The American family today - Examining the Black-white wealth gap

 1. The American family today

For children, growing diversity in family living arrangements

Family life is changing. Two-parent households are on the decline in the United States as divorce, remarriage and cohabitation are on the rise. And families are smaller now, both due to the growth of single-parent households and the drop in fertility. Not only are Americans having fewer children, but the circumstances surrounding parenthood have changed. While in the early 1960s babies typically arrived within a marriage, today fully four-in-ten births occur to women who are single or living with a non-marital partner. At the same time that family structures have transformed, so has the role of mothers in the workplace – and in the home. As more moms have entered the labor force, more have become breadwinners – in many cases, primary breadwinners – in their families.

As a result of these changes, there is no longer one dominant family form in the U.S. Parents today are raising their children against a backdrop of increasingly diverse and, for many, constantly evolving family forms. By contrast, in 1960, the height of the post-World War II baby boom, there was one dominant family form. At that time 73% of all children were living in a family with two married parents in their first marriage. By 1980, 61% of children were living in this type of family, and today less than half (46%) are. The declining share of children living in what is often deemed a “traditional” family has been largely supplanted by the rising shares of children living with single or cohabiting parents.

The American family today - Examining the Black-white wealth gap

The growing complexity and diversity of families

The two-parent household in declineThe share of children living in a two-parent household is at the lowest point in more than half a century: 69% are in this type of family arrangement today, compared with 73% in 2000 and 87% in 1960. And even children living with two parents are more likely to be experiencing a variety of family arrangements due to increases in divorce, remarriage and cohabitation.3 Today, fully 62% of children live with two married parents – an all-time low. Some 15% are living with parents in a remarriage and 7% are living with parents who are cohabiting.4 Conversely, the share of children living with one parent stands at 26%, up from 22% in 2000 and just 9% in 1960.

These changes have been driven in part by the fact that Americans today are exiting marriage at higher rates than in the past. Now, about two-thirds (67%) of people younger than 50 who had ever married are still in their first marriage. In comparison, that share was 83% in 1960.5 And while among men about 76% of first marriages that began in the late 1980s were still intact 10 years later, fully 88% of marriages that began in the late 1950s lasted as long, according to analyses of Census Bureau data.6

The rise of single-parent families, and changes in two-parent families

Black children and those with less educated parents less likely to be living in two-parent householdsDespite the decline over the past half century in children residing with two parents, a majority of kids are still growing up in this type of living arrangement.7 However, less than half—46%—are living with two parents who are both in their first marriage. This share is down from 61% in 19808 and 73% in 1960.

An additional 15% of children are living with two parents, at least one of whom has been married before. This share has remained relatively stable for decades.

In the remainder of two-parent families, the parents are cohabiting but are not married. Today 7% of children are living with cohabiting parents; however a far larger share will experience this kind of living arrangement at some point during their childhood. For instance, estimates suggest that about 39% of children will have had a mother in a cohabiting relationship by the time they turn 12; and by the time they turn 16, almost half (46%) will have experience with their mother cohabiting. In some cases, this will happen because a never-married mother enters into a cohabiting relationship; in other cases, a mother may enter into a cohabiting relationship after a marital breakup.

The decline in children living in two-parent families has been offset by an almost threefold increase in those living with just one parent—typically the mother.9 Fully one-fourth (26%) of children younger than age 18 are now living with a single parent, up from just 9% in 1960 and 22% in 2000. The share of children living without either parent stands at 5%; most of these children are being raised by grandparents.10

The majority of white, Hispanic and Asian children are living in two-parent households, while less than half of black children are living in this type of arrangement. Furthermore, at least half of Asian and white children are living with two parents both in their first marriage. The shares of Hispanic and black children living with two parents in their first marriage are much lower.

Asian children are the most likely to be living with both parents—fully 84% are, including 71% who are living with parents who are both in their first marriage. Some 13% of Asian kids are living in a single-parent household, while 11% are living with remarried parents, and just 3% are living with parents who are cohabiting.

Roughly eight-in-ten (78%) white children are living with two parents, including about half (52%) with parents who are both in their first marriage and 19% with two parents in a remarriage; 6% have parents who are cohabiting. About one-in-five (19%) white children are living with a single parent.

Among Hispanic children, two-thirds live with two parents. All told, 43% live with two parents in their first marriage, while 12% are living with parents in a remarriage, and 11% are living with parents who are cohabiting. Some 29% of Hispanic children live with a single parent.

