A new study has revealed that two (2) percent of Black households, around 340,000 families, have a net worth of over $1 million. In comparison, more than one in every seven White households are worth more than a million, according the report tilted the economic state of Black America.
The report published by McKinsey & Company further notes that an estimated 19% of Black American families, roughly 3.5 million households, have a negative net worth compared to just 8 percent of Whites.
The report attributes the phenomenon to historical discriminatory policies from government and private industries which have negatively impacted the circulation of wealth in Black communities. Also, some 4.3 million Black households have a net worth of less than $10,000, the study noted.
Black people make up 13% of the U.S. population and according to the study, employment disparities along racial lines have resulted in a $220 billion annual gap between the wages earned by Black Americans today and what they might be earning if their occupational numbers were proportional to the Black population.
“Achieving this scenario would boost total Black wages by 30% and draw approximately one million additional Black workers into employment,” the study said.
It examined how occupational choices, spending decisions, debt load, and saving habits contribute to the net worth of Black families. The study further looked at how policy and labor laws by the government lifted the wealth potential of the White middle class but did not benefit Black workers.
According to the report, the sum of these factors and historical inequalities have contributed to the growing wealth gap between Blacks and Whites.
Summarizing the occupational representation in various industries across the U.S., the report also noted that Black workers were concentrated in lower-wage jobs and paid less than their White colleagues for doing the same job.
In terms of earnings, the report said one in five Blacks earn less than $30,000 a year, which in the long run means that Blacks have less capacity to save, are prone to more debt traps, and have limited investment options.
In order to improve economic disparities, the McKinsey report observed that promoting women into higher positions will go a long way to addressing these disparities due to the economic role many play in their families.
“Women of all races are less represented in leadership roles, but women of color face double hurdles of sexism and racism,” the report noted.