Black and White Disparities: Snapshots | LendingTree (2024)

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Racial disparities have always existed with finances. With February being Black History Month, LendingTree researchers updated their compilation of data on income, wealth, savings, employment and credit to provide snapshots of Black and white economic inequality.

Here’s what we found.

Key findings

• The median income for Black households is 35% lower than that of white households in the U.S. This is a modest improvement from the 37% gap in 2019.
• Full-time Black workers’ median wages are 19% less than that of full-time white workers. Full-time Black workers in the mining industry make an average of 54 cents for every dollar their full-time white colleagues earn — the lowest among the sectors tracked. Next is leisure and hospitality, where Black workers make an average of 66 cents for every dollar earned by their white colleagues. The only industry without a gap is public administration.
• Black Americans have $6.4 trillion in wealth, compared with the $111.5 trillion held by non-Hispanic white Americans. Non-Hispanic white Americans hold 82% of the country’s wealth as of the third quarter of 2022, while Black Americans hold 5%, despite representing 59% and 14% of the population, respectively.
• Nearly 7 in 10 Black adults say they’re doing OK financially. 68% said this in 2021, up from 64% in 2020. That compares with 81% of white adults in 2021, up from 80% in 2020.
• Nearly double the rate of Black adults said they or another household member suffered a loss of employment income late in 2022. 17% of Black adults said this from mid-November through mid-December 2022, versus 9% of white adults.
• Black adults are more than twice as likely to be denied credit or approved for less than requested than their white counterparts. 46% of Black adults who applied for credit in 2021 were denied or approved for less than requested, compared with 22% of white adults.

Snapshots by type

Income

The Black and white income gap across the U.S. has remained substantial since 1970:

• 1970: The median income for Black households was $30,400, according to the Pew Research Center. That’s compared with $54,100 for white households — a difference of $23,700, or 44%.
• 2021: The median income for Black households was $48,297, according to the U.S. Census Bureau. That’s compared with $74,262 for white households — a difference of $25,965, or 35%.

Source: LendingTree analysis of the 2021 Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS) from the U.S. Census Bureau.

This compares to a 37% gap in median household incomes in 2019. The median income for Black households was $45,438 that year, compared with $72,204 for white households.

Additional look: In the fourth quarter of 2022, median weekly wages for full-time Black workers equaled 81% of the wages earned by full-time white workers, according to an analysis of U.S. Bureau of Labor Statistics (BLS) data. That breaks down to $896 versus $1,111 — a difference of $215 a week, or $2,580 a year.

Average earnings vary widely by industry and race. For example, Census Bureau data shows that full-time Black workers earn $963 a week in the mining industry, while full-time white workers earn $1,788 a week. That means Black workers in the industry make 54 cents for every dollar earned by their white colleagues. It’s nearly as bad in leisure and hospitality, where Black workers make 66 cents for every dollar earned by white colleagues.

Public administration is the only industry tracked in which the weekly wages for Black workers are higher than the weekly wages for white workers — $1,382 versus $1,366.

Source: LendingTree analysis of the March 2022 Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS) from the U.S. Census Bureau.

Wealth

Median net worth for Black and white families continues to fluctuate, though the gap remains massive:

• Black and white families saw the same 28% drop in median net worth from 2007 to 2010 amid the Great Recession. The median net worth for Black families went from $25,900 to $18,700, while the median net worth for white families went from $211,700 to $152,900.
• Between 2010 and 2013, the median net worth for Black families saw another significant decrease (23%) to $14,400, while white families’ net worth rebounded 2% to $155,800.
• Between 2013 and 2016, though, the median net worth for Black families dramatically increased by 27% to $18,200. It jumped 17% (to $181,900) for white families.
• That growth continued between 2016 and 2019, with median net worth rising 32% (to $24,100) for Black families and 4% (to $189,100) for white families.

That said, the difference in median net worth among Black and white families has increased from $134,200 in 2010 to $165,000 in 2019 after peaking in the lead-up to the Great Recession of 2007 to 2009.

It’s good there’s been some median wealth growth among Black families, says LendingTree chief credit analyst Matt Schulz, but he says that data may not paint the whole picture.

“It may tell you more about where these two groups were starting from than it does anything else,” he says. “That’s because it’s a lot easier to have high-percentage growth when you’re starting with a low income number than when you’re starting with a big income number.”

In other words, if you used to make $20,000 and get a $5,000 raise, it marks a far bigger percentage increase than if you make $100,000 and get a $5,000 raise. Either way, Schulz says a $5,000 raise is great, but it’s likely much more significant to the person who started with the smaller income.

The data suggests similarly. In fact, Black families’ median and average net worth in 2019 was considerably lower than that of white families.

