◼ FINANCE Bloomberg Businessweek June 29, 202026
THE BOTTOM LINE White households in the U.S. bring in vastly
higher payments from dividends and stock buybacks than Black
and Hispanic ones, exacerbating the economic divide.compounding wealth that accumulates over years,
is dominated by the affluent, and in America that
overwhelmingly means White people. Not only does
this divide foster the inequality that serves as a root
cause of the uprisings, but it also makes it easier for
the investor class to ignore the tumult caused by the
killing of George Floyd. “A market is not a democ-
racy, reflecting worldly concerns about inequality or
race. It is a dollar-weighted counting machine, where
investors’ views are weighted by how much money
they have to invest,” says Aswath Damodaran, a
professor of finance at New York University’s Stern
School of Business. “A divergence between public
and market views can be driven by wealth inequal-
ity, and to the extent that wealth and race are cor-
related, it will look unfair on a racial basis.”
Lopsided ownership demographics are as big a
fact of American markets as discrepancies in house-
hold income among races—and each exacerbates
the other. Data from the Federal Reserve shows
about 52% of families owned stocks either directly
or indirectly through retirement accounts in 2016.
Breaking it down by racial makeup, 31% of Black
households and 28% of Hispanic ones own equities,
according to analysis published by the central bank.
That compares with 61% of White families.
“We don’t have multigenerational wealth,” says
John Rogers Jr., founder of Ariel Investments, one
of the biggest Black-owned investment companies.
“And so therefore, we don’t have grandfathers and
grandmothers and aunts and uncles that have been
teaching us about the markets as we grow up and
how to get comfortable in the wealth that can be
created in the stock market.”
Disparities like these, mirroring gaps in income,
allow divisions in wealth creation to widen, partic-
ularly in the postcrisis period, where over about a
decade the S&P 500 delivered annualized returns of
almost 17% and some $25 trillion was added to the
value of American stocks. Indeed, at times during
the bull market, gains in U.S. shares exceeded gains
in worker pay by more than in any stretch in at least
half a century.
Much of the market’s rebound since March
was driven by the Fed, which has frantically cam-
paigned to support markets. Against that back-
drop, Raphael Bostic, the first Black Fed president
in the central bank’s 106-year history, has called on
policymakers to take action to create more oppor-
tunities for minorities and the poor.
A paper by Moritz Kuhn, Moritz Schularick,
and Ulrike Steins and accepted for publication
this year by the Journal of Political Economy indi-
cates that after the Great Recession, the bottom
50% of Americans in terms of wealth distributionwealthyWhitehouseholds,saysLenorePalladino,
a Roosevelt Institute fellow and assistant professor
at the University of Massachusetts at Amherst, who
wrote the paper.
“All the problems that face our society all come
back to the fact that we’re a capitalist democracy,”
ays Ariel’s Rogers. “And if we’re not fully partic-
ipants in the capitalist democracy, it just com-
pounds and compounds and compounds and
creates the kind of frustration that you’re seeing in
the streets.” �Max ReyesShareofequityownership ShareofU.S.populationWhite Black Hispanic1990 2019 1990 2019 1990 2019100%500HouseholdswithequityWhiteBlackHispanic61%31%28%TheStockMarket’sRacialGapsawtheirwealthshrinkby15%ofits 2007 levelby
2016,primarily because of the drop in residential
real estate values. The top 10% emerged relatively
unscathed thanks to equity gains. Meanwhile, there
was an outsize negative impact on Black Americans.
“ThetypicalBlackhouseholdremainspoorerthan
80%ofWhitehouseholds,”theresearcherswrote.
Accordingtoa workingpaperbytheleft-leaning
Roosevelt Institute, shareholder payments in the
form of stock buybacks and dividends that went
to White families from 2004 to 2019 totaled $13 tril-
lion, compared with $181 billion that went to Black
households and $212 billion that went to Hispanic
households in the same period. That gap is far out
of proportion to the U.S. population, which is about
60% White, 13% Black, and 18% Hispanic.
“In the last decade we talked about the
‘1 Percent’ as a wealth group in society,” but the con-
versation often didn’t clarify the group consisted ofEQUITY OWNERSHIP BY HOUSEHOLD. 2019 DATA IS AS OF Q3. DATA: FEDERAL RESERVE, ROOSEVELT INSTITUTE, U.S. CENSUS