Race and Social Problems

, Volume 8, Issue 1, pp 29–41 | Cite as

Diverging Fortunes: Racial/Ethnic Inequality in Wealth Trajectories in Middle and Late Life

Article

Abstract

The primary aim of this study is to examine whether racial/ethnic inequality in wealth dissipates or increases between middle and late life, and by how much. To address this aim, this study draws on critical race and life course perspectives as well as 10 waves of panel data from the Health and Retirement Study and growth curve models to understand racial/ethnic inequality in wealth trajectories among whites, blacks, and Mexican Americans (N = 8337). Findings show that, by midlife, significant inequalities in net worth emerge between whites and their black and Mexican American counterparts. On average, white households have amassed a net worth of $105k by midlife, compared to less than $5k and $39k among black and Mexican American families, respectively. Moreover, whites experience much more rapid rates of wealth accumulation during their 50s and 60s than their minority counterparts, resulting in increasing wealth disparities with age, consistent with a process of cumulative disadvantage. At the peak of their wealth trajectory (at age 66), whites have approximately $245k more than blacks and $219k more than Mexican Americans. A wide range of socioeconomic, behavioral, and health factors account for a portion, but not all, of racial/ethnic inequality in wealth, suggesting that unobserved factors such as parental wealth, segregation, and discrimination may play a role in the production and maintenance of wealth inequality.

