Report reveals racial gap in wealth in Mass.
Sandra Larson | 9/30/2009, 4:45 a.m.
A new report on the financial stability of American households reveals stark disparities in net worth and asset ownership between whites and minorities in Massachusetts.
The “2009-2010 Assets and Opportunities Scorecard” was released last Tuesday by the Corporation for Enterprise Development (CFED), a national economic nonprofit organization. The report assessed all 50 states and the District of Columbia in terms of how well residents are faring when it comes to financial security.
The report calls the racial wealth disparity in the nation “truly stunning.” One of its key findings: For every $1 of net worth owned by a white-headed household in 2006, a minority-headed household possessed only 16 cents.
“Due to a variety of factors, including different initial wealth endowments and outright discrimination,” the report says, “minority households accumulate — at the median — fewer assets than white households.”
According to the report, Massachusetts ranks near the bottom in “home ownership by race,” with 70.2 percent of whites owning homes compared to 37.3 percent of minorities. In the nation as a whole, white and minority homeownership rates are 71.5 percent and 48.2 percent, respectively.
The report also shows nearly half of minority households in the state, including African Americans, Asians and Hispanics, are “asset poor,” meaning they lack sufficient net worth to subsist at the poverty level for three months in the absence of income. For whites, the figure is 20.6 percent.
“It’s generally thought that all people in Massachusetts are doing well, but a lot of people are not,” said state Sen. Jamie Eldridge, D-Acton, co-chair of a special commission founded to study asset development in Massachusetts. “The disparities are quite significant, based on race and income. It means that a whole large group of Massachusetts residents don’t have a shot at the American dream.”
Assets such as real estate, savings and stocks, and education or vocational training are crucial building blocks of net worth and wealth. But the report shows a wide racial gap in net worth, both here and across the nation.
In Massachusetts, the median net worth of white households is $213,755, while the median for minority households is just $6,694. Those figures put the state in 31st place in the nation in the “net worth by race” category. But overall, the report gave the state an “A” grade due to its high rankings in areas such as education and health insurance.
Even the best of states shows a sobering gap. The top-ranked state for net worth by race — that is, the state with the smallest disparity — is Nevada, but the figure for white households there ($109,343) is still more than twice that of minority households ($45,050).
Margaret Miley, executive director of the Midas Collaborative, a statewide alliance of nonprofit agencies offering asset-building and financial education programs, said the scorecard reveals a clear wealth distribution problem along racial and other lines in Massachusetts.
“In my view, it’s very compelling that we’re getting a grade of A and yet there are areas we’re very weak in,” Miley said. “We come in 31st in the country on net worth by race, 32nd for net worth by income, 32nd in net worth by gender. That suggests that we have a lot of wealth, but it’s very poorly distributed.”