The living arrangements of black children stand in stark contrast to the other major racial and ethnic groups. The majority – 54% – are living with a single parent. Just 38% are living with two parents, including 22% who are living with two parents who are both in their first marriage. Some 9% are living with remarried parents, and 7% are residing with parents who are cohabiting.

Children with at least one college-educated parent are far more likely to be living in a two-parent household, and to be living with two parents in a first marriage, than are kids whose parents are less educated.11 Fully 88% of children who have at least one parent with a bachelor’s degree or more are living in a two-parent household, including 67% who are living with two parents in their first marriage.

In comparison, some 68% of children who have a parent with some college experience are living in a two-parent household, and just 40% are living with parents who are both in a first marriage. About six-in-ten (59%) children who have a parent with a high school diploma are in a two-parent household, including 33% who are living with parents in their first marriage. Meanwhile, just over half (54%) of children whose parents lack a high school diploma are living in a two-parent household, including 33% whose parents are in their first marriage.

Blended families

One-in-six kids is living in a blended familyAccording to the most recent data, 16% of children are living in what the Census Bureau terms “blended families” – a household with a stepparent, stepsibling or half-sibling. This share has remained stable since the early 1990s, when reliable data first became available. At that time 15% of kids lived in blended family households. All told, about 8% are living with a stepparent, and 12% are living with stepsiblings or half-siblings.12

Many, but not all, remarriages involve blended families.13 According to data from the National Center for Health Statistics, six-in-ten (63%) women in remarriages are in blended families, and about half of these remarriages involve stepchildren who live with the remarried couple.

Hispanic, black and white children are equally likely to live in a blended family. About 17% of Hispanic and black kids are living with a stepparent, stepsibling or a half-sibling, as are 15% of white kids. Among Asian children, however, 7% – a far smaller share – are living in blended families. This low share is consistent with the finding that Asian children are more likely than others to be living with two married parents, both of whom are in their first marriage.

The shrinking American family

Among women, fertility is decliningFertility in the U.S. has been on the decline since the end of the post-World War II baby boom, resulting in smaller families. In the mid-1970s, a 40% plurality of mothers who had reached the end of their childbearing years had given birth to four or more children.14 Now, a similar share (41%) of mothers at the end of their childbearing years has had two children, and just 14% have had four or more children.15

At the same time, the share of mothers ages 40 to 44 who have had only one child has doubled, from 11% in 1976 to 22% today. The share of mothers with three children has remained virtually unchanged at about a quarter.

Women’s increasing educational attainment and labor force participation, and improvements in contraception, not to mention the retreat from marriage, have all likely played a role in shrinking family size.

Among Hispanics and the less educated, bigger familiesFamily size varies markedly across races and ethnicities. Asian moms have the lowest fertility, and Hispanic mothers have the highest. About 27% of Asian mothers and one-third of white mothers near the end of their childbearing years have had three or more children. Among black mothers at the end of their childbearing years, four-in-ten have had three or more children, as have fully half (50%) of Hispanic mothers.

Similarly, a gap in fertility exists among women with different levels of educational attainment, despite recent increases in the fertility of highly educated women. For example, just 27% of mothers ages 40 to 44 with a post-graduate degree such as a master’s, professional or doctorate degree have borne three or more children, as have 32% of those with a bachelor’s degree. Among mothers in the same age group with a high school diploma or some college, 38% have had three or more kids, while among moms who lack a high school diploma, the majority – 55% – have had three or more children.

The rise of births to unmarried women and multi-partner fertility

Not only are women having fewer children today, but they are having them under different circumstances than in the past. While at one time virtually all births occurred within marriage, these two life events are now far less intertwined. And while people were much more likely to “mate for life” in the past, today a sizable share have children with more than one partner – sometimes within marriage, and sometimes outside of it.

Births to unmarried women

The decoupling of marriage and childbearingIn 1960, just 5% of all births occurred outside of marriage. By 1970, this share had doubled to 11%, and by 2000 fully one-third of births occurred to unmarried women. Non-marital births continued to rise until the mid-2000s, when the share of births to unmarried women stabilized at around 40%.16

Not all babies born outside of a marriage are necessarily living with just one parent, however. The majority of these births now occur to women who are living with a romantic partner, according to analyses of the National Survey of Family Growth. In fact, over the past 20 years, virtually all of the growth in births outside of marriage has been driven by increases in births to cohabiting women.17

Researchers have found that, while marriages are less stable than they once were, they remain more stable than cohabiting unions. Past analysis indicates that about one-in-five children born within a marriage will experience the breakup of that marriage by age 9. In comparison, fully half of children born within a cohabiting union will experience the breakup of their parents by the same age. At the same time, children born into cohabiting unions are more likely than those born to single moms to someday live with two married parents. Estimates suggest that 66% will have done so by the time they are 12, compared with 45% of those who were born to unmarried non-cohabiting moms.

