Wealth, Income and Race in the United States

Are We A More Equitable Society Than We Were Ten Years Ago?

Edward J. Dodson

[A compilation of statistics prepared by Edward J. Dodson, 1990]

Despite the expenditure of hundreds of billions of dollars over the last twenty-five years, the incidence of poverty in the United States is on the rise. By any measure one might care to use, our society is becoming two-tiered, and the plight of those at the bottom Is worsening. The problem seems to be beyond the ability of our institutions even to mitigate, let alone resolve.

All across the nation the problems have a similar pattern. Inner city neighborhoods are plagued by high unemployment, drug and alcohol abuse and crime, deteriorating housing stocks, the breakdown of traditional family life and diminishing public resources. Rural populations, long dependent on agriculture and single industries, have experienced an even more decline in economic activity and reduced services. As a consequence, the migration from rural to metropolitan areas has accelerated.

Rural families and single men and women have arrived in the cities at a time when the availability of affordable housing and blue collar employment opportunities are already in short supply. When combined with immigration from Mexico and other parts of Latin America, the rural to metropolitan migration has overwhelmed the strained resources of state, county and municipal governments, leaving them hard pressed to deal with what we must recognize is a national problem.

At the same time, social scientists (including a number of prominent Blacks) now conclude that the long-term result of many government social welfare programs, in combination with public housing that has concentrated poor into areas with few employment opportunities or community services, has condemned many of the poorest in our society to a life of isolation and dependency.

We should be deeply troubled by the extent of poverty that continues to plague our society. To be sure, we are a diverse people and our experiment in pluralism is new to mankind. Government cannot force individuals of differing values and backgrounds to live as one people: however, justice demands that our laws secure equality of opportunity for all and protect us equally. We are not merely being measured by history; our survival as a society depends on our success in bringing even the poorest of the poor into the mainstream of our society. As one social critic writes:

"It Is commonplace that a society reveals its reverence or contempt for history by the respect or disregard that it displays for older people. The way we treat our children tells us something of the future we envision. The willingness of the nation to relegate so many of these poorly housed and poorly fed and poorly educated children to the role of outcasts in a rich society is going to come back to haunt us." [Jonathan Kozol]

Each year, we are presented with reports by various government and private groups that use statistics to tell us something about how our society is changing. A key measurement of the overall economic health of our nation is that of Gross National Product, or the total value of all goods and services produced in a year. More meaningful to us as individuals is whether our purchasing power is increasing or decreasing. Our personal decisions and obligations to others play an extremely important role in how much we are able to save, for instance, or whether we can afford a home, new car or vacation.

Economic statistics are also good benchmarks for evaluating the degree of equality of opportunity that exists and whether opportunity is increasing or decreasing. Most revealing are statistics on individual and household income and wealth ownership.

What follows are some of the key statistical measurements of how well various groups in our society are doing. In looking at this information, a word of caution is necessary. Much of this data is obtained from the U.S. census, the results of which are always in dispute, as well as other limited studies performed by research organizations. Each of us must reach our own conclusions about what these numbers say to us.

Population

The total population of the United States Is now around 245 million. Nearly half reside in just 37 metropolitan areas with populations of a million or more. The nation's rural population has fallen as a percentage of the total, yet is 66.2 million today versus 54 million in 1950. Only 1.9% of our total population actually live on farms (97.4% are White; 1.8% are Black; and, 2.9% are Hispanic). Broken down by very general racial/ethnic groupings, our nation looks as follows:

	Number	Percent
Whites	196.0m	84.0%
Blacks	30.6m	12.5%
All Others	1.8m	0.7%

The racial make-up of our society is changing. Birthrates for non-White groups are generally higher, and as our population ages the non-White portion of the work force will grow considerably. By the year 2020, for example, Blacks will account for 1 out of 6 working age adults.

Blacks remained concentrated in the South, and for the first time this century the Black population in the South has increased. 56% of all Blacks now live in the South, compared with 52% in 1980.17% live in the Northeast, 19% in the Midwest, and 9% in the West.


