Institute on Assets and Social Policy

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Past Research

Leveraging Mobility? The Impact of Assets on Family Well-Being Over Time

Financial assets play a fluid and active role in the dynamics of social mobility and opportunity. In his book, The Hidden Cost of Being African American, Thomas Shapiro starkly highlighted the wealth effect –the difference in mobility opportunities for those whose wealth is built from income alone rather than in addition to family wealth. He articulated the opportunity that assets provides a starting point for understanding how strategically timed transfers of assets from individuals’ families play a role in opening doors to social mobility. This work provided a snapshot of the families in terms of their existing assets and asset sources, and future aspirations.  However, a broader understanding is needed of the way families, over time, do or do not acquire and use assets, how they manage financial uncertainty and opportunity, leverage social mobility and open up prospects for themselves and their children.

This project sought to re-contact approximately 100 of 189 families that were spoken to in 1998-1999.  The initial interviews provided the core data for Thomas Shapiro’s book, The Hidden Cost of Being African-American. The research drew on the same data set, returning to interview those families ten to twelve years later. 

The Racial Wealth Gap Increases Fourfold

Click to view reportAssessing the wealth holdings of the same families for 23 years (1984-2007) shows that the wealth gap between whites and African Americans increased more than 4 times, from $20,000 in 1984 to $95,000 in 2003. This gap persisted for African Americans and white families in the same income range. For example, middle-income white households had greater gains in financial assets than high-income African Americans; by 2007, they had accumulated $74,000, whereas the average high-income African American family owned only $18,000. At least 25% of all African American families had no assets to turn to in times of economic hardship.

Assets, the Racial Wealth Gap and Family Well-Being Over Time

As a continuation of Leveraging Mobility? The Impact of Assets on Family Well-Being Over Time, this project completed the interview database from the study examining the racial wealth gap that comprised the foundation of the book, The Hidden Cost of Being African American, continued the data analysis of both the family interviews and PSID, and began reporting the major findings. An important part of this project involved analyzing the drivers of the racial wealth gap using national databases to triangulate the in-depth family interviews. The quantitative component centered on analysis of the PSID to explore the major forces behind the increasing racial wealth gap, investigating what types of wealth contribute to the gap, and studying monetary transfers and employment experiences providing a representative comparison to the interviews conducted as part of this study.

Closing the Racial Wealth Gap and Building Economic Security

This project further expanded IASP’s knowledge and evidence, framed an accessible public narrative, developed an effective and strategic policy responses, and fueled IASP’s existing and expanding partnerships.

Image of briefThe Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide  This brief reveals the dramatic gap in household wealth that now exists along racial lines in the United States reflects policies and institutional practices that create different opportunities for whites and African-Americans, and that personal ambition and behavioral choices are but a small part of the equation.  So powerful are these government policies and institutional practices that for typical families, a $1 increase in average income over the 25-year study period generates just $0.69 in additional wealth for an African-American household compared with $5.19 for a white household, in part because black households have fewer opportunities to grow their savings beyond what’s needed for emergencies.

The dramatic increase in the racial wealth gap materialized and accelerated despite the country’s movement beyond the Civil Rights era into a period of legal equality and the election of the first African-American president.  The resulting “toxic inequality” now threatens the U.S. economy and indeed, American society.  This brief details how IASP was able to statistically validate five “fundamental factors” that together account for two-thirds of the proportional increase in the racial wealth gap.

On February 27, 2013 there was a webinar hosted by the Insight Center’s Closing the Racial Wealth Gap InitiativePolicyLink, and Tom Shapiro, Director of the Institute on Assets and Social Policy at Brandeis University.  This webinar presented breakthrough research on what has been fueling our country’s growing racial wealth divide for the past 25 years.  Click here to listen to the playback.

This report was well received and covered by television, radio, newspaper, and Internet:

March 2, 2013 - Director Shapiro appeared on the Melissa Harris-Perry show.

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