DURHAM, North Carolina – During the economic recovery that lasted a decade after the Great Recession, black households lost far more wealth than white families, regardless of class or occupation, according to new research from the Samuel DuBois Cook Center for Social Equity at Duke University.
Notably, while most other groups experienced an economic recovery between 2010 and 2019, black professionals suffered losses in wealth, the authors found. Meanwhile, black working-class families have remained in the worst economic position overall. As a result, many black families entered the COVID-19 pandemic in a state of financial insecurity.
âAs the economy recovered, the typical black household remained financially fragile and entered the COVID-19 crisis with less of a private safety net,â says co-author Fenaba Addo, associate professor of public policy at the University of North Carolina-Chapel Hill and affiliated faculty of the Cook Center. âBy comparison, white working-class households had an overwhelming majority of middle-class wealth levels – and were better placed for the economic uncertainty that the pandemic has brought. “
The document is available online in The Annals of the American Academy of Political and Social Sciences.
The authors explored the roughly ten-year period after the Great Recession, starting in 2010 and ending in 2019, before the start of the COVID-19 pandemic. The racial wealth gap was already large before the Great Recession and widened during and after, they found. During the recession, black and Latino households lost 48% and 44% of their wealth, respectively, while white households lost only 26%. In 2019, black households held less than fifteen percent of white household net worth.
The authors classified individuals and households according to both race (non-Latin-black, non-Latin-white, and Latin American) and class (working class or professional executive, depending on the occupation) .
âOne of the important contributions of this study is our conscious effort not to treat all those in paid work as members of the working class,â says co-author William A. Darity Jr., founding director of The Cook Center and Samuel DuBois Cook Professor of Public Policy, African and African American Studies, and Economics at Duke University. âWe separate the working class from the professional and managerial class and demonstrate that this has strong implications for uneven recoveries after the Great Recession and unequal access to wealth between households. “
While economic outcomes improved for most non-Black households between 2010 and 2019, few Black households were able to keep pace. The percentage of black professional and working-class households belonging to the middle or upper class declined between 2010 and 2019.
Additionally, black-headed and Latino-headed households were less likely than white households to reach these higher wealth thresholds, whether they were in the professional or working class.
The authors also identified ârich poorâ households, and therefore in the most precarious economic position. in 2019, the annual federal poverty line was $ 25,750 in annual income, or about $ 2,100 per month. When a household’s equity is not enough to cover three months at $ 2,100 per month, a household is classified as “wealth poor.”
The proportion of ârich poorâ families declined from 2010 to 2019 across most racial and professional categories, but increased among black professionals.
In addition, a majority of black and Latino households – in the working and professional classes – fell into this economically precarious category.
These disparities have far-reaching effects. “The cumulative and intergenerational inability of black households to acquire wealth continues to contribute to their sedimentation at the bottom of the socioeconomic distribution,” the authors write.
And without the ballast provided by that wealth, black households are more vulnerable during an economic downturn – and less able to reap the rewards of the economic recovery.
QUOTE: âDisparate Upsets: Wealth, Race, and the Working Class After the Great Recession,â Fenaba R. Addo and William A. Darity. ANNALS of the American Academy of Political and Social Sciences, vol. 695, number 1, 2021.
DOI: 10.1177 / 00027162211028822.