With the demographic shifts already underway in California and across the nation, recognizing and understanding wealth disparities is a step toward building financial stability and net worth among all communities, including communities of color.
On March 10, over 150 stakeholders gathered at the San Francisco Fed’s LA branch to mark the official release of “The Color of Wealth in Los Angeles,” a joint publication of Duke University, The New School, the University of California Los Angeles, and the Insight Center for Community Economic Development. Building on the “The Color of Wealth in Boston” released by the Boston Fed last year, this new report provides detailed data on assets and debts among subpopulations in the Los Angeles metro area according to race, ethnicity, and country of origin. The study includes data on liquid assets, small business ownership, homeownership, retirement assets, as well as various forms of debt such as credit cards, student loans, medical debt, and mortgage and vehicle debt. What emerges is a stark picture of racial wealth inequality in Los Angeles.
Utilizing the National Scorecard for Communities of Color (NASCC) survey, the report features estimates for U.S.-born blacks, blacks who are recent immigrants from Africa (African blacks), Mexicans, other Latinos (inclusive of Puerto Ricans, Cubans, Salvadorans, other South Americans, other Central Americans, and Europeans), Asian Indians, Chinese, Filipinos, Japanese, Koreans, and Vietnamese. Table 1 shows median family income among survey respondents, ranging from $40,000 among other Latinos to $115,000 among African blacks (note that African blacks have a median income more than twice that of U.S. blacks, revealing major differences within the same race category).
Table 1. Los Angeles Metropolitan Statistical Area Sample Characteristics
| n= | % Bachelor’s Degree or Higher | Median Family Income | |
|---|---|---|---|
| White | 56 | 56.9 | 95,000 |
| U.S. Black | 45 | 44.0 | 53,500 |
| African Black | 23 | 58.9 | 115,000 |
| Mexican | 100 | 17.8 | 50,000 |
| Other Latino | 31 | 45.7 | 40,000 |
| Chinese | 75 | 68.4 | 70,000 |
| Japanese | 68 | 68.6 | 75,000 |
| Korean | 77 | 57.1 | 60,000 |
| Vietnamese | 124 | 36.5 | 50,000 |
| Filipino | 42 | 76.7 | 80,000 |
| Asian Indian | 41 | 79.2 | 100,000 |
Source: NASCC survey, authors’ calculations
As significant as these income disparities are, they pale in comparison to the wealth differentials across racial groups in Los Angeles. Table 2 reveals that white households in the LA NASCC survey have a median net worth of $355,000, while Mexicans and U.S. blacks have a median net worth of $3,500 and $4,000, respectively (roughly one percent of the wealth of white households). Japanese, Asian Indian, and Chinese households had higher median wealth that whites, while all other racial and ethnic groups had much lower median net worth than white households. The community development field tends to focus on income as a primary metric, but there’s a growing recognition that net worth (assets minus debts) is a better indicator of financial well-being. Even more critical is the ability to transfer wealth from generation to generation, creating greater security for the future.
Table 2. Comparison of White and Nonwhite Household Median Net Worth
| Median Net Worth | Nonwhite household percentage of white household median net worth | |
|---|---|---|
| White | 355,000 | 100.0 |
| U.S. Black | 4,000 | 1.1** |
| African Black | 72,000 | 20.3 |
| Mexican | 3,500 | 1.0** |
| Other Latino | 42,500 | 12.0* |
| Chinese | 408,200 | 115.0 |
| Japanese | 592,000 | 166.8 |
| Korean | 23,400 | 6.6** |
| Vietnamese | 61,500 | 17.3* |
| Filipino | 243,000 | 68.5 |
| Asian Indian | 460,000 | 129.6 |
Source: NASCC survey, authors’ calculations
Note: The difference in the percentage of nonwhites as compared with the percentage of white households is statistically significant at the ***99%, **95%, *90% level.
Perhaps one of the most intriguing aspects of the NASCC data in Los Angeles is the detailed disaggregated data on Asian American households, a rarity in many national datasets. Dramatic wealth differentials across Asian American households (with median net worth ranging from $23,000 among Koreans to $460,000 among Asian Indians) reflect the significant variation that often gets masked under the single race grouping.
Stay tuned as we revisit The Color of Wealth in Los Angeles in an upcoming blog post and dig deeper into the data on Asian Americans.
The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.