In a recent report released by the New York Federal Reserve Bank, it was revealed that the COVID-19 pandemic further exacerbated existing wealth gaps, with white individuals experiencing greater financial growth compared to their Black and Hispanic counterparts. The study, which analyzed data from the first quarter of 2019 through the second quarter of 2023, found that the real net worth of white individuals outpaced that of Black individuals by 30 percentage points and that of Hispanic individuals by 9 percentage points.

One major factor contributing to this disparity is the higher participation of white households in financial markets, specifically stocks and mutual funds. A separate survey conducted by the Federal Reserve discovered that as of 2022, 65.6% of white households invested in stocks, while only 28.3% of Hispanic households and 39.2% of Black households held such investments.

Despite positive developments in the job market, including a record low unemployment rate of 5.3% for Black Americans, the report highlighted the challenges associated with closing the wealth gap. The earning power of the typical Black full-time worker increased by 7.1% since before the pandemic. However, the larger number of white households involved in stock market investments played a significant role in perpetuating inequality.

The study emphasized that the divergence in net worth between racial and ethnic groups since 2019 was primarily driven by disparities in the value of financial assets. Black households, for example, concentrated more of their wealth in pensions rather than in stocks and mutual funds. More than 50% of Black financial wealth was invested in pensions, compared to less than 30% for white households. Additionally, less than 20% of Black wealth was stored in private businesses and equities, in contrast to approximately 50% for white households.

The COVID-19 crisis further impacted wealth disparities, as Black-held financial assets experienced a decline below their 2019 levels and continued to steadily decrease. Similarly, the real value of Hispanic-held financial assets dipped below its 2019 level in 2022 and stagnated. Neither group's financial assets had fully recovered by the time of the report.

Another contributing factor to wealth inequality is the disproportionate impact of the pandemic on Black-owned businesses. Economic Policy Institute analysis revealed that while less than 10% of all U.S. business owners are Black, their businesses were more concentrated in sectors that were hit hardest by the pandemic, such as accommodation, food services, retail, healthcare, and social assistance. This led to higher rates of unemployment among Black business owners compared to their white counterparts.

Treasury Deputy Secretary Walley Adeyemo acknowledged the persisting wealth gap between Black and white households and pointed to improvements in employment and wages for Black Americans. He highlighted an increase in Black business ownership and participation in the stock market but suggested that additional policy measures may be necessary to address the unequal distribution of financial wealth.

The findings of the report underscore the need for continued efforts to reduce wealth disparities and promote economic equity among racial and ethnic groups. As the economy recovers from the pandemic, addressing these structural inequalities is vital for fostering a more inclusive and equitable society.