealth black people would need per household to have as much wealth as white people have per household. 

On the other end of the spectrum, white families have a mean net worth of $951,300 while “other” families — a category that includes Asians, Native Americans, and anyone else not fitting into the other three groups — have a mean net worth just over $1 million.

 

Reference: People's Policy Project, The Racial Wealth Gap Is About the Upper Classes. By Matt Bruenig June 29, 2020

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EDUCATION

Higher education has long been touted as a ticket to the middle class, but for black American s that has not been as true as one might hope. The typical black household headed by someone with an advanced degree has less wealth than a white household with only a high school diploma. Reference: The Washington Post, Democracy Dies in Darkness, The black-white economic divide is as wide as it was in 1968. By Heather Long and Andrew Van Dam. June 4, 2020

Top 100 Americans Wealth by Race

American's 100 richest people control more wealth than the entire Black population.

American's 186 richest people control more wealth than the entire Latino population.

Source: https://www.motherjones.com/politics/2015/12/report-100-people-more-wealth-african-american-population/

Stock Ownership in America

The richest 1 percent of Americans now account for more than half the value of equities owned by U.S. households, according to Goldman Sachs. 

 

Since 1990, the wealthiest have bought a net US$1.2-trillion in company stakes, while the rest of the population has sold more than US$1 trillion.

Three decades ago, ownership was also lopsided, but the top percentage point of Americans by wealth only controlled 46 percent of all U.S. equities held by households. By the end of September 2019, that proportion had hit a record 56 percent, amounting to US$21.4 trillion, according to the investment bank’s calculations. That includes both public stock and ownership stakes in private companies.

Published by: How America’s 1% came to dominate stock ownership

The market’s tenfold gain since 1990 mostly has gone to the richest part of the population

Financial Times. Robin Wigglesworth, February 11, 2020

https://financialpost.com/investing/how-americas-1-came-to-dominate-stock-ownership

Black Business Ownership

A look at data during Black Business Month shows that Black Americans own 2.2% of the nation’s 6 million businesses with employees.  Note: More than 40 million black people live in the United States, making up around 13% of the nation’s population, according to 2016 Census Bureau estimates

Published on Thu, August 13, 2020 9:12AM PDT | Updated Wed, September 23, 2020 4:53PM PDT

LAND OWNERSHIP RACIAL GAP

The five (5) largest landowners in America, all white, own more rural land than all of black America combined.  These five white landowners own more than nine (9) million acres will all the African American population combined, own just eight million acres.  Go to  https://inequality.org/research/owns-land/

African Americans, despite making up 13 percent of the population, own less than 1 percent of rural land in the county.  The combined value of this land is $14 billion.  White Americans, by comparison, own more than 98 percent of  U.S. land amounting to 856 million acres with a total worth of over $1 trillion.  Reference: Who Owns Almost All America's Land? A USDA report is exposing a massive disparity between white and black land ownership in the United States.  Research & Commentary February 15, 2016 by Antonio Moore. Go to https://popularresistance.org/who-owns-almost-all-americas-land/

GI BILL LEFT OUT AFRICAN AMERICANS

Veterans Day is always an occasion to talk about the GI Bill.  And, indeed, that 1944 registration was truly remarkable, helping millions of returning veterans buy homes in the great post-war suburban land rush. Unfortunately, black veterans weren't able to make use of the housing provision of the GI Bill because banks generally wouldn't make loans for mortgages in Black neighborhoods, and African Americans were excluded from suburbs by a combination of deed covenants and information racism.  Resource: How the GI Bill Left Out African Americans. Economic Justice, Racial Wealth Gap, November 11, 2013. By David Gallahan, Blog.

African American Population in the USA

African Americans by Percent: 14.6% (2019)

African Americans by Number: 47.8 million

Source: https://blackdemographics.com/ and

 Source: U.S. Census Bureau, Population Division, Release Date: June 2020

African American Population in the USA

Attendance at religious services by race/ethnicity (2014) 

% of adults who attend religious services…

African Americans attend religious services more frequently than any other race in the United States.  However, blacks are also at the bottom regarding wealth.

Source: https://www.pewforum.org/religious-landscape-study/compare/attendance-at-religious-services/by/racial-and-ethnic-composition/

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