How Did Black Wealth Increase by an Impressive 60 percent!

In a surprising turn of events, median Black household wealth increased by 60 percent from 2019 through 2022. This represents a significant boost of $17,000. Ultimately, this is a great offset to the seismic decrease of 61 percent from 2007 through 2010.

According to the recent 2022 Federal Reserve Survey of Consumer Finances, the median American household experienced a 37 percent boost. This represents a (net) positive increase through the pandemic.

What changed? And, will this pivot help to improve the odds of reaching racial wealth parity?

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Why does this increase in Black Wealth Matter?

As of Q3 2023, Black households held less than 5 percent of total US wealth. In contrast, white households held nearly 84 percent. These numbers stand in stark contrast to the total of Black households accounting for 13.4 percent of the US population, while white households account for 60 percent.

The wealth gap between Black and white Americans has not only stagnated but has become entrenched since the early 2000s.

Racial Wealth Gap 2009 — Average is not equal to the Median

While the wealth gap has converged significantly since 1860, the current lack of wealth in many Black households left communities blighted.

Every economic downturn such as the Dot.com bubble, the Housing crisis, and even government shutdowns leave Blacks increasingly vulnerable.

The recent pandemic took aim at the front-line workers, many of whom were predominantly minorities. The fallout of 2020 along with the cascading inflationary effects painted a total financial fallout for black businesses, churches, and households.

The 60 percent increase in median net worth of Black households between 2019 and 2022 suggests that the financial well-being of the US has recovered far faster than after the Great Recession. This means a lot in the grand scheme. Every percent increase above the national average creates more opportunities and meaningful impact. With more dollars in circulation as well as more capital assets, households are banking on their own future vs spending against its future value.

What changed?

The pandemic introduces additional resources from stimulus packages, an increase in unemployment benefits, and finally federal pauses (student loan forbearance and limited rent moratoriums). With these extra funds, a lot of households opted to invest for the first time with varying results. During those three years, some opted to buy their first home, especially at a historically low-interest rate.

Finally, if it was legitimate, the PPP loans also helped a myriad of small businesses. Plenty of positive tailwinds; my household can vouch since we became millionaires during that period.

See the Median Wealth by Race Chart to see the triannual percentages as well as the annualized average per racial group or ethnicity captured by the survey. :

**Note:** TNFG chart of wealth using Fed. Reserves Survey of Consumer Finances

Yes Black Wealth increased, but It’s Struggling to keep pace:

While the median net worth of Black households surged based on percentage, it is still the lowest in the survey. Surprisingly, the median Asian American household was north of $500,000. The median for white households was $285,000, while Hispanic households had a median net worth of $61,600.

This indicates that there is a lot of work to be done. Some of which are simple like the matching contribution from employers. Many don’t know that even $3,000 annually or $115 every pay period in a 401(k) match is worth $352,138 (at an 8 percent rate of return for 30 years). Along with your portion, your nest egg would be north of $700,000.

Considering that most Americans are retiring with less than $75,000, this is a great opportunity. Other solutions include an intentional position in college where mentoring should be mandatory.

Blacks in the US can ill-afford to hold on to a large share of student loan debt. Getting married and making a budget that leans toward acquiring valuable capital assets can’t be missed.

The three-year growth rate of real earnings for full-time workers revealed a 4.0 percent increase for Black workers (settling near $50,000) per household. Additionally, within 20 months after COVID, Black unemployment rates were lower than they were at the same time in previous recoveries and have stayed lower through the most recent data. At one point, we even hit a near-historic low, in early 2023. Black homeownership grew 2.9 percent for the same period.

Finally, Black rates of business ownership skyrocketed +6.2 percent to the highest recorded readings at 11 percent. Read Brooking’s commentary on Who is Driving Black Business Growth for more insights. All of these factors, added financial jet fuel to keep homes afloat. It’s an all-hands approach. If Blacks want to see a pivot toward a median of $100,000 or more per household, we will have to do more of the same.

I repeat: Education, high-paying in-demand jobs, Cash Flow Management, Marriage, Homeownership, and Investment. All of these dollars matter, and it all makes cents!