YC Founder’s Tweet Reignites Racial Income Gap Discussion
Paul Graham, a founder of Y Combinator, recently tweeted a graphic showing median household income in the US by ethnic group which has reignited discussions about race and income inequality in the US.
The graphic, originally shared by @indiainpixels in 2020, is reportedly based on US Census Bureau 2013-15 data.
The chart reveals that Indian, Filipino, and Taiwanese Americans had the highest median incomes, while Hispanic/Latino and African Americans had the lowest.
Additionally, the chart shows that Indian, Korean, Chinese, Filipino, and Japanese Americans are more likely to have a Bachelor’s degree than the US average.
However, the graph mostly breaks down Asian-American household incomes notable absences such as Indigenous Americans missing and Americans originating from African and European countries absents. Hispanic/Latino Americans are also not further disaggregated.
Unsurprisingly, some have used the data as evidence that racism isn’t a barrier to success in the US, turning to the model minority myth to explain the high educational attainments and incomes of Indian Americans.
What did the 2020 census show?
Data from the 2020 census revealed that income inequality actually increased for the first time since 2011.
Median household income in the US increased by 2.3% between 2005-2009 and 2015-2019. Black households’ median incomes increased in line with the national trends, but Asian household median incomes increased by 7.9% versus 5.9% for Hispanic/Latino households and 3.0% for white households.
The percentage of Black, Hispanic/Latino and Native Hawaiian Americans with Bachelor’s degrees has also been increasing in recent years.
How did we get here?
Using historical census data and early state tax records from 1860 to 2020, researchers from the National Bureau of Economic Research found that in 1870, the wealth gap between Black and White Americans was 23 to 1. In other words, for every $100 owned by white Americans, Black Americans had just $4.
Over the last 150 years, the gap has narrowed to about 6 to 1 but in the 40 years between 1980 and 2020, the racial wealth gap has actually increased by 0.1% a year.
It’s not just about income
While we’ve been making progress regarding income equality, researchers say that savings from income and capital gains are the main drivers of wealth growth. It is the differences in wealth-accumulating conditions that are driving the racial wealth gap we still see today.
Moreover, the average white household holds a significant share of their wealth in equity and has therefore benefited from booming stock prices, say researchers.
During the pandemic, wealth concentration reached its highest levels since WWII – the top 0.01% of households now own over 36% of private wealth.
In contrast, for Black households, housing continues to be the most important asset, and so they have been largely left out of these gains.
Read: Dr. Bernice A. King And Ashley D. Bell Join Forces To Make Homeownership More Accessible
Researchers say that during the pandemic, wealth concentration reached its highest levels since WWII – the top 0.01% of households now own over 36% of private wealth.
Closing the racial gap in wealth, therefore, will take more than getting more Black Americans into high-paying jobs. It will take systematic changes that equalize the ways we can accumulate wealth accumulation – a challenge that has been centuries in the making.