Keywords

Race Wealth Inequality Aging Life course 

References

  1. Altonji, J. G., & Draszelski, U. (2005). The role of permanent income and demographics in black/white differences in wealth. Journal of Human Resources, 40(1), 1–30.CrossRefGoogle Scholar
  2. Avery, R. B., Brevoort, K., & Canner, G. B. (2006). Higher-priced home lending and the 2005 HMDA data. Federal Reserve Bulletin, 92, A123–A166.Google Scholar
  3. Blau, P. M., & Duncan, O. D. (1967). The American occupational structure. New York: John Wiley & Sons.Google Scholar
  4. Blau, F., & Graham, J. W. (1990). Black-white differences in wealth and asset composition. The Quarterly Journal of Economics, 105(2), 321–339.CrossRefGoogle Scholar
  5. Bobo, L. D., & Charles, C. Z. (2009). Race in the American mind: From the Moynihan report to the Obama candidacy. The ANNALS of the American Academy of Political and Social Science, 621, 243–259.CrossRefGoogle Scholar
  6. Bonilla-Silva, E. (1997). Rethinking racism: Toward a structural interpretation. American Sociological Review, 63(3), 465–480.CrossRefGoogle Scholar
  7. Bonilla-Silva, E. (2013). Racism without racists (4th ed.). Lanham: Rowan & Littlefield.Google Scholar
  8. Bonilla-Silva, E., & Baiocchi, G. (2008). Anything but racism: How sociologists limit the significance of racism. In T. Zuberi & E. Bonilla-Silva (Eds.), White logic, white methods: Racism and methodology (pp. 137–152). Lanham, MD: Rowman & Littlefield Publishers.Google Scholar
  9. Bound, J., Waidmann, T. A., Schoenbaum, M., & Bingenheimer, J. (2003). The labor market consequences of race differences in health. Milbank Quarterly, 81(3), 441–473.CrossRefGoogle Scholar
  10. Brady, D. (2009). Rich democracies, poor people: How politics explain poverty. New York, NY: Oxford University Press.CrossRefGoogle Scholar
  11. Brown, T. H. (2012). The intersection and accumulation of racial and gender inequality: Black women’s wealth trajectories. The Review of Black Political Economy, 39, 239–258.CrossRefGoogle Scholar
  12. Brown, T. H., O’Rand, A., & Adkins, D. E. (2012). Race/ethnicity and health trajectories: Tests of three hypotheses across multiple groups and health outcomes. Journal of Health and Social Behavior, 53, 359–377.CrossRefGoogle Scholar
  13. Burton, L. M., Bonilla-Silva, E., Ray, V., Buckelew, R., & Hordge Freeman, E. (2010). Critical race theories, colorism, and the decade’s research on families of color. Journal of Marriage and Family, 72(3), 440–459.CrossRefGoogle Scholar
  14. Chang, M. L. (2010). Shortchanged: Why women have less wealth and what can be done about it. New York, NY: Oxford University Press.CrossRefGoogle Scholar
  15. Conley, D. (1999). Being black, living in the red: Race, wealth, and social policy in America. Berkeley, CA: University of California Press.Google Scholar
  16. Darity, W. A. (2008). Forty acres and a mule in the 21st century. Social Science Quarterly, 89(3), 656–664.CrossRefGoogle Scholar
  17. Darity, W., & Hamilton, D. (2012). Bold policies for economic justice. Review of Black Political Economy, 39(1), 79–85.CrossRefGoogle Scholar
  18. Darity, W. A., & Mason, P. L. (1998). Evidence on discrimination in employment: Codes of color, codes of gender. The Journal of Economic Perspectives, 12, 63–90.CrossRefGoogle Scholar
  19. Delgado, R., & Stefancic, J. (2000). Critical race theory: An introduction (2nd ed.). Philadelphia, PA: Temple University Press.Google Scholar
  20. DiPrete, T., & Eirich, G. M. (2006). Cumulative advantage as a mechanism for inequality: A review of theoretical and empirical developments. Annual Review of Sociology, 32, 271–297.CrossRefGoogle Scholar
  21. Elder, G. H. (1998). The life course as developmental theory. Child Development, 69(1), 1–12.CrossRefGoogle Scholar
  22. Favreault, M. (2008). Discrimination and economic mobility: The economic mobility project. Washington, D.C.: The Pew Charitable Trusts. Accessed on December 1, 2015, from http://www.urban.org/research/publication/discrimination-and-economic-mobility.
  23. Flippen, C. (2004). Unequal returns to housing investments?: A study of real housing appreciation among black, white, and hispanic households. Social Forces, 82, 1523–1551.CrossRefGoogle Scholar
  24. Gittleman, M., & Wolff, E. N. (2004). Racial differences in patterns of wealth accumulation. Journal of Human Resources, 39(1), 193–227.CrossRefGoogle Scholar
  25. Gould, E. (2006). Health insurance eroding for working families: Employer-provided coverage declines for fifth consecutive year. Economic Policy Institute, Briefing Paper # 175. Accessed on August 15, 2015, from http://www.epi.org/files/page/-/old/briefingpapers/175/bp175.pdf.
