(Bloomberg) -- The conclusion is sobering, but not surprising: For Black America, the wealth gap is pervasive.
Even in this era of Black Lives Matter, the coronavirus pandemic is worsening racial economic inequality. Many of the forces that have stunted Black wealth for generations -- among them slavery, segregation and institutionalized discrimination -- have been further exposed by the public-health crisis.
That’s the takeaway from data released by the Federal Reserve in June, which provides one of the first comprehensive looks at the racial dynamics of the U.S. economy as Covid-19 began forcing businesses to close and people to stay at home.
African Americans held only 1.6% of corporate stock and mutual-fund shares in the U.S. as of March 31 compared with almost 91.6% by White investors, who have gained from the roughly 45% rise in the S&P 500 since then.
Part of the gap in wealth holdings is their share of the population, which is 13.4% compared to 60.1% for non-Hispanic Whites. Further, White Americans are older on average which generally means they had more time to accumulate wealth.
But it also lies in systemic inequalities that have hindered Black Americans’ ability to accrue wealth and then pass it on to heirs.
Real estate is often considered one of the surest ways to do to that, with more than 70% of White households owning their own homes since the early 1990s. Less than half of Black families owned a home at the end of the first quarter.
White Americans also hold a larger proportion of their assets in private businesses than Black Americans.
Vast differences in income have widened the wealth gap. More than a third of White households earned in excess of $100,000 per year in the first quarter -- a share twice as large as that for Black households.
The decline of unions has had a significant impact on the inequality, said economist Catherine Ruetschlin, an adjunct assistant professor at the University of Utah who has studied the racial wealth gap. The trend has reduced the bargaining power of workers, especially the Black middle class, since the 1970s.
Some of the barriers to asset growth for Black families began decades ago, according to Frank Paré, a financial planner and president of PF Wealth Management Group in Oakland, California.
Social Security, created in 1935, initially excluded millions of Black domestic and farm workers, for example, while Black veterans didn’t equally benefit from the G.I. Bill after World War II.
“Things that happened 40-50 years ago reverberate today,” he said. Through much of the 20th century, “we were not allowed to participate in these policies that would help solidify middle-class wealth for generations afterwards.”
©2020 Bloomberg L.P.
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