Know the Data: 15 Cents on the Dollar

That's the Black-White Wealth Gap. Help us spread this important data.

This is a post to share the data that motivated our new book, “Fifteen Cents on the Dollar: How Americans Made the Black-White Wealth Gap,” which came out on June 18. At the bottom of this post, we link to the slide deck we use in some of our in-person data talks, in case you want to go deeper.

The Black-White Wealth Gap

Wealth is one of the most misunderstood concepts in popular finance today. People constantly confuse it with income and think that someone earning the same amount of money as them must have the same wealth. Or they confuse wealth with assets – they think just because someone has a home that they’re wealthy, but it could be the case that their home is encumbered by a lot of debt.

Because wealth is not very well-understood, wealth gaps are even less well-understood. 

There’s also not much transparency into wealth in this country. Not only do people consider wealth a private matter, even among friends and family, Americans don’t report their wealth on a regular basis to the government today (they used to just after the Civil War, more on that below). And when there is a snapshot of wealth, at the point of inheritance, race is not recorded in that tax filing. This makes it difficult to study the issue in detail.

The most authoritative data on race and wealth comes out every three years from the Federal Reserve in a survey about consumer finance. That’s what we used below for data since 1989.

This data shows the dollar amounts of difference between the average wealth of white families and the average wealth of Black families. As you can see, it’s more than a $1 million difference. 

One of the most common questions we get about this data is: what about the billionaires? If you just removed them, would there not be a Black-white wealth gap? Are the mostly white American billionaires the ones who are creating this gap? 

The answer is “no.” The gap is not driven solely by people at the very top. One way this is demonstrated: there is a gap between the average wealth of white and Black families and also a gap between the wealth of the median white and Black families. If the gap were only tied to the very richest families, removing those families would affect the average, but it wouldn’t change the median. In other words, taking 20 families off of the top, would still leave the families standing in the middle of the distribution (the medians) in about the same place.

The most recent Federal Reserve data has the ratio of the wealth of the average Black family divided by the wealth of the average white family at 15 percent. This same Fed survey also has the ratio of the wealth of the median Black family divided by the median white family at 15 percent. 

In other words, this is a gap that shows up in the middle of the distribution as well, not just the top.

Looking Back at History

Back after the Civil War, the U.S. government asked families about their wealth. The 1860 and 1870 Censuses featured wealth as a question for households. Over the last few years, a group of academics from Princeton and the University of Bonn have created a unique and compelling data series showing the Black-white wealth gap since 1860. They used these Census filings as well as other indicators like local property tax records to come up with average wealth levels of Black and white families since the Civil War, including in the many decades that preceded the Federal Reserve’s survey of wealth.

What you see above is a graph of the ratio of the average white family’s wealth compared to the average Black family’s wealth since the Civil War. It shows the ratio drops from around 58:1 down to 10:1 in the 40 years after the Civil War. And then it keeps dropping until the mid to late 1900s.

The drops in disparity in the late 1800s can be attributed to the loss “wealth” of enslaved people once owned by white people and the increase in wealth Black Americans had as they managed to purchase land as white farmers moved west to Homestead properties. 

The early 1900s drops came as Black businesses developed and some Black business districts thrived.

Where does that leave us today?

Identical numbers can paint a different picture when you flip them on their head and show the inverse. That’s what we have done here. This graph is the inverse of the prior “pile of money” graphic. This graph shows the average Black family’s wealth divided by the average white family’s wealth. When you normalize it on a dollar, you see that the average Black family had 1.8 cents for every $1 in the average wealth of white families in 1860. That figure went up to 15 cents on the dollar in the 1950s. And then it went up more in the early 1990s. And now, after some ups and downs, it sits again at 15 cents on the dollar.

The average wealth of Black families today is 15 cents for every $1 in average wealth of white families.

To understand the Black-white wealth gap, look at the green area of the dollar bill. That is the gap. If there were parity among typical Black and white families, that green area would be gone.

Some people may be surprised that the Black cents on the dollar is not higher than it was in the 1950s, even though we have had the Civil Rights movement and policies like affirmative action.

There are many factors in the modern history of this gap, but some to consider are that new policies aimed at lifting up Black families – like affirmative action – often were paid for by those families with debt. Black families have had to take on more student debt than white families. So, while education can help Black families build assets, they still have more education debt than white families. Other factors to consider are the prominence of stock market gains in white wealth; Black families with wealth to invest haven’t been as likely to invest in the stock market to the same degree. And also it’s worth remembering that much of white Americans wealth is inherited in some form, at the point of death or through advantages paid for throughout childhood and young adult life.

How much longer until parity?

The length of time it would take to reach parity depends on many factors, including whether inputs to the gap — like the rate of home ownership among races — change. Our book goes through nuanced storylines and scenarios and explains which factors will affect the wealth gap the most.

But simply speaking, to get a feel for the future, you could look at the rate the gap has been closing in recent years to come up with some possibilities. Using data about median levels of wealth from the Federal Reserve, we find that: If the Black-white wealth ratio continues closing in coming years at the rate that it did from 1989 until 2022, the length of time it will take to reach a 1:1 ratio is 291 years.

More positively, if the Black-white wealth ratio increases at the pace it did from 2019 until 2022, it would reach 1:1 in 91 years.

That will be the year 2113.

These facts are important in our national conversation about wealth and fairness in society.

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Thank you for reading about this important data. Our number one goal is to make 15 cents on the dollar a nationally-recognized statistic, and we appreciate your help.

We have been giving talks about racial wealth gap data around the country. Here are our slides, if you want to go deeper.

The data is important to our book, which was released on June 18. But so are the very human stories. Over the last few weeks, we have introduced the main people in the book to you in this newsletter, including: Michael Render, Andrew Young, Ryan Glover, James Woodall, Brook Bacon and Tandreia Dixon. We will introduce the final main person in the book to you this weekend.

We are excited to see many of you at one of our Juneteenth events over the next week in NYC, DC, Atlanta, LA, Denver, Kansas City and Tulsa. (More on events here.)

And if you are interested in media clips from our launch day. Here is our “Morning Joe” clip.” The Money Life podcast. A write-up from CharterWorks. And a book excerpt that ran on YahooNews and Capital B News.

Thank you for helping us spread the word about these important issues.

-Louise and Ebony