  26. Haas, S. A., & Rohlfsen, L. (2010). Life course determinants of racial and ethnic disparities in functional health trajectories. Social Science & Medicine, 70, 240–250.CrossRefGoogle Scholar
  27. Hamilton, D., Darity, W., Price, A. E., Sridharan, V., & Tippett, R. (2015). Umbrellas don’t make it rain: Why studying and working hard isn’t enough for black Americans. Insight Center for Community Economic Development, Oakland, CA. Accessed August 15, 2015, from http://www.insightcced.org/uploads/CRWG/Umbrellas-Dont-Make-It-Rain8.pdf.
  28. Hurst, E., Luoh, M. C., & Stafford, F. P. (1998). Wealth dynamics of American families, 1984–1994. Brookings Papers on Economic Activity, I, 267–337.CrossRefGoogle Scholar
  29. Katznelson, I. (2005). When affirmative action was white: An untold history of racial inequality in twentieth-century America. New York, NY: W.W. Norton & Company.Google Scholar
  30. Keister, L. A. (2000). Wealth in America. New York: Cambridge University Press.CrossRefGoogle Scholar
  31. Keister, L. A. (2004). Race, family structure, and wealth: The effect of childhood family on adult asset ownership. Sociological Perspectives, 47, 161–187.CrossRefGoogle Scholar
  32. Keister, L. A., Vallejo, J. A., & Borelli, E. P. (2014). Mexican American mobility: Early life processes and adult wealth ownership. Social Forces, 93(3), 1015–1046.CrossRefGoogle Scholar
  33. Kochhar, R. (2004). The wealth of hispanic households: 1996 to 2002. Washington, D.C.: Pew Hispanic Center. Accessed August 15, 2015, from http://www.sas.upenn.edu/~dludden/HispanicWealthREPORT.pdf.
  34. Kochhar, R., Fry, R., &Taylor, P. (2011). Wealth gaps rise to record highs between whites, blacks and hispanics. Pew Social and Demographic Trends. Accessed August 15, 2015, from http://www.pewsocialtrends.org/2011/07/26/wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics/.
  35. Land, K. C., & Russell, S. T. (1996). Wealth accumulation across the adult life course: Stability and change in sociodemographic covariate structures of net worth data in the survey of income and program participation, 1984–1991. Social Science Research, 25, 423–462.CrossRefGoogle Scholar
  36. Lee, H., McCormick, T., Hicken, M. T., & Wildeman, C. (2015). Inequalities in connectedness to imprisoned individuals in the United States. Du Bois Review, 12, 269–282.CrossRefGoogle Scholar
  37. Lee, H., & Wildeman, C. (2013). Things fall apart: Health consequences of mass imprisonment for African American women. The Review of Black Political Economy, 40(1), 39–52.CrossRefGoogle Scholar
  38. Lewis, O. (1966). La vida: A Puerto Rican family in the culture of poverty—San Juan and New York. New York: Random House.Google Scholar
  39. Lui, M., Robles, B., Leondar-Wright, B. , Brewer, R., & Adamson, R. (2006). The color of wealth: The story behind the U.S. racial wealth divide. New York: The New Press.Google Scholar
  40. Massey, D. S. (2007). Categorically unequal: The American stratification system. NY: Russell Sage Foundation.Google Scholar
  41. McKernan, S.-M., Ratcliffe, C., Simms, M., & Zhang, S. (2011). Private transfers, race, and wealth. Opportunity and Ownership Project, Report 5. Washington, D.C.: The Urban Institute. Accessed on December 1, 2015, from http://www.urban.org/publications/412371.html.
  42. McKernan, S.-M., Ratcliffe, C., Steuerle, E., & Zhang, S. (2013). Less than equal: Racial disparities in wealth accumulation. Washington, D.C.: The Urban Institute. Accessed on December 1, 2015, from: http://www.urban.org/publications/412802.html.
  43. Menchik, P. L., & Jiankopolos, N. (1997). Black-white wealth inequality: Is inheritance the reason? Economic Inquiry, 35(2), 428–442.CrossRefGoogle Scholar
  44. Meschede, T., Sullivan, L., & Shapiro, T. (2013). The crisis of economic security for African American and Latino Seniors. Boston, MA: Institute on Assets and Social Policy. Accessed on August 15, 2015, from http://www.demos.org/sites/default/files/publications/IASP%20Demos%20Senior%20of%20Color%20Brief%20September%202011.pdf.
  45. Modigliani, F. (1986). Life cycle, individual thrift, and the wealth of nations. American Economic Review, 76, 297–313.Google Scholar
  46. Modigliani, F., & Brumberg, R. (1954). Utility analysis and the consumption function: An interpretation of cross-section data. In K. K. Kurihara (Ed.), Post-Keynesian economics. New Brunswick, NJ: Rutgers University Press.Google Scholar
  47. Moynihan, D. P. (1965). The Negro family: The case for national action. Washington, DC: Office of Policy Planning and Research, U.S. Department of Labor.Google Scholar
