As Black History Month begins, newly updated data from LendingTree has again revealed the persistent racial economic disparities in the United States, covering income, wealth, savings, employment, credit and retirement.
The findings illustrate the ongoing and deep financial inequities between Black and white Americans despite progress in some areas.
Income and Employment
The median income for Black households in 2023 was $56,490, compared with $84,630 for white households, a 33.3% gap, and an increase from the 31.6% gap in 2022.
Full-time Black workers earned a median weekly wage of $962 in the third quarter of 2024, 18.8% less than white workers, who earned $1,184. The wage gap is more severe in certain industries, particularly agriculture, where full-time Black workers earned an average of 40 cents for every $1 their white colleagues made.
In terms of employment, Black adults experienced greater financial instability due to job losses. Between August and September 2024, 16% of Black adults reported losing employment income in their household over the previous four weeks, compared to 10.3% of white adults.
The “last hired, first fired” trend remains a factor in employment patterns, with Black unemployment rates consistently higher than those of white workers. As of December 2024, the unemployment rate stood at 5.6% for Black men and 5.4% for Black women, compared to 3.3% and 3.4% for white men and women.
Wealth Disparities
Black Americans hold significantly less wealth than white Americans.
As of the third quarter of 2024, Black Americans held $5.39 trillion, just 3.4% of the country’s total wealth, while white Americans controlled $134.58 trillion, or 84.2%. The gap in median net worth between Black and white families widened to $240,210 in 2022.
Although Black families saw a 57.8% increase in their median net worth between 2019 and 2022, the overall disparity remains overshadowed by financial gains.
LendingTree’s chief credit analyst, Matt Schulz, noted that while percentage-based growth in Black families’ net worth may appear substantial, it reflects the significant difference in starting points.
“It’s a lot easier to have high-percentage growth when starting with a low-income number than when starting with a big income number,” Schulz said.
Savings and Banking
Financial security remains a challenge for many Black households.
In 2023, 14% of Black adults were unbanked, compared with just 4% of white adults.
Black Americans were more than twice as likely to incur overdraft fees, with 19% reporting such charges compared to 9% of white Americans.
Additionally, 42% of Black adults reported having at least three months of emergency savings in 2023, compared with 59% of white adults.
Credit and Loan Disparities
Access to credit also remains uneven.
In 2023, 65% of Black adults with a family income below $50,000 were denied credit or approved for less than requested, compared with 47% of white applicants in the same income bracket. Even among those earning over $100,000 annually, Black applicants were denied or approved for less at 29%, compared to 13% for white applicants.
A similar gap exists in credit card ownership, with 86% of white adults holding at least one credit card in 2023, compared with 70% of Black adults. Schulz pointed to income levels as a contributing factor, noting that banks extend higher credit limits to those with higher incomes, affecting borrowing power and financial flexibility. He recommended using a personal loan to pay off smaller debts.
“As for getting approved for less than requested, there’s no question that income levels play a big role,” he said. “While your income level isn’t factored into your credit score, it’s considered when, for example, banks decide how much credit to extend. People with higher incomes may receive higher limits on credit cards than those with lower incomes, all other things being equal.”
Retirement Readiness
Black families are also less likely to have retirement savings.
In 2022, 34.8% of Black families had a retirement account such as a 401(k) or IRA, compared with 61.8% of white families. The median retirement account balance for Black families stood at $39,000, while white families held a median of $100,000.
Additionally, as of 2023, 51% of Black non-retired adults reported having tax-preferred retirement savings accounts, compared with 68% of white non-retired adults.
Overall, “Black households have less financial margin for error than white households in many cases because of income disparities,” Schulz said. “This is a big problem anytime, but it’s particularly troubling in times of inflation. Higher prices mean that people have even less wiggle room financially.”
Useful information. Great to see progress. I believe with greater use of our citizen responsibilities as well as greater investment in our communities by us these gaps will close. $5.39 trillion in networth is more than many countries GDP are worth in the world. What is frustrating articles and our newspapers are we are very good at describing the situation, the problem or issue but not very good in educating our community on solutions, giving advice, or actions needed. I live in a community that does just that. Get on board, educate, show the way, and make it happen. Lots of opportunities to transform community with right information and guidance.
Thank you for this article, Mr. Brown. I am currently exploring the relationship between economic disparities and education outcomes of African American men aged 18-24 living in Washington, D.C. Though evident in common knowledge, I have found a strong correlation between household income and the level of educational attainment. More than that, annual household income is essentially the deciding factor in where in the district school-age youth live – and subsequently where they attend high school – thus segregating youth across all eight wards. Holding less wealth or income coupled with the loan and credit disparity means folks can not afford to live in affluent – and dare I say gentrified – communities where essential resources (e.g. quality grocery stores) are hoarded and access to prime educational spaces are restricted. I can only see this disparity widening further without key changes in local budget allocation for affordable housing, DEI initiatives to aid in employment, an equitable and radical redistribution of financial resources, and adequatley preparing young adults to enter the workforce.