Massachusetts has a major wealth gap problem. And as the Globe’s 2017 Spotlight series demonstrated, the cleave is most pronounced along racial lines: White residents are generally far wealthier than their Black and Latino neighbors.
That’s why it’s welcome news that the Federal Reserve Bank of Boston is partnering with local business groups and nonprofits to conduct a more comprehensive study of the wealth divide in the state. The aim is to get a more complete picture of economic inequality, its extent, its causes — and its possible solutions.
The laudable effort is in its early stages. The project’s funders, including the Boston Foundation, the Greater Boston Chamber of Commerce, Eastern Bank Foundation, and the Barr Foundation are still $250,000 short of their $1.5 million budget goal. A survey firm will be hired within the next year to complete the research, and it will take roughly three years until we get its initial findings.
But for this effort to be truly successful, it is crucial not only that the project take a broad look at all the factors that contribute to economic inequality — including that which forms along racial, ethnic, and geographic lines — but also ensure that the research continues at regular intervals so that the success, or the failure, of efforts to address the wealth gap can be measured over time.
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The effort comes seven years after a jaw-dropping Color of Wealth report by the Boston Fed found that the median net wealth of a US-born Black Boston-area resident was just $8. It comes as other studies continue to identify the stark economic divides in the Commonwealth.
A study by the Boston Foundation, released Thursday on the economic condition of Bay State Latinos, is one example. It shows that more than 24 percent of Latinos in Massachusetts — about 1 in 4 — live in poverty. That is worse than the national average of about 20 percent. It also shows about 18 percent of Black state residents live in poverty — compared to less than 7 percent of white Massachusetts residents.
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This is despite the fact that poverty rates among Latinos have actually decreased in the state, and labor force participation and entrepreneurship have increased. The persistent wealth gap only worsened during the pandemic, in part because of the slow recovery in the leisure and hospitality industries.
But the main drivers of the wealth gap are clear: sky-high housing costs, which affect Latino and Black residents outside of Boston, far from its higher-paying job opportunities and top-quality social services. The farther outside Route 128 you go, the more your access to upward employment mobility, nonprofits, well-funded community organizations, and interpreter services dwindles. Massachusetts’ first-class technology sector, medical resources, academic and scientific communities, and tourism industries are largely out of reach for those outside of Boston’s urban core. Yet increasingly, the far-flung areas are where the state’s Latino communities and an increasing number of Black residents are found, because it’s what they can afford.
And this is just what we know from the data that we have — which is incomplete.
The Boston Fed is off to a good start with the first phase of the new research project, which is already underway and examining disparities in the assets of residents, such as homes and investments, and their debts, such as mortgages and bank loans. But for the project to be really impactful, it must also examine the lack of certain assets and debts. For example, Black and brown residents are far less likely to have mortgages, despite still having the burden of paying high rent prices — something that may not show up as a debt. And, as the Emancipator — a new publication jointly produced by the Globe and Boston University— outlined in a recent series about the racial wealth gap, Black and brown people are more likely to carry high student loan debt burdens, be steered to payday loans and other second-tier lending practices, and to have difficulty securing business capital to start and grow businesses within their communities.
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The troubling picture painted by the data we do have underscores the need to learn more. The new effort led by the Boston Fed could have real impact and serve as a national model — so long as it is thorough, lasting, and carefully designed to understand what the most underserved residents in the state need in order to succeed and thrive. Hopefully, those leading this new charge won’t let those residents down.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.