Households

There were an estimated 80.7 million households in the U.S. at the beginning of 1980. Of these, 33 million were families with Children. By 1989 this number increased to 92.8 million, although the rate of increase was less than in the 1970s when the majority of baby boomers reached adulthood.

One reason for the increase In households is the lower number of persons per household. In 1970, the average family household contained 3.58 persons; in 1988, this had fallen to 3.17 persons. For all households the drop was from 3.14 down to 2.64 persons.


Employment

Nearly 75% of all women ages 25-54 are now in the work force. This compares to only 49% as recently as 1969.

During the 1980s, 960,000 moderately high paying blue collar jobs were eliminated. A total of 18.8 million new jobs were created; however, fully 77% of these jobs were in retail trade and services, the two lowest paying industries. As a result, the real median income for those most affected-individuals aged 25-34 (and who have only a high school education) -- fell 5%, to $20,400.

For less experienced people in the 20-24 age group, income fell by 12%, to $13,1000.


Annual Income
There has been much discussion about whether the policies of the Reagan years resulted in a greater concentration of income among those at the top. The increase in the number of individuals reporting incomes above $100,000 between 1982-1988 is as follows:

	1982	1988
$1 million or more	8,400	65,300
$500,000 - $999,000	20,900	119,200
$200,000 - $499,000	140,300	554,800
$100,000 - $199,999	570,800	1,795,000

Between 1977 and 1990 the income received by the top 1% of all households combined increased from 7.3% to 12.6% of the total.

The median income of households living in their own homes is considerably higher than for those who rent. This is true for people of all races. A comparison based on 1989 statistics Is shown below.

Median Income

	All Households	Homeowners
White	$30,410	$36,070
Black	18,080	25,870
Hispanic	21,920	31,570
Asian	36,100	50,010

The median household income in 1987 for all Americans was $30,850. Adjusted for inflation this represented a 1 % increase over 1986.

The total income received by all Americans in 1990 was $3.65 trillion. Based on population only, Blacks could be expected to receive 12.5%, or $456 billion of the total. in fact, Blacks received only 7.1%, as shown below:


Money Income, By Race: 1990

White	$3.26 trillion	89.3%
Black	.28	7.1
Other	.11	3.6

Household income is also strongly tied to the type of family that makes up a household. In all cases, the median figures are highest for households where there are two parents (although this statistic includes a significant number of cases where only one spouse is employed):

Household Headed By	Whites	Blacks	Hispanics
2 parents	$40,800	$31,400	$27,200
Male Only	25,400	15,500	18,800
Female Only	3,700	8,900	9,500

Among Blacks, the number of two-income families increased by 300,000 during the 1980s, to 2.4 million (or, one-third of all Black households).

Only 15 million households (17% of the total) receive income of $50,000 or more. Even then, in 3 out of 5 instances two or more incomes within a household are needed to achieve this level. Half of the income earners in these households are college graduates.

For Whites in the top fifth by income, the median household income is $82,000. For Blacks, $55,000.

Between 1977-87 and measured after taking inflation into consideration, the wealthiest 1% of U.S. households increased their annual income by 74% -- from $174,500 to $303,900. The number of millionaires doubled during this period. At the same time, the incomes of the poorest 10% of U.S. households fell 10.5% -- to $3,160 from $3,530. More than 80% of all U.S. households had a net loss of income.

The average household income for Blacks narrowed the gap against Whites during the 1980s but is still only 57% of that received by White households.

For young families real median income in the period 1973-86 decreased more than for any other group. By race the decrease for Blacks was highest:

Whites	Blacks	Hispanics
-19%	-46%	-18%

The U.S. is both an upwardly and downwardly mobile society. Many people fall into and rise out of poverty several times during their lifetime. In fact, in any given 10-year period, one-third of Americans experience a 50% drop in standard of living.

