I don't recall if Glenn and his guest discussed this point, and I didn't see if in a quick read of Clifton's analysis, but isn't age a critical factor in wealth accumulation? The median age of whites is 44, while the median age of blacks is 27. That makes any comparison not adjusted for age into an apples-to-oranges comparison, doesn't it? If I missed something, I apologize. Coincidentally, just this morning I watched a 2016 Sandy Darity talk at Brown on this very topic and he didn't once mention the role of age, which I assume was a deliberate omission.
The short answer to your question is that adjusting for age wouldn't substantially diminish the racial wealth gap according to a Federal Reserve analysis of the 2019 Survey of Consumer Finances:
Wealth accumulation generally follows a predictable life-cycle arc, wherein families generally accumulate wealth during their working years, in preparation for retirement. Table 1 displays median wealth by age category based on the age of the reference person, separately, for White, Black, Hispanic, and other families.7 Following the expected life-cycle savings patterns, within each race or ethnicity group median wealth is sharply higher for middle-aged families (35 to 54) compared to young families (under 35) and is highest among older families (55 and over).
Table 1: Wealth rises with age for all families, but substantial wealth gaps between White and non-White families persist throughout the life-cycle.
White Black Hispanic Other
Under 35 25.4 0.6 11.2 13.5
35-54 185.0 40.1 46.1 154.5
Over 55 315.0 53.8 111.5 213.2
Source: Federal Reserve Board, 2019 Survey of Consumer Finances.
Notes: Table displays median wealth by age group and by race and ethnicity in thousands of 2019 dollars.
Within each age group, the SCF data indicate large differences in wealth across racial and ethnic groups. Even among young families who have had relatively little time to accumulate wealth, there are sizeable differences in wealth by race and ethnicity, most starkly between young Black and young White families. The median young Black family has almost no wealth ($600). In contrast, the median young White family has a wealth of $25,400. Young Hispanic and other families fall in between, with $11,200 and $13,500 in median wealth, respectively. Differences in parental resources may contribute to these early life cycle gaps, which we will discuss in the next section.
In absolute terms, the gaps in median wealth between White and non-White families widen considerably at older ages. For example, amongst families under 35, White families have between $11,900 and $24,800 more in median wealth than Black, Hispanic, or other families. For families over age 55, the gaps widen to between $101,700 and $261,100. In proportional terms, however, the gaps are relatively stable or diminish with age. With respect to the Black-White gap at middle and older ages, the median wealth of White families is four to six times greater than the median wealth of Black families. These within-age ratios are somewhat lower than the Black-White ratio of nearly eight for all families combined (implied by Figure 1).
Apologies for the table formatting, but I'm not the best at 'cutting and pasting.' My guess is that the racial wealth gap widens for older folks because black incomes tend to lag those of whites, which means we have less to invest, and because older blacks, as a group, have fewer equities in their portfolios.
It is also worth noting that black household incomes are about 61% of those of whites as of 2020 according to the latest figures from the US Census Bureau. Use this link and download Table 2 is you want to do a deep dive
I used the median household figures for "White Alone, Not Hispanic" ($74,912) and "Black Alone" (45,870) to calculate the 61% figure I referenced above.
First, let me mention Sandy Darity's combined numbers -- for which you are not accountable, obviously. He had combined numbers for three years. I'm doing the following ratios in my head, but I think they are close.
2005 12 times greater
2009 20 times greater
2011 16 times greater
The combined number in the link you provided is about 8 times. Different years, yes, but I don't think anyone is saying the gap has been cut in half in the past ten years. But you are not responsible for his numbers, I know.
Rather than gather the numbers properly and make a proper case, I'm just going to make a few observations and share a couple of thoughts.
If we use your link's 8 times, then the 35-54 drops to 4-1/2. Over 55 goes from 8 to 6. Those are significant changes for just one adjustment. Now, I know, I just skipped right over the Under 35 because it goes from 8 to 40. (Warning: I'm still doing this in my head.) Cherry-picking two ranges and ignoring the other is bad, so I'm just going to abandon my contention for the time being.
However, I think that $600 vs $25,400 comparison is what Dr. Loury was getting at when he discussed how using the median isn't such a good idea when the number ($600) is so close to zero. Maybe he can discuss this in the future. (I'd like to see the numbers for the 25th percentile. Would they both be zero?) It would also be helpful if we had smaller age ranges. If there is a median age difference of 17 years, there must be many ways that affects the compilation of the comparisons, and the distribution of the people in the ranges would have an effect, too.
I would also like to see other adjustments before I join Team Systemic Racism. Years in workforce must be critically important in wealth accumulation. I just don't think defaulting to "racism" as the explanation to every disparity is helpful. (And I'm absolutely NOT saying that in regards to you. In fact, I think your numbers in the past have generally supported quite the opposite.)
