It's not exactly breaking news that there is a wage gap between men and women and between whites and people of color.
But a new study from the Insight Center for Community Economic Development reveals a shocking disparity in women's wealth:
Among the most startling revelations in the wealth data is that while single white women in the prime of their working years (ages 36 to 49) have a median wealth of $42,600 (still only 61 percent of their single white male counterparts), the median wealth for single black women is only $5.
Yes. You read that right. Five dollars.
And the numbers aren't much better for black women on the whole, whose median wealth is only $100, or for Hispanic women, whose median wealth is only $120.
The study [pdf] focused on data from the 2007 Survey of Consumer Finances, sponsored by the Federal Reserve Board. That means, according to the study's authors, that as bad as these numbers were in 2007, in all likelihood, they're a lot worse now, given the recent economic downturn. In other words, the conclusion that single black women's wealth is about $5 is actually a conservative estimate.
The study offers several explanations. Women of color are more likely to hold jobs with lower pay and fewer benefits. They're also more likely to be raising their families alone, with a full 70 percent of black families headed by single women. And while married or cohabitating women of color do better, with a median net worth of $31,500, that's still substantially less than their white counterparts, whose median net worth is $167,500.
Another explanation is the disproportionate reliance on credit card debt for what the National Council of La Raza calls "survival spending." You know, those luxuries like groceries and other necessities.
And finally, there's this catch:
Last but not least, women of color are more likely to use their own financial resources to help out extended family members. With a history of exclusion from public benefits and economic opportunities afforded to whites, women of color know they are relied on and must rely on others in their families and communities when hard times hit.
So in times of economic trouble, black women are more likely to take on the additional burden of assisting friends and family, with fewer resources available to assist them, and thus, they're the most likely to have greater debt and less wealth. Nice catch, huh?
Meizhu Lui, director of the Closing the Gap Initiative, who contributed to the report, and works every day to improve the economic circumstances of women of color, was nonetheless shocked by the report.
"Even for those of us who have been looking at the wealth gap for a while, we were shocked and amazed at how little women of color have," Ms. Lui said.
The study recommends five policy changes to address these horrible imbalances and improve the financial realities for women of color:
- Improve data collection
- Improve employment opportunities for women of color
- Support self-employment and microenterprise
- Provide low-income women with subsidies and incentives to save
- Modify social insurance to provide adequate protection for women of color, who often fall through the cracks because of significant gaps in coverage
The entire study is devastating in its assessment of women's wealth, or lack thereof, but well worth reading.