1 in 4 Black and Latino Families Were Underwater Even Before the Pandemic Hit

Such is the ludicrous state of America’s “prosperous” economy.

A crowd protests evictions carried out by law enforcement.Angela Weiss/AFP/Getty

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.

Most Americans get that our nation’s wealth distribution skews toward the rich, yet few seem to fully grasp how gaping the disparities are.

Ten years ago, social scientists Michael Norton and Dan Ariely published a paper in which they asked more than 5,500 American participants to estimate their nation’s wealth distribution. Their subjects guessed, on average, that the least wealthy 40 percent—about 125 million people—owned 9 percent of the nation’s overall assets. The true figure then was 0.03 percent—almost nothing. Sometime last year, I conducted an informal Twitter poll asking the same question, and though it was hardly scientific, most of my 32 respondents also greatly overestimated the wealth of the bottom 40 percent.

How could the bottom 40 percent have nothing at all? Well, as you move down the economic ladder, you reach a point at which household wealth zeroes out and turns negative. In 2019, according to the latest calculations provided to me by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, all households from the bottom up to the 23rd percentile owned nothing—or less than nothing. They were in debt, those at the very bottom deeply so.

This economic pain, not surprisingly, isn’t equally distributed. A new analysis from the Institute for Policy Studies—which has been churning out report after report on economic inequality, racial inequities, pandemic profiteering, and the ludicrously good fortunes of America’s billionaires—breaks down our “underwater” families by race.

The upshot: Black and Hispanic Americans have made gains relative to whites over the years in terms of being entrapped in a cycle of debt, but Hispanic households were twice as likely as white households to have assets of zero or less—and Black families were very nearly so. This, remember, was before the pandemic.

As my Mother Jones colleagues Edwin Rios and Dave Gilson detailed in a recent data spread, it is Black, Latino, and Native American households hit hardest by the virus, economically and otherwise. Families of color are significantly more likely to have experienced income declines and worries about their ability to pay the rent. Black, Latino, and multiracial households were roughly twice as likely as white families to say they hadn’t had enough to eat in the previous week. In December 2020, Black men had the nation’s highest unemployment rate—10.4 percent. 

Given that a large proportion of the nation’s workers was living paycheck to paycheck even before COVID, “we can anticipate an increase in the number of households who will be under financial water,” note Omar Ocampo and Chuck Collins, the authors of the IPS analysis.

In an email, Collins, who co-authored a 2019 report outlining 10 ways to tackle the racial wealth gap, added that we Americans tend to think of the United States as a very prosperous nation. “Yet the staggering percentage of households with no reserves or negative wealth betrays that image,” he said. “The millions of households—disproportionately Black and brown—that have zero or negative wealth is one of the most morally appalling measures of inequality.”

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate