You might call it the number that rocked a city.
The Federal Reserve Bank of Boston released its “Color of Wealth” report in 2015, and it quickly became one of the most widely cited studies of any sort in Boston. The biggest reason? Its stark estimate for the median net wealth of US-born Black people in the region: $8.
That sobering single digit — contrasted with the $247,500 reported by white households in Greater Boston — inspired hard conversations about who benefits from Boston’s economic boom, and who gets left behind.
The report and ensuing discussions prompted the creation of the Black Economic Council of Massachusetts, which has become a formidable lobbying force for city and state public affairs, and the Foundation for Business Equity, an Eastern Bank Foundation spinoff that helps entrepreneurs of color. And that eight-dollar figure was the focal point of a Globe Spotlight series in 2017 that increased the urgency among local business groups to address the persistent racial inequities underscored in the report.
Now, business leaders working with the Boston Fed are revisiting the ground covered by that oft-mentioned study. Late last month, they embarked on an extensive initiative that will involve a survey that’s far more comprehensive than the previous one.
The new study has an estimated budget of $1.5 million. The funders include the Barr Foundation, at $500,00, along with the Boston Foundation, the Greater Boston Chamber of Commerce, and the Eastern Bank Foundation, each kicking in $250,000. (At least another $250,000 still needs to be raised.) A survey firm will be hired within the next year to oversee the polling. It will take up to three years to complete the research, although findings will be shared on a rolling basis.
Nicole Obi, BECMA chief executive, said the original report “really did kick off the racial awakening ... here in Massachusetts” but more can be done to study the underlying causes of the wealth gap. In particular, she wants the researchers to delve into student loan debt, which has had an outsized impact on Black families. Borrowing for college has gone from being seen as a steppingstone toward the American dream, she said, to an intergenerational problem that is holding back Black families.
That’s not the only issue Obi hopes can be addressed.
“There’s so much opportunity in the Massachusetts economy around high-growth and high-paying jobs and careers, but what is happening in the Black community in that regard, how many people are engaged in the growth?,” Obi said. “Life sciences is booming in the state right now [but] are we going to participate in that opportunity?”
The original $8 figure was based on the assets and debts of a sample of about 70 households led by US-born Black people in the Boston metro area who reported a median family income of $41,000 a year. The report compared those households to nearly 80 white-led households, who had a median net worth of $247,500 and median earnings of $90,000 a year. (The report also found great disparities between the net wealth of Hispanic households, with about 130 surveyed in total, and white households.) About 400 households were sampled in total, but certain ethnicities were underrepresented. And the report dealt only with the Boston metro area.
Boston Fed executive vice president Prabal Chakrabarti said he wants the new report to be broader, to cover racial inequities statewide, with bigger samples to consider and a broader variety of ethnic groups. For example, only 14 households with Asian backgrounds were surveyed for the 2015 report, making it difficult to draw any conclusions about a population that comprises about 7 percent of Massachusetts residents. And Chakrabarti wants the report to set benchmarks that can be recalibrated year after year, to show where progress is occurring in addressing the wealth gap, and where it’s not. Boston Fed officials say the new survey will include a more robust sample, probably at least 3,000 to 5,000 people.
“We’ll have a much richer picture of wealth and debt across racial and ethnic groups and in different geographies around the Commonwealth,” Chakrabarti said.
That’s not the only way the Boston Fed is trying to improve on the earlier report.
“It didn’t say enough about the sources of the disparity, and it really didn’t point to ... what to do [about it],” Chakrabarti said. “That study was an incredible catalyst [but] this new study is designed to be more of a compass, to reduce and ultimately eliminate wealth disparities.”
Jim Rooney, Greater Boston Chamber chief executive, said the new study can be traced to work that started in the administration of former mayor Martin J. Walsh, under Karilyn Crockett, Walsh’s chief of equity. Crockett had been eager to revisit and update the 2015 report. But she left City Hall after Walsh was appointed US labor secretary, and now works at MIT as a professor of urban history and policy. Rooney said the chamber has hired Crockett as a consultant to oversee the chamber’s involvement in the new study.
Rooney said many of his members are focused on the disparities created by a free-market economy.
“The question we need to ask ourselves is: What does inclusive capitalism look like?” Rooney said. “What does it mean? If left to the natural order of things, these gaps and inequities just perpetuate. That’s not the direction we want to head in.”
A steering committee of academic and community advisers, to be led by the Boston Foundation, will be assembled to help the Boston Fed and its to-be-hired consultant design a rigorous survey, to get an in-depth picture of the wealth gap and shed some light on the causes and potential solutions.
“This is a matter of generational wealth, and it’s going to take potentially a full generation to see substantive progress,” said Dave Madan, founder of the Builders of Color Coalition. “[But} I’m optimistic at the degree to which the folks around Boston have agreed to take this challenge seriously.”
Glynn Lloyd, head of the Foundation for Business Equity, said he’s glad that the next report will be broader in scope and mission than the 2015 report. But it’s also hard to understate the impact the first one had.
“People were kind of slumbering and didn’t really understand how the wealth gap existed in their own city, their own state,” Lloyd said. “That was like a wake-up call, probably on all sides.”