States With the Biggest and Smallest Wealth Gaps by Race

In America, there is racial inequality in many areas, including our wealth. Current trends show that a wide financial gulf continues to divide racial groups in the U.S., with Hispanic and black Americans still at the bottom of the economic ladder. Non-Hispanic white Americans have a median household wealth of $250,400, compared to $24,520 for Black households and $48,720 for Hispanic households.

Some key factors driving the racial wealth gap include unequal access to higher education and employment for minorities, as well as residential segregation that still persists. 

In light of these issues, WalletHub measured the financial inequality among racial groups in each state and the District of Columbia. We did so by analyzing each state across 21 key metrics, ranging from the median household income gap to the unemployment rate gap.

“Wealth inequality is still very prominent in America, unfortunately. For example, in the most unequal states, white people earn as much as 50%-60% more than their Black peers and are 200%-400% less likely to be unemployed or living in poverty. Combatting wealth inequality is no simple task, as it requires us to remove discrimination from education, employment and the housing market.”

Chip Lupo, WalletHub Analyst

In-Depth Look at the Places with the Highest Wealth Gaps

District of Columbia

The District of Columbia has the highest wealth gap in the country, which means, the seat of our nation’s government is also the most financially unequal place to live. In D.C., white people earn around 64% more than Black people, the most disadvantaged group.

D.C. also sadly ranks first when it comes to the gap in the poverty rate, and it’s even more dramatic. Black D.C. residents have a poverty rate that’s 374% higher than it is for white people. This is likely due to the big gaps that also exist in educational attainment and employment. Black people in D.C. are nearly 61% less likely to have a bachelor’s degree than white people, and they’re around 263% more likely to be unemployed.

There is still some good news from the District of Columbia, though. Despite its problems, it does have the lowest gap in homeownership in the country. But if other conditions in the state continue to be extremely inequitable, this divide may get worse, too.

Wisconsin      

Wisconsin has the second-highest wealth gap by race. It has the second-highest gap in median household income, with white residents making around 48% more than their Black neighbors. In addition, Wisconsin has the fifth-largest gap when it comes to poverty. Black people, the most disadvantaged demographic, are over 222% more likely to live in poverty than white people.

Wisconsin has the sixth-highest gap in homeownership as well. Sadly, Black people are over 62% less likely to own a home than white people. Part of this stems from the income gap, which obviously makes it much harder to put a down payment on a house or compete with other potential buyers in the current market. But gaps in homeownership may also be influenced by redlining or other discriminatory housing practices that still persist across the U.S.

To top things off, Wisconsin has the third-worst racial disparity when it comes to unemployment and the ninth-worst disparity for health insurance. 

Nebraska

Nebraska has the third-highest overall wealth gap, driven by the fact that it also has the second-highest gap in high school graduation in the country. In this case, the most disadvantaged group is hispanic people, who are over 28% less likely to obtain a high school diploma than white people.

Higher levels of education correlate with better financial outcomes, so lacking even a high school education can severely impact people’s earning potential in the future. The state also has the sixth-highest attainment gap for higher education. Hispanics are around 58% less likely to get a bachelor’s degree or higher than white people.

When it comes to the unemployment rate, Hispanics are also in the most disadvantaged position in Nebraska, and are over 130% more likely to not have access to a job compared to white people. 

Methodology

To measure the wealth gap among races in the U.S., WalletHub analyzed the 50 states and the District of Columbia across 21 key metrics, which are listed below with their corresponding weights. 

Because white people comprise the majority of the American population at 63 percent, we chose this racial group as our benchmark with which to measure the gap with minority, nonwhite populations, including Black people, Hispanics and Asians. To determine the overall ranking of each state, we selected the biggest gap between racial groups for each metric. For instance, if the income gap in California is 20 percent between white people and Black people, 30 percent between white people and Hispanics and zero between white people and Asians, we used 30 percent for that metric for California. We took this approach in order to draw attention to the areas where the biggest gaps exist.