Household wealth inequality, entrepreneurs’ financial constraints, and the great recession: evidence from the Kauffman Firm Survey

The collapse of the labor, housing, and stock markets beginning in 2007 created unprecedented challenges for American families. This study examines disparities in wealth holdings leading up to the Great Recession and during the first years of the recovery. All socioeconomic groups experienced declines in wealth following the recession, with higher wealth families experiencing larger absolute declines. In percentage terms, however, the declines were greater for less advantaged groups as measured by minority status, education, and prerecession income and wealth, leading to a substantial rise in wealth inequality in just a few years. Despite large changes in wealth, longitudinal analyses demonstrate little change in mobility in the ranking of particular families in the wealth distribution. Between 2007 and 2011, one-fourth of American families lost at least 75 percent of their wealth, and more than half of all families lost at least 25 percent of their wealth. Multivariate longitudinal analyses document that these large relative losses were disproportionally concentrated among lower-income, less educated, and minority households.

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Disparate Recoveries: Wealth, Race, and the Working Class after the Great Recession

The Annals of the American Academy of Political and Social Science ◽

10.1177/00027162211028822 ◽

2021 ◽

Vol 695 (1) ◽

pp. 173-192

Author(s):

Fenaba R. Addo ◽

William A. Darity

Keyword(s):

Middle Class ◽

Working Class ◽

Great Recession ◽

Wealth Inequality ◽

Net Worth ◽

The Great Recession ◽

Consumer Finances ◽

White Working Class ◽

Using Data ◽

The Relationship

What does it mean to be working class in a society of extreme racial wealth inequality? Using data from the Survey of Consumer Finances, we investigate the wealth holdings of Black, Latinx, and white working-class households during the post–Great Recession (pre–COVID-19) period that spanned 2010 to 2019. We then explore the relationship between working-class and middle-class attainment using a wealth-based metric. We find that, in terms of their net worth, fewer Black working-class households benefitted from the economic recovery than white working-class households. Among white households, the working class saw the greatest increase in wealth in both absolute and relative terms. Working-class households were less likely to be middle class as defined by their wealth holdings, and Black and Latinx households were also less likely to be middle class. For Black households, racial identity is a stronger predictor of wealth attainment than occupational sector.

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The Distribution of Wealth in America (1983–2013)

United States Income, Wealth, Consumption, and Inequality ◽

10.1093/oso/9780197518199.003.0009 ◽

2020 ◽

pp. 219-242

Author(s):

John C. Weicher

Keyword(s):

Great Recession ◽

Home Ownership ◽

Household Wealth ◽

Distribution Of Wealth ◽

The Great Recession ◽

Home Values

This chapter covers a period of rising wealth followed by abrupt decline. Between 1983 and 2007, real median household wealth rose by 70 percent, from $80,000 to $136,000 (in 2013 dollars). This increase disappeared completely, however, in the Great Recession; by 2010, median wealth had dropped by 40 percent, to $82,000, and it did not improve by 2013. The typical household of 2013 was no wealthier than the typical household of 1983. In addition, the distribution became markedly more unequal during the Great Recession; the richest 10 percent experienced a smaller reduction of 10 percent. For families in the middle, the most important asset was their home, but in 2013, fewer of them were homeowners and home values dropped for those who were. The declines in home ownership and home values accounted for most of the loss in wealth for middle-wealth families as a group.

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