Wealth gap widens as Boston booms
Economic prosperity denied to communities of color
The wealth gap between Boston’s high earners and low-income communities of color continues to widen, but there’s hope, according to the Boston Foundation’s latest report.
The paper, titled “Boston’s Booming… but for Whom? Building Shared Prosperity in a Time of Growth,” released Oct. 9, analyzes several economic factors and concludes that while the city is experiencing a period of great economic growth, not everyone is sharing in this new wealth. Produced by Boston Indicators, the research arm of the Boston Foundation, the report’s authors, Luc Schuster and Peter Ciurczak, paint a complex picture of the economic opportunities available to Boston’s white, black and Latino communities.
“Despite all this vibrancy and growth,” write Schuster and Ciurczak, “despite our low unemployment rate, despite the fact that we live in one of the richest cities in one of the richest countries on earth … Too many of us are struggling to afford the rent, to pay for child care and to save for college.”
This creates what Schuster described in a phone interview with the Banner last week as “stark and persistent divides within society,” which, he said, have become a major concern for Bostonians living in an increasingly stratified city.
“This report affirms what too many residents already know,” said City Councilor Kim Janey, “that despite economic prosperity, too many Bostonians, particularly in communities of color, are being left out of that prosperity.”
According to the report, Boston’s skyrocketing property prices have led to a significant reduction in the number of middle-income households in the city, down by 15,000 since 1990, and precipitated a decline in homeownership rates.
While home values have increased nationally by 3 percent, they have risen by 48 percent in Boston since the early 2000s. Although this is positive for long-term homeowners, rising housing costs have become a barrier to homeownership for renters, the report reads. About 65 percent of residents in Suffolk County rent their homes and many are currently paying more than half their annual income on housing. Citywide, the median household earns $61,267 a year, but median annual rent is $31,356.
Schuster and Ciurczak used American Community Survey data to find that in Dorchester almost all “affordable” housing is beyond the means of most residents. According to the report, the median annual income in Dorchester is $54,380, and the median annual rent is $29,880. Residents would have to earn almost double the median salary, $99,580, to be able to afford average rents.
“We strive to provide and create a city where households of middle incomes can thrive, but that’s not the case,” said Schuster.
Higher housing costs have negatively impacted the wealth of communities of color, but Schuster told the Banner that public policies that have “propped up asset wealth for white households in a way that they did not for our communities of color,” are also to blame.
“This report underscores what many of us already know — that Boston is still grappling with the lingering effects of redlining, inequitable distribution of wealth, and housing discrimination,” City Councilor Ayanna Pressley told the Banner in a written statement. “These systemic inequities have not only added to the widening racial wealth gap but they have made it harder for communities of color to achieve a semblance of long-term economic security.”
Generational wealth traditionally provides economic security, yet the report reveals that this is becoming increasingly uncommon. The likelihood of earning more than previous generations is now much lower for all Bostonians.
Ninety-one percent of people born in Massachusetts in 1940 had the opportunity to make more money than their parents. Forty years later, only 55 percent of those born in 1980 have the chance to move up the ladder and earn more money than previous generations.
But the news is not all bad. Boston has the second-highest rate of economic mobility compared with 100 of the largest cities in the U.S., and, according to the report, Boston ranks top among this group for black economic mobility.
Yet, on closer inspection of individual income, the report concludes that black males in the city have the lowest economic mobility of any group in the city.
African American men aged 31 to 37 in Boston earn on average $23,730 a year, and while this is relatively high compared with black men in other cities, it is lower than the average earnings for all other groups in Boston. Schuster points out that is it also notably less than the lowest annual income nationally for white men, which is about $26,000 in Atlanta, Georgia. This shows that although economic mobility is high for black men in Boston compared with black men nationally, when compared to white men across the country, it remains significantly lower.
The research reveals that in 2015 the median income for white families in the Metro Boston area was $90,000, and their median wealth was $247,500. The median income for black families during the same year was $41,200, while their wealth was just $8, according to data analyzed from the National Asset Scorecard for Communities of Color survey and calculations made by the Federal Reserve Bank of Boston.
“This divide we see in terms of black wealth and white wealth in Boston you can take back to who has had the opportunity to purchase homes and who hasn’t,” said Janey, “and too many have been locked out of that.”
Schuster and Ciurczak have suggested that wealth inequality could also be a result of high incarceration rates among African American men, and the impact of racial bias. According to their analysis, Massachusetts’ overall incarceration rate is the second lowest in the country, but the state’s black imprisonment rate remains higher than the white imprisonment rate in every other state.
The report offers several solutions to these economic impediments, including improving education resources, providing more work training for people without higher education, improving the transportation system so that it is easier for people to get to work, and making healthcare more affordable and accessible.
“There’s no question that we need to provide better education resources,” said Schuster, “but compared with other U.S. cities our public schools system is strong … we’re starting from a slightly higher level.”
At-large City Councilor Ayanna Pressley wrote to the Banner, “I’m proud of the progress we’ve made in Boston. We’ve been able to prioritize procurement as a tool to provide equitable opportunities for government contracting among women-owned and minority businesses and as a state we’ve taken measures to raise the minimum wage.” But she added, “As lawmakers, we can no longer afford to paper over these disparities with strong rhetoric about a booming economy, strong job numbers, and increased housing stock. We have to be more intentional about lifting vulnerable communities out of this inter-generational poverty.”
Schuster agreed with Pressley and said the city and the state has made some progress towards those goals. He cited the criminal reform bill passed earlier this year as an example of positive legislation that might alleviate some of the pressures that hinder economic growth for communities of color.
But Schuster added, “We need to do more.”
“We’re not starting from scratch,” he said, “but we have a real opportunity to create a broad range of strong [opportunities] that are accessible to all neighborhoods in Boston.”