I don't think I've said it specifically yet myself, so I will now: Your contributions here have been great. I think all subscribers look forward to you weighing in on the various topics and commenting on your analysis. I'm sorry I don't have a heftier response for you in this case, but I hope I have explained, in general, why I approach the headline explanation (i.e., systemic racism) for wealth disparity with such skepticism.
I'm not an expert and I'm definitely not the right guy if you want to go way into the weeds. Moreover, I don't know enough about Professor Darity's numbers to try to explain the variations in the racial wealth gap that you mentioned. That said, my guess is that at least a portion of the variations in the black-white wealth ratio is a function of stock market volatility. The total value of corporate equities and mutual fund shares, an asset class that represents a greater share of white wealth than black wealth, was $9.48 trillion as of Q1 2005 according to the Federal Reserve. It was 7.05 trillion in Q1 of 2009 and $13.03 trillion in Q1 of 2011. It was`$40.37 trillion at the end of Q2 of this year. The total value of real estate, an asset class that represents a bigger share of black wealth than white wealth, by contrast hasn't been nearly as volatile. It was $21.76 trillion in Q1 of 2005, bottomed out at $17.99 trillion in Q2 of 2012 and was at $34.88 trillion as of Q2 of this year. Pension liabilities, which represent over 40% of black wealth compared to about 20% of white wealth have been even more stable. Their total value was $13.69 trillion in Q1 2005 compared to $30.95 trillion as of Q2 of this year.
Use this link if you want to do a deep dive into the numbers I listed above:
I can't back into Professor Darity's numbers, but I hope the numbers from the Fed suggest the possibility of significant variations in the black-white wealth ratios over time. Scholars at Brookings have done some work in this area. Their analysis of the black-white wealth gap and why it changes over time is more rigorous than my back of the envelope calculations and theories. Use this link if you want to see an analysis that was published at the end of 2020:
I disagree with your numbers. Your data is skewed by the corporate elitists. The top 10% control 70% of the corporate equities and mutual funds and private businesses. A great deal of their income comes from there. About 98% of the top 10% are white and they skew the information of what is really going on.
Whites like myself that became an electrical engineer and then became a nurse earn a comfortable wage but are nowhere near $315,000. You putting 80% of the whites that don't earn big bucks in with Bezos, Blumberg, Ray Dalio, Bill Gates. Zuckerberg and the other stealing bastards of our race.
I wonder too about savings/investing rates. I have family members who drive old cars and retire early while others have the latest model every year and don't think about retirement planning at all
This is a well-documented huge difference culturally between groups... Expensive jewelry fancy cars hair and makeup the latest sneaker from Nike the list can go on. Different groups place different preferences on where they spend their money... If you look at some of the stats that are referenced by this letter you can even see it inside the numbers and of course no one's mentioning it because it's inconvenient...
Interestingly, in the Darity talk I mentioned above, he is asked that very question. It's at the 50-minute mark. (If you search for "Darity Brown 2016," it should be your top return. There is a purple backdrop.) His answer was odd, it seemed to me. He said, roughly, If you control for household income, that blacks actually have a slightly higher savings rate than whites. After a moment of reflection, it occurred to me that if you control for household income (and some other key factors), you can also make his claim of wealth inequality disappear.
I watched TGS episode with David Kaiser more closely this morning, and I was amused by something Glenn said. First, my complaint yesterday was that Darity (and others) did not consider age in their wealth analyses. I could only find charts with broad ranges, but Under 35 is vastly lower than 35-45, as it's difficult to accumulate wealth when young and first starting out. By the way, the only reason this age/wealth matter entered my mind while watching Darity was that Coleman Hughes had mentioned it on one of his podcasts.
Which brings me to Glenn's remark. Watching Darity, I gave him much credit for using median rather than average. Yes, yes, that's fair, I thought, That's the way to do it. Then, today, I hear Glenn explain why using median -- in this situation where the bottom half have, more or less, zero wealth accumulation -- is another trick. I had to replay Glenn's remarks a couple of times before I caught on. I laughed at patting my own back for catching one bit of subterfuge -- while completely falling for another.
Thanks for this....interesting behavioral data findings he cites. I think the metric that is most disturbing is the lack of any savings across all demo's compared to other countries.
I don't recall if Glenn and his guest discussed this point, and I didn't see if in a quick read of Clifton's analysis, but isn't age a critical factor in wealth accumulation? The median age of whites is 44, while the median age of blacks is 27. That makes any comparison not adjusted for age into an apples-to-oranges comparison, doesn't it? If I missed something, I apologize. Coincidentally, just this morning I watched a 2016 Sandy Darity talk at Brown on this very topic and he didn't once mention the role of age, which I assume was a deliberate omission.
