The share of white millionaires in the United States has doubled in the past quarter-century, with 1 in 7 white families now worth more than $1 million, according to new Federal Reserve data.
The dramatic growth in white millionaires reflects a widening economic gulf, with the top 1 percent of households holding 24 percent of income in 2016, a record high.
It also highlights a deepening racial disparity. The percentage of black and Hispanic households worth more than $1 million has remained around or below 2 percent since 1992.
“We have growing wealth disparities among whites as well, but the white group is so much further ahead that the class of elite blacks is nowhere near the class of elite whites,” said Darrick Hamilton, an economist at the New School in New York.
The accumulation of white wealth looks set to continue. The average white household, worth about $930,000 in 2016, will accumulate a net worth of more than $1 million by the time the next triennial survey comes out in 2020, Hamilton said. (The reported average is skewed by wealthy outliers. The median white household was worth $171,000 in 2016.)
White families vastly outperform African Americans and Hispanics in several key indicators of wealth: homeownership and equity, investments, and inheritance.
Much of the growth in white wealth during the past two decades comes from the doubling of financial assets, including stocks and bonds, as well as pensions and retirement accounts, according to a Washington Post analysis of Fed data. Equity in their primary residences as well as equity in nonfinancial assets such as second homes and other real estate, boats, cars and jewels grew as well, but not as significantly.
White families are twice as likely as black and Hispanic families to own stocks or mutual funds. Sixty percent of white families invest in the stock market, while less than one-third of black and Hispanic families have any exposure to the stock market, according to Fed data.
Among American households invested in the market, the median value of white-owned investments rose to $50,000 in 2016, indicating a recovery from the Great Recession. The median value of black-owned and Hispanic-owned investments also rose but remained below 2007 values, at about $12,000. All numbers have been adjusted for inflation.
When it comes to homeownership, often the largest component of wealth for American families, nearly three-quarters of white families own their homes, compared with less than half of black and Hispanic families.
Even among homeowners, minority-owned homes had lower values, in part because of racist practices such as redlining that prohibited them from buying residences in many white neighborhoods.
“If you are a black homeowner, you are more likely to have a lower value on your home because of neighborhood segregation,” said Valerie Wilson, director of the Economic Policy Institute’s program on race, ethnicity, and the economy. “Blacks couldn’t purchase in white communities where values were rising faster.”
The average housing wealth for white families was more than twice that of black and Hispanic families in 2016.
White families are more likely to trade up to pricier homes over time, whereas black families are more likely to lose their homes or stay in the same house for a lifetime, said Brendan O’Flaherty, a Columbia University economist who studies the economics of race.
“The idea of a starter house is predominantly a white phenomenon,” O’Flaherty said.
Black and Hispanic families are also much less likely to inherit wealth than their white counterparts. One-quarter of white households reported receiving an inheritance, compared with 8 percent of blacks and 5 percent of Hispanics.
The Republican tax plan, released last week, could further widen the country’s gaping economic divide, delivering major gains for the richest 1 percent of Americans, according to an analysis by the Urban-Brookings Tax Policy Center, a leading group of nonpartisan experts.
“The racial disparities in wealth, which is the paramount indicator of economic opportunity, security and overall well being, remain stark,” Hamilton said. “And if the Trump tax plan, which includes the elimination of the estate tax, is made into law, it will only get even larger.”
Ted Mellnik contributed to this report.