The share of births occurring outside of marriage varies markedly across racial and ethnic groups. Among black women, 71% of births are now non-marital, as are about half (53%) of births to Hispanic women. In contrast, 29% of births to white women occur outside of a marriage.

The American family today - Examining the Black-white wealth gapRacial differences in educational attainment explain some, but not all, of the differences in non-marital birth rates.

New mothers who are college-educated are far more likely than less educated moms to be married. In 2014 just 11% of women with a college degree or more who had a baby in the prior year were unmarried. In comparison, this share was about four times as high (43%) for new mothers with some college but no college degree. About half (54%) of those with only a high school diploma were unmarried when they gave birth, as were about six-in-ten (59%) new mothers who lacked a high school diploma.

Multi-partner fertility

Related to non-marital births is what researchers call “multi-partner fertility.” This measure reflects the share of people who have had biological children with more than one partner, either within or outside of marriage. The increase in divorces, separations, remarriages and serial cohabitations has likely contributed to an increase in multi-partner fertility. Estimates vary, given data limitations, but analysis of longitudinal data indicates that almost 20% of women near the end of their childbearing years have had children by more than one partner, as have about three-in-ten (28%) of those with two or more children. Research indicates that multi-partner fertility is particularly common among blacks, Hispanics, and the less educated.

Parents today: older and better educated

While parents today are far less likely to be married than they were in the past, they are more likely to be older and to have more education.

In 1970, the average new mother was 21 years old. Since that time, that age has risen to 26 years. The rise in maternal age has been driven largely by declines in teen births. Today, 7% of all births occur to women under the age of 20; as recently as 1990, the share was almost twice as high (13%).

While age at first birth has increased across all major race and ethnic groups, substantial variation persists across these groups. The average first-time mom among whites is now 27 years old. The average age at first birth among blacks and Hispanics is quite a bit younger – 24 years – driven in part by the prevalence of teen pregnancy in these groups. Just 5% of births to whites take place prior to age 20, while this share reaches 11% for non-Hispanic blacks and 10% for Hispanics. On the other end of the spectrum, fully 45% of births to whites are to women ages 30 or older, versus just 31% among blacks and 36% among Hispanics.

Mothers today are also far better educated than they were in the past. While in 1960 just 18% of mothers with infants at home had any college experience, today that share stands at 67%. This trend is driven in large part by dramatic increases in educational attainment for all women. While about half (49%) of women ages 15 to 44 in 1960 lacked a high school diploma, today the largest share of women (61%) has at least some college experience, and just 19% lack a high school diploma.

Mothers moving into the workforce

The American family today - Examining the Black-white wealth gapIn addition to the changes in family structure that have occurred over the past several decades, family life has been greatly affected by the movement of more and more mothers into the workforce. This increase in labor force participation is a continuation of a century-long trend; rates of labor force participation among married women, particularly married white women, have been on the rise since at least the turn of the 20th century. While the labor force participation rates of mothers have more or less leveled off since about 2000, they remain far higher than they were four decades ago.

In 1975, the first year for which data on the labor force participation of mothers are available, less than half of mothers (47%) with children younger than 18 were in the labor force, and about a third of those with children younger than 3 years old were working outside of the home. Those numbers changed rapidly, and, by 2000, 73% of moms were in the labor force. Labor force participation today stands at 70% among all mothers of children younger than 18, and 64% of moms with preschool-aged children. About three-fourths of all employed moms are working full time.

Among mothers with children younger than 18, blacks are the most likely to be in the labor force –about three-fourths are. In comparison, this share is 70% among white mothers. Some 64% of Asian mothers and 62% of Hispanic mother are in the workforce. The relatively high proportions of immigrants in these groups likely contribute to their lower labor force involvement – foreign-born moms are much less likely to be working than their U.S.-born counterparts.

The more education a mother has, the more likely she is to be in the labor force. While about half (49%) of moms who lack a high school diploma are working, this share jumps to 65% for those with a high school diploma. Fully 75% of mothers with some college are working, as are 79% of those with a college degree or more.

