It’s Systemic Barriers, Not Individual Choices, that Prevent Black and Latine Households from Building Wealth

When the Trust committed to working to close the racial and ethnic wealth gap for Chicagoans, we knew we would need robust data to better understand how we might focus our efforts most effectively. On Monday, we hosted the New School’s Institute on Race, Power and Political Economy to release Color of Wealth in Chicago, a report that, for the first time, details the relative wealth, assets, and debt positions across racial and ethnic groups in the Chicago area.  

The study shows that the net worth — total assets minus total debt — of white Chicagoans far outpaces that of Black, Mexican (U.S. and foreign-born), and Puerto Rican households, even among groups with comparable education and marriage rates. While the report’s findings are bleak, they are not surprising, particularly for people struggling to make ends meet, let alone save and invest. We commissioned this study to help us and others engaged in the critical work to reverse these unacceptable disparities, gain clarity and recommit to doing our part.  

According to the study, the median net worth of the surveyed households is:  

• White: $210,000
• U.S.-born Mexican: $40,500 
• Puerto Rican: $24,000 
• Foreign-born Mexican: $6,000  
• Black: $0 

In addition to identifying stark disparities in net worth, the study found:   

• Black families had the lowest estimated homeownership rate (34 percent) in Chicago, while white families had the highest (72 percent).  
• Large numbers of Black and Latine families in Chicago — including 45 percent of foreign-born Mexican families, 38 percent of Black families, and 25 percent of Puerto Rican families — do not have access to a conventional checking or savings account. Only 10 percent of white families are unbanked.
• Nearly half of Black families (45%) have student loans compared to 28 percent of U.S.-born Mexican, 23 percent of white, and 20 percent of foreign-born Mexican and Puerto Rican families. 
• Black families with a BA or higher had 12 percent ($34,000) of the wealth of white households with a BA or higher ($294,000). When those households are compared to white households without a BA ($134,000), the gap in wealth only narrows slightly.  
• Black families (18 percent), U.S.-born Mexican families (13 percent), and Puerto Rican families (11 percent) were most likely to use payday lending, while only 6 percent of white families accessed payday loans.
• U.S.-born Mexican families, Black families, and Puerto Rican families (29 percent, 30 percent, and 21 percent, respectively) were more likely to have medical debt — the number one cause of bankruptcy in the U.S. — than white families (18 percent).
• Married households had higher median wealth than not married families, apart from Mexican foreign-born households, where the pattern reversed ($9,000/$37,000). Black married households had one-sixth the median wealth ($49,000) of white households ($297,000). Black not-married households had negative wealth ($-3,000), while white not-married households had $73,700 in wealth. Mexican U.S.-born married and not-married households had $45,000 and $17,000 in wealth, respectively.

As Color of Wealth in Chicago makes clear, these inequities are so pronounced because of systemic barriers, and individual choices like going to college or getting married do not erase the wealth gap. Moreover, our diverging fortunes, including lower homeownership rates, less home equity, more student and medical debt, and little to no retirement savings, affect us all. This excessive inequality can erode social cohesion, lead to political polarization, and lower economic growth. Put simply, when so many Chicagoans experience such limited opportunities for their families, it hurts our region’s vitality and economic viability.

The good news is that we have the tools and resources to reverse these trends and make Chicago a leader in economic inclusion. We are fortunate to have many talented civic and business leaders working collaboratively to build solid pathways to jobs whose pay and benefits allow increasing numbers of Chicagoans to achieve financial well-being. Community organizations are working with financial institutions to develop homeownership opportunities that will revitalize neighborhoods and allow increasing shares of Chicago’s families to begin building generational wealth. Government, companies and philanthropists are investing in small businesses and infrastructure that will bring vitality to Chicago’s long-disinvested neighborhoods.  

As the region’s community foundation, we’re privileged to bring many tenacious individuals and institutions together to improve our city and make it a place where all of us can thrive. The Trust is prioritizing its funding to advance programs and policies that move the needle on income and asset growth, homeownership and home equity, and economic development in Black and Latine communities. We remain committed to supporting these efforts and developing policy solutions that remove barriers to economic well-being. We’re energized by the progress and beacons of hope we see across the region every day. Color of Wealth in Chicago provides essential data that challenges others to get involved. The future of our region depends on all of us doing our part.