Distribution of Income	All People	Among Blacks
top 1% of Pop.	12.6%
Top Fifth	44.0	47.4
Bottom 40%	14.2
Bottom Fifth	4.6	3.3

85% of Americans in the top fifth are married couples living together, versus only 15% of those In the bottom fifth.


Wealth Ownership

The total net worth of all U.S. households today is roughly $8.4 trillion. The wealthiest 3% of the population holds 27% of this total, or $2.27 trillion.

The U.S. has 62 individuals who earn more than $1 billion each year, and 37 additional households have a net worth of over $1 billion.

The richest 1% of the U.S. population (2.45 million) receive an after-tax income equal to that received by the bottom 40% (98 million). Those in the bottom 20% by income hold only 7% of all net worth. Broken down by category of wealth, the top 1% hold the following percentages of all net worth held (1983):

All Wealth	33.6%
Stocks and Bonds	81.3
Trust Funds	98.3
Cash/Deposits	33.5
Real Estate (other than primary home)	45.2

In 1983, 8 million households had a net worth of $250,000 or more, while the median net worth for all households was $32,700. One household in a thousand, 70,000 households, had a net worth of $10 million or more.


Median Net Worth - 1984

Equity in Home	$40,600
Retirement Accounts	4,100
Vehicles	4,100
Stocks, bonds, etc.	3,900
Interest-bearing Assets	3,100
Total	$55,800

Despite the rise In housing values between 1986-88, the median net worth for both White and Black households fell because of Increased indebtedness. For Whites this was $43,300; for Blacks, $4,200. When only married couples are considered, however, the figures for both Whites and Blacks increase, to $62,400 and $17,600, respectively.

Overall, 43% of the net worth of all U.S. households combined is tied up in home equity. For those who have owned their homes since 1960, they have experienced an average Increase In value of nearly 1,000%. The total market value of all residential real estate In 1960 was estimated to be $373 billion; by 1986 the total value was set at $3.7 trillion.


Indebtedness

Total consumer debt increased from $97.1 billion in 1969 to $716.6 billion in 1989. Household debt, which adds first mortgage loans to the total, was $3.5 trillion in 1989.

The number of personal bankruptcies has also continued to climb during the 1980s:

1984	1988	1989
308,000	550,670	616,750

Wealth Inherited Between 1987-1991

By the end of this year, property (land, houses, stocks, bonds, annuities, etc.) worth over $925 billion will be handed down through inheritance. The 64 million people born during the baby boom generation of 1946-1959 will inherit wealth worth almost $7 trillion.

Distribution of Inheritance

	Percent	Average Amount
Richest 1%	33%	$3,600,000
Next 9%	33%	396,000
Remaining 90%	34%	40,000

Households in Poverty

More than 32 million people live in households with incomes below the official poverty line (based on an income of $11,600 for a family of four). Yet, 60% of the households in poverty have at least one person working full or part-time.

The percent of Blacks living In poverty has remained unchanged over the last 20 years.

Households in Poverty

	Whites	Blacks	Hispanics
All	10.1%	31.6%	26.8%
Headed By:
2 Parents
Male Only
Female Only	27%	52%

There are 7.5 million households headed by single mothers in the U.S and 11.6 million headed by females (a large percentage of whom are elderly and living alone). This is broken down as follows:

	Whites	Blacks	Hispanics
No. with female heads of household (millions)	7.3	3.6	1.4
% of total households	13.0	43.0	23.0
No. with single mothers as heads of household (millions)	2.5	3.2	1.1

Who Are The Poor?

Among the households that comprise the bottom fifth of the population (measured by income), three-fourths are White. Only 11% of the adults have full-time jobs, and fully 65% are unemployed. Around 54% are households comprised of only one person. The elderly (42% of whom own their own homes) make up 40% of the households in the bottom fifth of the population by income.

In 1959 there were 39.5 million people (23% of the U.S. population) in poverty. By 1973 this had dropped to its lowest point as measured by the government; still there were 23 million poor -- 11.5% of the population. By 1987 the number of poor was back up to 32.5 million, or 13.5% of the population.

