Poverty and race … and net worth

I wrote a post yesterday about poverty and race. The basic gist was that there are a lot of poor Whites, which is something quite a few people do not realize. The percentage of White people in poverty is lower than Blacks and Hispanics, but because there are just so many Whites, there are also so many poor Whites, just under 20 million according to the 2010 census. One of my tweeps asked about poverty and wealth. In particular: what is the difference in wealth between impoverished households of different races?

I went into the 2010 Survey of Consumer Finances microdata to see if I could find out, and I did! According to the SCF2010 data, the median net worth of White families with poverty incomes in 2010 was $6,960. For poverty-income Hispanic families, the median net worth was $3,100, and for poverty-income Black families it was $70. Across all races and families, the median net worth of poverty-income families was $3,780. The median net worth for families from all income groups in 2010 was $77,300.

Here is how I came up with these numbers. I used the 2010 Census poverty thresholds for a given household size. If a SCF survey participant had a household before-tax income below that line, they were counted as below poverty. From there, I just use the net worth data for each poverty-income household (applying the weights of course), and get median figures for each racial group.

It is important to note that poverty is purely an income measurement. So it is possible for someone to have a poverty income while still having a net worth of millions of dollars. In fact, some of the survey participants in 2010 had just that. Generally you would not expect that to happen often because with that amount of money, investment returns alone (which are counted in the income figures) should put you well above poverty, but there are always bound to be a handful of the very wealthy whose investments fared poorly that year. Using median figures instead of mean figures should take care of those outliers and give us a decent sense of the resources of a more typical poverty-income household.

Last thing I will say just to stave off any questions is that the net worth figure here includes pretty much any asset you could imagine (minus liabilities). So non-financial wealth like cars and such count towards a household’s net worth, not just financial wealth.