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

Date01 May 2021
DOI10.1177/00027162211028822
AuthorWilliam A. Darity,Fenaba R. Addo
Published date01 May 2021
Subject MatterPopulation Outcomes
ANNALS, AAPSS, 695, May 2021 173
DOI: 10.1177/00027162211028822
Disparate
Recoveries:
Wealth, Race,
and the
Working Class
after the Great
Recession
By
FENABA R. ADDO
and
WILLIAM A. DARITY J.
1028822ANN The Annals Of The American AcademyDisparate Recoveries
research-article2021
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 house-
holds. 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 attain-
ment than occupational sector.
Keywords: middle class; race; recession; stratification;
wealth inequality; working class
Racial wealth inequality in the United States
is massive, persistent, and well docu-
mented. In the immediate years postrecession,
Black-white wealth disparities widened; and
five years later, Black households held one-
tenth the net worth of white households
Fenaba R. Addo is an associate professor of public pol-
icy at the University of North Carolina–Chapel Hill.
Her work on racial disparities in student debt, older
Black women and wealth, and the Millennial wealth
gap sheds light on the ways that societal inequalities
stem from historical legacies of racial exclusion and
discrimination, and how they get reproduced over time.
William A. Darity Jr. is the Samuel DuBois Cook
Professor of Public Policy, African and African
American Studies, and Economics and the director of
the Samuel DuBois Cook Center on Social Equity at
Duke University. His most recent book, coauthored
with A. Kirsten Mullen, is From Here to Equality:
Reparations for Black Americans in the 21st Century
(University of North Carolina Press 2020).
Correspondence: faddo@email.unc.edu
174 THE ANNALS OF THE AMERICAN ACADEMY
(Dettling etal. 2017). As the labor and housing markets recovered after experi-
encing record rates of unemployment and foreclosures, returns from the rising
economy were not shared equally across U.S. households (McKernan et al.
2014; Compton, Giedeman, and Muller 2018). Building upon these studies that
showed disparate wealth holdings by race and ethnicity but focused on the lag
of the recession, we use data from the Survey of Consumer Finances (SCF) to
investigate the financial status of households headed by Black, white, and Latinx
adults tied to the labor market in the period of post–Great Recession economic
growth between 2010 and 2019, capturing the entire recovery period. We cate-
gorize the working-class population based on their attachment to the labor
market and in relation to the means of production. We bridge literatures on class
and status attainment through the lens of stratification economics (Darity 2005;
Darity etal. 2017), a newer subfield in economics that focuses on the relation-
ship between intergroup inequality, group identity, and relative group position.
We are able to highlight the persistence of fundamental economic inequality
during the longest period of economic growth in modern America. Wealth and
wealth inequality measures have become increasingly important for understand-
ing the economic lives of Americans and, in particular, economic disparities
across racial groups. The increasing role of consumer and education debt in
American households, with a diminished role for the social safety net, has meant
greater reliance on and increased importance of private charitable contribu-
tions.
Recently, Darity, Addo, and Smith (2020) made the case for a wealth-based
definition of middle-class status to capture, more accurately, the subaltern status
of Black Americans, a comparatively privileged subgroup within a larger margin-
alized one. This is important because wealth in the United States can be trans-
formative. It serves both as a means of social mobility and solidification of social,
political, and economic status. In contrast, Black households’ cumulative, inter-
generational inability to acquire wealth continues to contribute to their sedi-
mentation at the bottom of the socioeconomic distribution (Oliver and Shapiro
2006). While a different set of historical processes led to their current status, the
statistics on wealth disparities between Latinx and (non-Latinx) white house-
holds are remarkably similar to those between (non-Latinx) Black and white
households.
We are also interested in unpacking how the relationship between working-
class status and net worth changed during this recovery period. We document
wealth holdings of households classified as working class within Black, white, and
Latinx populations after the Great Recession, including an assessment of their
asset and debt profiles. In addition to providing an overall accounting of changes
in working-class households’ financial balance sheet in the years postrecession,
we are also interested in the degree of financial precarity that these households
experienced. We accomplish this by exploring the relationship between a wealth-
based threshold of “middle-class” attainment and working-class status over the
same period. In the final section, we examine the potential for overlap among the
two groups, and whether the patterns differ by race and ethnicity.

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