By The Numbers

Reporter’s notebook: Clearing up the $600,000 average white wealth

Noel King May 3, 2013

On Thursday, after my story on Black-owned franchises aired on Marketplace, a few listeners raised questions about a line in the story’s introduction, which said the average white family has $632,000 in wealth, while the average black family has $98,000.

To some people, those numbers sounded high – especially at a time when so many families, regardless of race, are struggling.

I posed the question to the authors of an Urban Institute study, which informed my reporting.

Listener Ms. Mary was correct when she suggested we must be talking about “mean” or average – as opposed to “median” data.

Here is what the Urban Institute study authors said.

The primary data presented in our brief is means. In 2010, the average (or mean) wealth of white families was $632,000 and the average wealth of black families was $98,000. In this case, the racial wealth gap is 6-to-1 ($632,000/$98,000).

If we look at the “typical” (or median) family, the wealth numbers are substantially lower, but the racial wealth gap is larger. In 2010, the wealth of the typical white family was $123,800 and the wealth of typical black family was $15,700. In this case, the racial wealth gap is even larger at 8-to-1 ($123,800/$15,700).

Both mean and median measures of wealth are important. Mean wealth tells us how a group is prospering as a whole relative to other groups. Median wealth tells us how the “typical” person is doing (i.e., the person in the middle of the group). One complication with focusing on median wealth is that it doesn’t show where all the remaining wealth goes (we only know the wealth of that one middle person).

I followed up by asking whether the wealthiest few Americans are affecting the data in any way.

The Urban Institute says that is the case.

What happens if we trim the extremes off our analysis, excluding the top and bottom 1%? For white families in the middle of this 98%, their average wealth is $434,000. If we take this down another notch and exclude the top and bottom 5%, white families in the middle of the remaining 90% have an average wealth of $297,000. If we do the same calculations for black families, their average wealth is $75,000 and $57,000, respectively. The resulting white-to-black wealth ratios are still in the 5/6: 1 range, on par with what we found when we included all families in the original research.

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