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How COVID-19 Has Impacted Black-White Financial Inequality

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Black-White Financial Inequality

How COVID-19 Impacted Black-White Financial Inequality

COVID-19 has disrupted everything from economic markets to personal finances, but not everyone feels its effects equally. When compared with White Americans, Black Americans’ financial situations have been disproportionately affected by the pandemic.

In this infographic from McKinsey & Co., we outline the financial vulnerabilities of Black Americans, their increased usage of financial services since the onset of the pandemic, and their lower satisfaction levels with those services.

Financial Vulnerabilities of Black Americans

Compared to White Americans, more Black Americans say their job and income have been negatively impacted by COVID-19.

My job has been negatively impacted by COVID-19My income has been negatively impacted by COVID-19
White Americans29%24%
Black Americans36%31%

Looking forward, Black Americans also report greater job security concerns and have less savings to protect themselves financially. In the event of a job loss, 57% of Black Americans report their savings would last four months or less, compared with 44% of White Americans.

With less of a cash buffer on hand, Black consumers are also more likely to have missed a recent bill payment.

Skipped at least 1 paymentPartially paid at least 1 billPaid in full
White Americans16%22%62%
Black Americans51%22%27%

This includes being unable to pay for basic items such as utilities, telephone and internet, and mortgage payments.

How do they begin to manage these challenges?

Use of Financial Services

Black Americans increased their use of financial services more than White Americans.

Banking activities in the past two weeks, per March-June 2020 surveys

Withdrew cashDeposited cashDeposited checksContacted bank for service on accountOpened new accountsReceived advice on digital tool usage
White Americans35%20%40%9%3%4%
Black Americans47%31%30%15%7%7%

For example, Black Americans were about twice as likely to request account service, open an account, or receive advice on digital tools. In addition, Black families were more likely to leverage a fintech platform and have been more active in opening fintech accounts since the start of the COVID-19 crisis.

However, as Black Americans seek out more financial help, some are not happy with the service they receive.

Satisfaction with Financial Services

Overall, Black families are less satisfied than White families across all types of financial activities. These differences were most pronounced for digital tool advice, where 38% of Black Americans were dissatisfied or very dissatisfied, compared with just 12% of White Americans.

Even though Black people were less satisfied with banking services, they were more likely to say that bank performance was above their expectations. This may suggest that expectations are lower for Black families than they are for White families.

Black Americans were also much less likely to trust their financial advisor.

Do not trust/losing trustIndifferentGaining trust/trust
White Americans10%9%81%
Black Americans32%9%59%

From March-June 2020, the percentage of Black people distrusting their advisors rose from 12% to 32%. Over the same time period, White people’s distrust of financial advisors remained stable at 10%.

A notable exception: White and Black Americans were both satisfied with fintech providers. Only 5% of White Americans and 8% of Black Americans expressed some level of dissatisfaction with fintech companies.

Time to Examine the Financial System?

COVID-19 has perpetuated Black-White financial inequality. Data shows that Black families are more likely to be financially vulnerable, and increase their use of financial services during the COVID-19 crisis. However, they are less likely to feel satisfied with these services.

Financial institutions can urgently review their remote and in-person customer service procedures to ensure the needs of all families are being met.

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Visualizing the Wealth of Americans Under 40 (1989-2023)

The wealth of American Millennials hit historic highs after the COVID-19 pandemic.

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This line chart shows the growth of wealth for Americans under 40 over the last 40 decades.

Visualizing the Wealth of Americans Under 40 (1989-2023)

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Millennials have been often referred to as a “broke generation.” Whether in conversations or on the news, it is common to hear how those born in the 1980s or 1990s are struggling in today’s economy, particularly when it comes to entering the housing market or saving for retirement.

However, data shows that the wealth of Americans under 40 years old has hit historic highs after the COVID-19 pandemic, suggesting that millennials have accumulated more wealth by their 40s than previous generations.

To illustrate this, the graphic above shows the average wealth per household, adjusted for inflation, for Americans under 40 years old from Q4 1989 to Q4 2023 (in December 2023 dollars). The data is sourced from the Federal Reserve and accessed via the Center for American Progress.

Post-Pandemic Recovery

Data indicates that younger Americans have reaped the most benefits from the strong economic recovery after the pandemic, enjoying low unemployment rates and rapid wage growth.

The average wealth of U.S. households under 40 was $259,000 in the fourth quarter (Q4) of 2023, compared to $164,000 in Q4 1989 and $182,000 in Q4 2000.

QuarterAverage Wealth for Those Under 40 (USD)
Q4 1990152K
Q4 1995146K
Q4 2000182K
Q4 2005184K
Q4 2010100K
Q4 2015148K
Q4 2020231K
Q4 2023259K

Looking specifically at millennial households, inflation-adjusted wealth has more than doubled during the same period.

The increase in younger Americans’ wealth is not concentrated in a single area. Average housing wealth—house values minus mortgage debt—rose by $22,000 from 2019 to 2023. Younger Americans also saw gains in liquid assets, such as bank deposits and money market mutual funds, business ownership, and financial assets, mainly stocks and mutual funds.

Additionally, non-housing debt, such as credit card and student loan debt, fell for this age group after the pandemic.

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