Of all the poor in the U.S. today: 66% are White; 30% are Black; 17% (5.2 million in 1986) are Hispanic; 52% are households headed by single females; and, 50% of all Black children live in poverty.

Among Hispanics the highest poverty rate is among Puerto Ricans, the lowest among Cubans; however, the number of Mexicans living in poverty is increasing faster than any other group because of the large number of poor and uneducated immigrants.


Rural Versus Urban

There are 57 million people, 23% of the U.S. population, living outside metropolitan areas. Only 7% of the rural population live on farms; most live in small towns. Some 9.7 million, or 18.1%, are poor. Thus, rural poor represent 30% of the nation's poor.

3 out of 4 rural poor are white.

42% of all rural Blacks are poor (11% higher than in cities).


Housing Arrangements for the Elderly

	All	Whites	Blacks	Hispanics
Living alone	31%
Live with spouse	46%
Live with relatives	17%

Educational Levels Achieved

Today there is a 30% drop-out rate from high school for the entire population of teenagers. In areas where schools are racially segregated the rate is 60%. The fact that 40-60% of inner city kids do not graduate from high school indicates the degree to which our schools remain segregated.

Some 30 million people in the U.S. are functionally Illiterate; 5% of all young adults are illiterate and 20% are semi-Illiterate; 5% of adults between the ages of 21-25 read at a 4th grade level; and, 20% of those aged 21-25 read below an 8th grade level.

In 1988, college enrollment for Blacks and Whites age 18 was as follows:

	Whites	Blacks
Males	39%	4%
Females	46%	6%

The affect education has on earnings is shown in the average monthly Income statistics below:

	Whites	Blacks
Master's	$2,830	$2,180
Bacherlor's	2,160	1,600
Associate	1,650	1,360
Vocational	1,470	840
Some college	1,320	1,070
High school diploma	1,170	880
No diploma	800	560

Homeownership


Homeownership Rates for Married Couples With Children

	1980	1990
All	71%	63%
Age 30-34	61%	53%
Age 35-55	72%	66^

Since 1975 some 1.8 million housing units previously affordable to lower Income households have been lost to gentrification; hundreds of thousands more are too seriously deteriorated to be lived in.

More than one-fourth of all households cannot find housing that will not absorb more than one4hird of their gross annual Income. In the metropolitan areas of Washington, D.C., San Francisco, Boston or Los Angeles, an Income of $14/hour Is needed to afford a typical (and reasonably livable) 2-bedroom apartment.

In Massachusetts, Nevada, California and Vermont, over 50% of all rents do not earn enough for this type of housing.

In Washington, D.C., Maryland and Virginia, some 46% of all rents do not meet this Income standard.

Approximately 62% of the nation's poor are renters, and 45% of the poor spend 70% or more of their income on rent. As a consequence, between 4-14 million households live on the verge of homelessness.


Household Budgets

	Average Household	Income Under $10,000
Total spending	$24,414
Housing	7,570	36%
Transportation	4,600
Food	3,664
Insurance	2,175	2.5%
Clothing	1,446
Entertainment	1,193
Health care	1,135

Infant Mortality

Of the 3.8 million children born in 1986, 40,000 died before reaching their first birthday. Overall, the U.S. ranks 20th among the world's nations If the U.S. is measured based on infant mortality statistics for Blacks, we would be 28th.


Health Insurance

More than 11 million children have no health Insurance at all.

40% of all children In the U.S. have not received basic immunizations for childhood diseases.


Homelessness

Estimates of the number of homeless are extremely unreliable. The number ranges from several hundred thousand to upwards of 3-5 million. Moreover, many people are homeless for short periods of time due to temporary loss of income. Non-homeowners are far more likely to become homeless at some period of their lives.

One-third of the homeless suffer from drug and/or alcohol abuse, have no skiIls, seIf-discipIine or family structure to fall back on.