The short answer to your question is that adjusting for age wouldn't substantially diminish the racial wealth gap according to a Federal Reserve analysis of the 2019 Survey of Consumer Finances:
https://www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.htm
Here's an excerpt:
Wealth over the life-cycle
Wealth accumulation generally follows a predictable life-cycle arc, wherein families generally accumulate wealth during their working years, in preparation for retirement. Table 1 displays median wealth by age category based on the age of the reference person, separately, for White, Black, Hispanic, and other families.7 Following the expected life-cycle savings patterns, within each race or ethnicity group median wealth is sharply higher for middle-aged families (35 to 54) compared to young families (under 35) and is highest among older families (55 and over).
Table 1: Wealth rises with age for all families, but substantial wealth gaps between White and non-White families persist throughout the life-cycle.
White Black Hispanic Other
Under 35 25.4 0.6 11.2 13.5
35-54 185.0 40.1 46.1 154.5
Over 55 315.0 53.8 111.5 213.2
Source: Federal Reserve Board, 2019 Survey of Consumer Finances.
Notes: Table displays median wealth by age group and by race and ethnicity in thousands of 2019 dollars.
Within each age group, the SCF data indicate large differences in wealth across racial and ethnic groups. Even among young families who have had relatively little time to accumulate wealth, there are sizeable differences in wealth by race and ethnicity, most starkly between young Black and young White families. The median young Black family has almost no wealth ($600). In contrast, the median young White family has a wealth of $25,400. Young Hispanic and other families fall in between, with $11,200 and $13,500 in median wealth, respectively. Differences in parental resources may contribute to these early life cycle gaps, which we will discuss in the next section.
In absolute terms, the gaps in median wealth between White and non-White families widen considerably at older ages. For example, amongst families under 35, White families have between $11,900 and $24,800 more in median wealth than Black, Hispanic, or other families. For families over age 55, the gaps widen to between $101,700 and $261,100. In proportional terms, however, the gaps are relatively stable or diminish with age. With respect to the Black-White gap at middle and older ages, the median wealth of White families is four to six times greater than the median wealth of Black families. These within-age ratios are somewhat lower than the Black-White ratio of nearly eight for all families combined (implied by Figure 1).
Apologies for the table formatting, but I'm not the best at 'cutting and pasting.' My guess is that the racial wealth gap widens for older folks because black incomes tend to lag those of whites, which means we have less to invest, and because older blacks, as a group, have fewer equities in their portfolios.
It is also worth noting that black household incomes are about 61% of those of whites as of 2020 according to the latest figures from the US Census Bureau. Use this link and download Table 2 is you want to do a deep dive
https://www.census.gov/library/publications/2021/demo/p60-273.html
I used the median household figures for "White Alone, Not Hispanic" ($74,912) and "Black Alone" (45,870) to calculate the 61% figure I referenced above.
First, let me mention Sandy Darity's combined numbers -- for which you are not accountable, obviously. He had combined numbers for three years. I'm doing the following ratios in my head, but I think they are close.
2005 12 times greater
2009 20 times greater
2011 16 times greater
The combined number in the link you provided is about 8 times. Different years, yes, but I don't think anyone is saying the gap has been cut in half in the past ten years. But you are not responsible for his numbers, I know.
Rather than gather the numbers properly and make a proper case, I'm just going to make a few observations and share a couple of thoughts.
If we use your link's 8 times, then the 35-54 drops to 4-1/2. Over 55 goes from 8 to 6. Those are significant changes for just one adjustment. Now, I know, I just skipped right over the Under 35 because it goes from 8 to 40. (Warning: I'm still doing this in my head.) Cherry-picking two ranges and ignoring the other is bad, so I'm just going to abandon my contention for the time being.
However, I think that $600 vs $25,400 comparison is what Dr. Loury was getting at when he discussed how using the median isn't such a good idea when the number ($600) is so close to zero. Maybe he can discuss this in the future. (I'd like to see the numbers for the 25th percentile. Would they both be zero?) It would also be helpful if we had smaller age ranges. If there is a median age difference of 17 years, there must be many ways that affects the compilation of the comparisons, and the distribution of the people in the ranges would have an effect, too.
I would also like to see other adjustments before I join Team Systemic Racism. Years in workforce must be critically important in wealth accumulation. I just don't think defaulting to "racism" as the explanation to every disparity is helpful. (And I'm absolutely NOT saying that in regards to you. In fact, I think your numbers in the past have generally supported quite the opposite.)
I don't think I've said it specifically yet myself, so I will now: Your contributions here have been great. I think all subscribers look forward to you weighing in on the various topics and commenting on your analysis. I'm sorry I don't have a heftier response for you in this case, but I hope I have explained, in general, why I approach the headline explanation (i.e., systemic racism) for wealth disparity with such skepticism.
Thanks for the feedback!