Along with their movement into the labor force, women, even more than men, have been attaining higher and higher levels of education. In fact, among married couples today, it is more common for the wife to have more education than the husband, a reversal of previous patterns. These changes, along with the increasing share of single-parent families, mean that more than ever, mothers are playing the role of breadwinner—often the primary breadwinner—within their families.

The American family today - Examining the Black-white wealth gapToday, 40% of families with children under 18 at home include mothers who earn the majority of the family income.18 This share is up from 11% in 1960 and 34% in 2000. The bulk of these breadwinner moms—8.3 million—are either unmarried or are married and living apart from their spouse.19 The remaining 4.9 million, who are married and living with their spouse, earn more than their husbands. While families with married breadwinner moms tend to have higher median incomes than married-parent families where the father earns more ($88,000 vs. $84,500), families headed by unmarried mothers have incomes far lower than unmarried father families. In 2014, the median annual income for unmarried mother families was just $24,000.

Breadwinner moms are particularly common in black families, spurred by very high rates of single motherhood. About three-fourths (74%) of black moms are breadwinner moms. Most are unmarried or living apart from their spouse (61%), and the remainder (13%) earn more than their spouse. Among Hispanic moms, 44% are the primary breadwinner; 31% are unmarried, while 12% are married and making more than their husbands. For white mothers, 38% are the primary breadwinners—20% are unmarried moms, and 18% are married and have income higher than that of their spouses. Asian families are less likely to have a woman as the main breadwinner in their families, presumably due to their extremely low rates of single motherhood. Just 11% of Asian moms are unmarried. The share who earn more than their husbands—20%— is somewhat higher than for the other racial and ethnic groups.

The flip side of the movement of mothers into the labor force has been a dramatic decline in the share of mothers who are now stay-at-home moms. Some 29% of all mothers living with children younger than 18 are at home with their children. This marks a modest increase since 1999, when 23% of moms were home with their children, but a long-term decline of about 20 percentage points since the late 1960s when about half of moms were at home.

While the image of “stay-at-home mom” may conjure images of “Leave It to Beaver” or the highly affluent “opt-out mom”, the reality of stay-at-home motherhood today is quite different for a large share of families. In roughly three-in-ten of stay-at-home-mom families, either the father is not working or the mother is single or cohabiting. As such, stay-at-home mothers are generally less well off than working mothers in terms of education and income. Some 49% of stay-at-home mothers have at most a high-school diploma compared with 30% among working mothers. And the median household income for families with a stay-at-home mom and a full-time working dad was $55,000 in 2014, roughly half the median income for families in which both parents work full-time ($102,400).20

A close examination of wealth in the U.S. finds evidence of staggering racial disparities. At $171,000, the net worth of a typical white family is nearly ten times greater than that of a Black family ($17,150) in 2016. Gaps in wealth between Black and white households reveal the effects of accumulated inequality and discrimination, as well as differences in power and opportunity that can be traced back to this nation’s inception. The Black-white wealth gap reflects a society that has not and does not afford equality of opportunity to all its citizens.

Efforts by Black Americans to build wealth can be traced back throughout American history. But these efforts have been impeded in a host of ways, beginning with 246 years of chattel slavery and followed by Congressional mismanagement of the Freedman’s Savings Bank (which left 61,144 depositors with losses of nearly $3 million in 1874), the violent massacre decimating Tulsa’s Greenwood District in 1921 (a population of 10,000 that thrived as the epicenter of African American business and culture, commonly referred to as “Black Wall Street”), and discriminatory policies throughout the 20th century including the Jim Crow Era’s “Black Codes” strictly limiting opportunity in many southern states, the GI bill, the New Deal’s Fair Labor Standards Act’s exemption of domestic agricultural and service occupations, and redlining. Wealth was taken from these communities before it had the opportunity to grow.

This history matters for contemporary inequality in part because its legacy is passed down generation-to-generation through unequal monetary inheritances which make up a great deal of current wealth. In 2020 Americans are projected to inherit about $765 billion in gifts and bequests, excluding wealth transfers to spouses and transfers that support minor children. Inheritances account for roughly 4 percent of annual household income, much of which goes untaxed by the U.S. government.

Just how large and persistent are these racial wealth gaps? As figure 1 shows, median net worth for white households has far exceeded that of Black households through recessions and booms over the last thirty years. While movements in white wealth are easier to see due to the larger scale, during the most recent economic downturn, median net worth declined by more for Black families (44.3 percent decline from 2007 to 2013) than for white families (26.1 percent decline). In fact, the ratio of white family wealth to Black family wealth is higher today than at the start of the century.

