It’s going to be a long haul for African-American families to catch up to where white families are today, economically speaking: exactly 225 years from now, if we’re being optimistic.
That’s according to a new report by the Corporation for Enterprise Development and Institute for Policy Studies, which estimates future wealth disparities among U.S racial groups using data from the Federal Reserve’s Survey of Consumer Finance (SCF). The total amount of money in the average person’s pockets, or their net worth, is obtained by adding up assets like housing, bank deposits, financial securities, insurance plan values, stocks and mutual funds, and equity, and then from that sum, subtracting liabilities like mortgage, consumer, and educational debts. (This measure is based on a 2014 working paper by New York University economist Edward N. Wolff, and doesn’t take into account the value of goods like cars, electronics, and furniture.)
Using that methodology, the authors calculated the net worth of racial groups for 30 years before 2013, and then projected those trends into the future. They found that the economic rift between whites and minorities is widening dramatically: By 2043, when people of color overtake whites as the majority in the U.S. population, blacks and Latinos will likely lag even further behind them, wealth-wise, than they do now. These two minority groups will have around $1 million less than whites, on average, compared to $500,000 in 2013.