  48. Oliver, M. L., & Shapiro, T. M. (2006). Black wealth/white wealth: a new perspective on racial inequality, tenth anniversary edition. New York: Routledge.Google Scholar
  49. Pager, D., & Shepherd, H. (2008). The sociology of discrimination: racial discrimination in employment, housing, credit and consumer markets. The Annual Review of Sociology, 34(1), 181–209.CrossRefGoogle Scholar
  50. Painter, M. A., Holmes, M., & Bateman, J. (2015). Skin tone, race/ethnicity, and wealth stratification among new immigrants: Revisiting the preference for whiteness hypothesis. Paper Presented at the Annual Meeting of the Population Association of America.Google Scholar
  51. Patillo-McCoy, M. (1999). Black picket fences: Privilege and peril among the black middle class. Chicago: Chicago University Press.Google Scholar
  52. Piketty, T. (2014). Capital in the twenty-first century. Cambridge, MA.: Harvard University Press.CrossRefGoogle Scholar
  53. Raudenbush, S. W., & Bryk, A. S. (2002). Hierarchical linear models: Applications and data analysis methods. Thousand Oaks, CA: Sage.Google Scholar
  54. Raudenbush, S. W., & Kasim, R. M. (1998). Cognitive skill and economic inequality: Findings from the national adult literacy survey. Harvard Education Review, 68, 33–79.CrossRefGoogle Scholar
  55. Shapiro, T. M. (2004). The hidden cost of being African American: How wealth perpetuates inequality. New York: Oxford University Press.Google Scholar
  56. Shapiro, T., Meschede, T., & Osoro, S. (2013). The roots of the widening racial wealth gap: Explaining the black-white economic divide. Boston, MA: Institute on Assets and Social Policy. Accessed on August 15, 2015, from http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf.
  57. Sharkey, P. (2013). Stuck in place: Urban neighborhoods and the end of progress toward racial equality. Chicago: The University of Chicago Press.CrossRefGoogle Scholar
  58. Small, M., Harding, D., & Lamont, M. (2010). Reconsidering culture and poverty. Annals of the American Academy of Political and Social Science, 629(1), 6–27.CrossRefGoogle Scholar
  59. Smith, J. P. (1995). Racial and ethnic differences in wealth in the health and retirement study. Journal of Human Resources, 30, S158–S183.CrossRefGoogle Scholar
  60. Smith, J. P. (1999). Healthy bodies and thick wallets: The dual relation between health and economic status. Journal of Economic Perspectives, 13(2), 145–166.CrossRefGoogle Scholar
  61. St. Clair, P., Bugliari, D., Campbell, N., Chien, S., Hayden, O., & Hurd, M. (2011). RAND HRS data documentation, Version L. Santa Monica, CA: RAND Center for the Study of Aging.Google Scholar
  62. Thomas, H., Boguslaw, J., Chaganti, S., Atkinson, A., & Shapiro, T. (2013). Employment capital: How work builds and protects family wealth and security. Leveraging Mobility Series. Waltham: Institute on Assets and Social Policy. Accessed on December 1, 2015, from https://iasp.brandeis.edu/pdfs/2013/Employment.pdf.
  63. Thomas, H., Meschede, T., Mann, A., Boguslaw, J., & Shapiro, T. (2014a). Web of wealth: Resiliency and opportunity or driver of inequality. Leveraging Mobility Series, no 4. Waltham, MA: Institute on Assets and Social Policy. Accessed on December 1, 2015, from https://iasp.brandeis.edu/pdfs/2014/Web.pdf.
  64. Thomas, H., Meschede, T., Mann, A., Stagg, A., & Shapiro, T. (2014b). Location, location, location: The role neighborhoods play in family wealth and well-being. Leveraging Mobility Series, no. 5. Waltham, MA: Institute on Assets and Social Policy. Accessed on December 1, 2015, from https://iasp.brandeis.edu/pdfs/2014/Location.pdf.
  65. Turner, M. A., Nichols, A., Comey, J., Franks, K., & Price, D. (2012). Benefits of living in high-opportunity neighborhoods: Insights from the moving to opportunity demonstration. Washington, DC: The Urban Institute. Accessed on December 1, 2015, from http://www.urban.org/publications/412648.html.
  66. Turner, M. A., Ross, S. L., Galster, G., & Yinger, J. (2003). Discrimination in metropolitan housing markets: Phase I. Washington, D.C.: The Urban Institute.Google Scholar
  67. Vincent, G. K., & Velkoff, V. A. (2010). The next four decades, the older population in the United States: 2010 to 2050. In Current population reports (pp. 25–1138). Washington, DC: US Census Bureau, US: Government Printing Office.Google Scholar
  68. Williams, D. R., & Mohammed, S. A. (2013). Racism and Health I: Pathways andScientific Evidence. American Behavioral Scientist, 57(8), 1152–1173.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Department of SociologyVanderbilt UniversityNashvilleUSA

Personalised recommendations