Source: Federal Reserve Survey of Consumer Finances

Additional look: The net worth gap begins early in life. The median net worth for white families younger than 35 is $25,400, according to the Federal Reserve, compared with just $600 for Black families younger than 35.

Black Americans have far less wealth as of the third quarter of 2022, according to the Federal Reserve. Black Americans hold 5% — or $6.4 trillion — of the country’s wealth, versus 82% — or $111.5 trillion — among non-Hispanic white Americans. This doesn’t align with the population, according to the Census Bureau. Black Americans and non-Hispanic white Americans represent 14% and 59% of the population, respectively.

Savings

In 2021, 41% of Black adults were unbanked or underbanked, according to the Federal Reserve, while just 13% of white adults said the same. That means only 59% of Black adults were fully banked, versus 87% of white adults. (Fully banked means the respondent had a bank account and didn’t use any alternative financial services — money orders, check cashing services, payday loans or payday advances, pawn shop loans, auto title loans and tax refund advances — in the past 12 months.)

Black Americans with bank accounts are more than twice as likely to incur an overdraft fee compared to white Americans — 20% versus 9%.

Separately, 35% of Black families had retirement accounts — including 401(k) and individual retirement accounts — in 2019, while 57% of white families had them.

Being unbanked or underbanked and forgoing retirement accounts isn’t where it ends. In fact, 73% of Black adults surveyed early in the pandemic said they didn’t have an emergency fund to cover three months’ worth of expenses, according to the Pew Research Center. Comparatively, only 47% of white adults said similarly.

“Black households have less financial margin for error than white households in many cases because of income disparities,” Schulz says. “This is a big problem anytime, but when inflation is running rampant, it’s particularly troubling. When the cost of fundamental expenses like gas, groceries and utilities rise, it means that people have even less wiggle room financially. That means less money to put toward paying down credit card debt, growing their emergency fund or contributing to savings for college, a mortgage or other big goals.”

Overall, 68% of Black adults said in 2021 that they were doing OK financially, according to the Federal Reserve, up from 64% the previous year and 53% in 2013. Meanwhile, 81% of white adults said they were OK financially, up from 80% a year earlier and 65% in 2013.

Tip: For those looking for a boost despite the tumultuous market, Schulz recommends looking for a high-yield savings account.

“For many years, savings accounts were giving savers minuscule returns,” he says. “That’s not the case anymore. While the Fed’s rate increases have been brutal on those with credit card debt, they’ve been amazing for savers. You can find savings accounts with APYs of 4% or higher, though you’ll likely have to look beyond the traditional megabanks to find them.”

Employment

With inflation driving a wave of layoffs, Black adults report feeling the effects more than white adults. Overall, 17% of Black adults said they or another household member suffered a loss of employment income between mid-November and mid-December 2022, according to U.S. Household Pulse Survey data, while 9% of white adults said the same.

It’s not the first time something like this has happened, either. In fact, minorities — according to research — have historically been affected by a “last-hired, first-fired” phenomenon. In other words, racial and ethnic minority groups during an economic downturn are typically among the first laid off. During an economic recovery, however, they’re among the last hired.

That’s had an impact on the unemployment disparity, too. As of December 2022, the unemployment rate for white men and women ages 20 and older was 2.8% and 2.8%, respectively, according to the U.S. Bureau of Labor Statistics. Meanwhile, it was 5.1% and 5.0%, respectively, for Black men and women in the same age group.

Credit

In 2021, 46% of Black adults who applied for credit were denied or approved for less than they requested, according to the Federal Reserve, compared with 22% of white adults.

Breaking it down, 60% of Black applicants from families making less than $50,000 a year had their credit applications denied in 2021, compared with 43% of white households in the same bracket.

According to Schulz, the fact that Black applicants are likely to have lower incomes may be holding them back from having higher credit limits.

“When it comes to getting approved for less than they requested, there’s no question that income levels play a big role,” he says. “While your income level isn’t factored into your credit score, it’s considered when, for example, banks decide how much credit to extend to you. People with higher incomes may receive higher limits on credit cards than those with lower incomes, all other things being equal.”

Tip: If you’re feeling overwhelmed by your debt and unable to make on-time payments, Schulz suggests consolidating debts with a personal loan.

“Low-interest personal loans are an amazing tool,” he says. “They can not only help you save a ton of money in interest payments, but they can also help you streamline your to-do list. Use a single personal loan to pay off several smaller debts so you’ll only have one debt payment to manage instead of wrestling with several simultaneously.”

Sources

• U.S. Census Bureau
• U.S. Bureau of Labor Statistics
• Federal Reserve
• Pew Research Center
• U.S. Household Pulse Survey

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