I'm not an expert and I'm definitely not the right guy if you want to go way into the weeds. Moreover, I don't know enough about Professor Darity's numbers to try to explain the variations in the racial wealth gap that you mentioned. That said, my guess is that at least a portion of the variations in the black-white wealth ratio is a function of stock market volatility. The total value of corporate equities and mutual fund shares, an asset class that represents a greater share of white wealth than black wealth, was $9.48 trillion as of Q1 2005 according to the Federal Reserve. It was 7.05 trillion in Q1 of 2009 and $13.03 trillion in Q1 of 2011. It was`$40.37 trillion at the end of Q2 of this year. The total value of real estate, an asset class that represents a bigger share of black wealth than white wealth, by contrast hasn't been nearly as volatile. It was $21.76 trillion in Q1 of 2005, bottomed out at $17.99 trillion in Q2 of 2012 and was at $34.88 trillion as of Q2 of this year. Pension liabilities, which represent over 40% of black wealth compared to about 20% of white wealth have been even more stable. Their total value was $13.69 trillion in Q1 2005 compared to $30.95 trillion as of Q2 of this year.
Use this link if you want to do a deep dive into the numbers I listed above:
https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#quarter:127;series:Corporate%20equities%20and%20mutual%20fund%20shares;demographic:networth;population:1,3,5,7;units:levels
I can't back into Professor Darity's numbers, but I hope the numbers from the Fed suggest the possibility of significant variations in the black-white wealth ratios over time. Scholars at Brookings have done some work in this area. Their analysis of the black-white wealth gap and why it changes over time is more rigorous than my back of the envelope calculations and theories. Use this link if you want to see an analysis that was published at the end of 2020:
https://www.brookings.edu/blog/up-front/2020/12/08/the-black-white-wealth-gap-left-black-households-more-vulnerable/
Sorry for the bad formatting from Table 1 above. Here's what I hope is a clearer display of the same information:
Median family wealth for those under 35
White - $25,400
Black - 600
Hispanic - 11,200
Other - 13,500
Median family wealth for those 35 to 54
White - $185,000
Black - 40,100
Hispanic - 46,100
Other - 154,500
Median family wealth for those over 55
White - $315,000
Black - 53,800
Hispanic - 115,500
Other - 213,200
I disagree with your numbers. Your data is skewed by the corporate elitists. The top 10% control 70% of the corporate equities and mutual funds and private businesses. A great deal of their income comes from there. About 98% of the top 10% are white and they skew the information of what is really going on.
Whites like myself that became an electrical engineer and then became a nurse earn a comfortable wage but are nowhere near $315,000. You putting 80% of the whites that don't earn big bucks in with Bezos, Blumberg, Ray Dalio, Bill Gates. Zuckerberg and the other stealing bastards of our race.
The 315,000 is not salary, but accumulated wealth for people over 55. I assume it includes home equity and retirement savings.
This is a point made by Thomas Sowell in "The Quest for Cosmic Justice" as well in other of his writings.
I wonder too about savings/investing rates. I have family members who drive old cars and retire early while others have the latest model every year and don't think about retirement planning at all
This is a well-documented huge difference culturally between groups... Expensive jewelry fancy cars hair and makeup the latest sneaker from Nike the list can go on. Different groups place different preferences on where they spend their money... If you look at some of the stats that are referenced by this letter you can even see it inside the numbers and of course no one's mentioning it because it's inconvenient...
Interestingly, in the Darity talk I mentioned above, he is asked that very question. It's at the 50-minute mark. (If you search for "Darity Brown 2016," it should be your top return. There is a purple backdrop.) His answer was odd, it seemed to me. He said, roughly, If you control for household income, that blacks actually have a slightly higher savings rate than whites. After a moment of reflection, it occurred to me that if you control for household income (and some other key factors), you can also make his claim of wealth inequality disappear.
I watched TGS episode with David Kaiser more closely this morning, and I was amused by something Glenn said. First, my complaint yesterday was that Darity (and others) did not consider age in their wealth analyses. I could only find charts with broad ranges, but Under 35 is vastly lower than 35-45, as it's difficult to accumulate wealth when young and first starting out. By the way, the only reason this age/wealth matter entered my mind while watching Darity was that Coleman Hughes had mentioned it on one of his podcasts.
Which brings me to Glenn's remark. Watching Darity, I gave him much credit for using median rather than average. Yes, yes, that's fair, I thought, That's the way to do it. Then, today, I hear Glenn explain why using median -- in this situation where the bottom half have, more or less, zero wealth accumulation -- is another trick. I had to replay Glenn's remarks a couple of times before I caught on. I laughed at patting my own back for catching one bit of subterfuge -- while completely falling for another.
Thanks for this....interesting behavioral data findings he cites. I think the metric that is most disturbing is the lack of any savings across all demo's compared to other countries.