Households across the United States were able to build wealth during the COVID-19 pandemic, but Black and Hispanic families still lagged behind their white and Asian counterparts at all income levels, according to a Pew Research Center study released Monday.
“Large gaps in wealth across racial and ethnic groups persisted through the pandemic, and are not much different from the gaps that have been present for several decades now,” said Rakesh Kochhar, a Pew Research Center senior researcher and lead author of the study.
The center analyzed Census data from 2020 and 2022 to identify wealth disparities among racial and ethnic lines. The wealth of Indigenous and Pacific Islander households was not considered because of their small sample size.
Overall, families in the United States have grown wealthier since 2020, even as unemployment surged during the pandemic, the study found. That is largely because as COVID forced US households into quarantine, families cut down on consumption of extraneous foods and goods, the report states. Three rounds of stimulus checks from the federal government also allowed families to pocket extra cash.
“You didn’t go out to restaurants and travel, and all these things added up to more savings for households,” Kochhar said.
In the meantime, Kochhar said, a 31 percent rise in home values between 2019 and 2021 also helped families accrue wealth. Since most Americans derive their wealth from homeownership, any appreciation in home value converts to a higher net worth. Home equity, or the value of a property minus household debt, accounted for more than 60 percent of the net worth of Black and Hispanic households in 2021, according to the report.
Kochhar warned, though, that any wealth building could “flatten out” now that the government has stopped issuing stimulus checks, and as Americans have less disposable income.
Though households were generally able to build wealth, the gains during the pandemic could only make a dent in closing the racial wealth gap, the study found.
The typical white household in America had more than nine times the wealth of a Black household in December 2021 — or $250,400, compared to $27,100. The ratio dropped from 13 times the wealth in December 2019.
White households had about five times the wealth of Hispanic families in that time, the study found. Multiracial households that don’t identify as Hispanic had less than half of the wealth of white families in 2021, up from more than a third of the wealth in 2019.
Asian households had the highest wealth of any race or ethnicity in 2021, at a median $320,900 net worth. The median net worth for the top 25 percent of Asian families in 2021 was $1,814,000. And for Black families? Just $414,200.
Kochhar said research behind the wealth gap shows that racist practices such as slavery and segregation, as well as a person’s immigration status, put Black and Hispanic households in a deficit that will take generations to overcome.
“Wealth is something that you accumulate over time,” Kochhar said. “So once a gap has settled in, it builds itself.”
The report did find that white and Asian households overall have more debt than Black and Hispanic households, though the report’s authors attribute the finding to data that shows Black and Hispanic people are more likely to be denied mortgages or lines of credit, and are less likely to have a bank account.
Despite holding less debt, Black and Hispanic households had higher debt-to-assets ratios, meaning they had a smaller share of money to pay back their debts.
Immigrants also saw their wealth increase during the pandemic, the report found. The median income for immigrant households grew 42 percent, from $73,300 in 2019 to $104,400 in 2021. But the wealth for a typical immigrant family still trails behind that of the typical US-born family, which was $177,200.
The report showed a large disparity in wealth generation between Hispanic and non-Hispanic immigrant families, though. While immigrant households with a Hispanic head held around $35,000 in net worth in 2021, non-Hispanic immigrants held $234,000 in assets.
Kochhar attributed the gap to a range of causes. Many non-Hispanic immigrants came from wealthier parts of Europe and Asia, and have higher education levels. Also, a large percentage of Hispanic immigrants in the United States are younger or new arrivals, and have had less time to build wealth.
“None of [these factors] alone explains everything, but a lot of factors contribute to the wealth gap,” Kochhar said.