The American family today - Examining the Black-white wealth gap

Median wealth—or the wealth of the household at the middle of a distribution—gives the experience of the typical family, but does not reflect the bulk of national wealth that is held by the richest households. White average wealth ($929,800), which is more influenced by very rich families and does not characterize the typical experience, is 6.7 times greater than Black average wealth ($138,100).

White adults tend to be older (median age of 55) than African Americans (49 years old), and older people tend to have more wealth, but figure 2 shows that the wealth gap remains when looking within age groups. The typical young adult (18–34 years old) of either race has little wealth, but the gap rises quickly with age, and for 65–74-year-olds accumulates to $302,500 in median white wealth and $46,890 in median Black wealth.

The American family today - Examining the Black-white wealth gap

Wealth is the sum of resources available to a household at a point in time; as such it is clearly influenced by the income of a household, but the two are not perfectly correlated. Two households can have the same income, but the household with fewer expenses, or with more accumulated wealth from past income or inheritances, will have more wealth. Figure 3 shows median net worth at different points in the family income distribution. What is immediately evident is that the racial wealth gap remains even for families with the same income. For those in the top 10 percent by income (only 3.6 percent Black), the racial wealth gap is still quite large: median net worth for white families in this income group is $1,789,300 versus $343,160 for Black families. A racial gap exists in every income group except the bottom quintile (23.5 percent Black), where median net worth is zero for everyone.

The American family today - Examining the Black-white wealth gap

Why are high- and middle-income white families so much wealthier than Black families with the same incomes? We note a few reasons. White families receive much larger inheritances on average than Black families. Economists Darrick Hamilton and Sandy Darity conclude that inheritances and other intergenerational transfers “account for more of the racial wealth gap than any other demographic and socioeconomic indicators.”  In addition, the income groups in figure 2 are based on a snapshot of family income, which does not fully capture lifetime income. Black families who make it to the top of the income distribution in a particular year are more likely than white families to drop out of the top in subsequent years, and their respective wealth levels reflect this difference. Likely less important, but still notable, high- and middle-income Black families are more likely than their white counterparts to be called upon to assist family members and neighbors.

All of this matters because wealth confers benefits that go beyond those that come with family income. Wealth is a safety net that keeps a life from being derailed by temporary setbacks and the loss of income. This safety net allows people to take career risks knowing that they have a buffer when success is not immediately achieved. Family wealth allows people (especially young adults who have recently entered the labor force) to access housing in safe neighborhoods with good schools, thereby enhancing the prospects of their own children. Wealth affords people opportunities to be entrepreneurs and inventors. And the income from wealth is taxed at much lower rates than income from work, which means that wealth begets more wealth.

There is no single, simple explanation for the racial wealth gap. It is not explained away by differences in educational attainment, as Darrick Hamilton and Trevon Logan show in a recent article, and as we show in a recent Hamilton Project volume on tax policy. It is not accounted for by indebtedness—white families actually tend to have higher levels of debt. It is not even fully accounted for by differences in income, as seen in figure 3. In addition, the fact that intergenerational transfer of wealth is lightly taxed means that historical gaps persist over generations. Furthermore, inadequate investments in the public goods that facilitate economic mobility make it harder to erase past gaps.

The solutions to the Black-white wealth gap—and the policies that address racial inequity more generally—are largely outside the scope of this post. But the analysis above points to at least one type of reform: taxation of income from wealth. The income from inheritances, and from wealth more generally, is taxed at an inequitably low rate, especially when compared to earnings.

Well-designed taxes on inheritancesreforms to capital income taxation, and even taxes on wealth could be part of the solution. Inheritance or estate taxes in particular could enhance equality of opportunity, especially if revenues were invested in programs that give low-income children a better chance at economic success.

When I - a person living in the UK - Google that phrase, the first ten images are:

  • White family with kids
  • White kids (1930s rural, by the look of it)
  • White family with kids
  • Black couple with child
  • Two white kids with two black kids (1930s again)
  • Asian family with kids
  • White family with kids
  • Black father and son (presumably)
  • Asian or possibly Hispanic child
  • Lionel and Brenda Richie with the adopted Hispanic/Creole daughter

What all of them images have in common is that they appear on webpages where the phrase "white American families" appears in the text. No conspiracy, just algorithms.

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