(Bloomberg Businessweek) -- The best research on differences in black and white Americans’ income and wealth comes from Germany. University of Bonn economists Moritz Kuhn, Moritz Schularick, and Ulrike Steins assembled historical data from the Federal Reserve’s Survey of Consumer Finances from 1949 to 2016, analyzing income from all sources by households, not individuals. They found that the median black household narrowed the income and wealth gaps with its white counterpart through the late 1960s and ’70s in percentage terms, but it’s lost ground since. During the financial crisis, the housing market collapse was especially cruel to the best-off black households, because they were more likely to be highly leveraged, Schularick notes. They were also targeted with predatory loans. The researchers found that at the 90th percentile—households better off than 9 of 10 of their race—black wealth “collapsed” after 2007 while whites were “largely unaffected.”
• Black household income peaked at 62 percent of whites’ in 1977, according to the data the researchers assembled. It was 57 percent in 2016.• By 2016, median black household wealth had fallen to 9 percent of whites’—the same level as in 1965.• Mass incarceration of black men caused black household wealth to slip in the 1980s.
To contact the author of this story: Peter Coy in New York at pcoy3@bloomberg.net
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