DASHBOARD
URBAN AGENDA – ECONOMIC MOBILITY – WEALTH GAP
1
1
2023 Baseline – Neutral
9x
White households in Cleveland and Cuyahoga County have more than 9 times the net worth of Black households. White households in the city and county have 7 times the net worth of Hispanic/Latino households.
MEDIAN HOUSEHOLD NETWORTH BY RACE, 2022
The Urban Agenda goal of closing the wealth gap may be the hardest to achieve due to stark differences and the compounding impact of barriers to opportunity. A 2023 Federal Reserve Bank analysis of the Survey of Consumer Finances estimated the average Black household’s net worth to be just 15.8% of the average White household. Hispanic households, on average, had a net worth roughly 21.6% of White households nationwide. Other wealth estimates, such as from the Urban Institute, calculate the gap to be even wider, with median net worth for Black households being roughly 8% that of White households nationwide.
Given differences in income that have been demonstrated and differences in house values and homeownership rates that will be presented in this section of the Urban Agenda Economic Mobility Dashboard, we can assume that net worth for Black and Hispanic/Latino households in Cleveland and Cuyahoga County are even lower than for the nation overall.
Using the Fed’s net worth estimations as a starting point, we have calculated racial and ethnic disparities in wealth, guided by research finding differences in the degree to which income and house values contribute to wealth. Our calculations estimate net worth for Black households in Cleveland to be less than $16,000 and Hispanic/Latino households to have a net worth of about $21,000, little more than a third of the wealth of their peers nationwide. Net worth of White households in Cleveland was significantly higher at $145,292, on average, but that amount was only about half the wealth possessed by White households nationally. Black and Hispanic/Latino households in Cuyahoga County had higher net worth, but they still possessed little more than half the wealth of their peers nationwide.
CITY OF CLEVELAND MEDIAN HOUSEHOLD NETWORTH BY RACE, 2022
$15,799
Black Households
$145,292
White Households
$20,919
Hispanic/Latino Households
2030 WEALTH GAP GOAL
A five-year goal of the Urban Agenda and its partners is to support strategies and actions so that disparities in wealth for Black and Hispanic/Latino households compared to their White neighbors are no greater in Cleveland and Cuyahoga County than those seen for the nation overall. That would mean, based on 2022 estimates, raising median net worth of Black households in Cleveland to at least $25,916 and Hispanic/Latino households to at least $35,616. The goal for Black households in Cuyahoga County would be a net worth of $41,391 and for Hispanic/Latino households $56,785.
WEALTH GAP KEY DRIVERS OF INTEREST
DISPARITIESHOMEOWNERSHIPHOUSE VALUESRENT BURDENSAVINGSHIGH-PAY EMPLOYMENTMORTGAGE DENIALSBUSINESS OWNERSHIP
NET WORTH DISPARITIES
These calculations suggest that Black households in Cleveland may possess a net worth less than 11% that of White households in Cleveland. Net worth for Hispanic/Latino households was found to be just 14.4% that of White households in Cleveland. Compounding these grim numbers is the fact that the net worth of White households in Cleveland was estimated to be only about half that of White households for the nation overall. That means Black households in Cleveland have a net worth of only about 5.5% that of White households in the U.S. overall. Moreover, Black households in Cleveland have only about 35% the wealth enjoyed by their Black peers nationwide. Net worth in Cuyahoga County is higher, but Black, Hispanic and White households all substantially lag national averages, and racial and ethnic disparities are similar to those seen for Cleveland households. These lower net worths and wider disparities are troubling for the financial well-being of Cleveland’s people and the city overall.
NET WORTH 2030 BENCHMARKS
As the preceding charts make clear, racial and ethnic gaps in wealth are vast and even wider at local levels. Although most of the near-term economic mobility goals for the Urban Agenda involve setting our sights on disparities no greater than for the state overall, in the case of wealth, we have set a goal of increasing net worth so that disparities are no greater than those for the nation overall. That would mean, based on 2022 estimates, raising net worth of Black households in Cleveland to $22,890 and Hispanic/Latino households in Cleveland to $31,400. This would require raising median household net worths roughly 50% over current levels—a bold goal, to be sure. And that’s before accounting for inflation over the next 5 years. Despite the unusually high rates of inflation seen over the past few years, inflation has averaged roughly 2.55% since 2000. Assuming that average rate of inflation, Urban Agenda benchmarks for 2030 would need to be roughly $25,916 for Black households and $35,616 for Hispanic/Latino households in Cleveland; for the county, estimated 5-year net worth benchmarks would need to be $41,391 for Black households and $56,785 for Hispanic/Latino households. Achieving those 2030 benchmarks would require annual increases of roughly 11% over 2022 estimates.
HOMEOWNERSHIP DISPARITIES
One place to focus attention in order to meet household net worth goals is homeownership. Homes represent the single-biggest asset for most families. A 2023 report by the Pew Research Center found that home equity contributes less to the net worth of White households but is of particular importance to Black and Hispanic/Latino households, accounting for 63% and 66% of net worth, respectively. Yet, homeownership among Black and Hispanic/Latino households in Cleveland and Cuyahoga County significantly lags homeownership rates among their peers nationwide. The third of Black and Hispanic/Latino households in Cleveland (and little more than 40% for the county) that are owner-occupied are also substantially less than the 50% of White households in Cleveland and the 71% of White households in Cuyahoga County.
HOMEOWNERSHIP 2030 BENCHMARKS
If we are to meet the net worth goals of local racial and ethnic disparities being no larger than those seen at the national level, increasing homeownership rates in Cleveland and Cuyahoga County to align more with the U.S. rate will be central to the effort. Achieving such a 5-year benchmark would require converting roughly 7,300 Black renter households into owner-occupied ones in Cleveland (a 27% increase over 2022 levels) and nearly 3,300 Hispanic/Latino renter-occupied households in Cleveland into owner-occupied ones (a 62% increase). The number of Black and Hispanic/Latino homeowners in Cuyahoga County would need to increase by 10% and 20.8%, respectively, over 2022 levels.
HOUSE VALUES DISPARITIES
Beyond differences in the owning of homes, differences in the value of those homes contributes greatly to disparities in wealth. In Cleveland, the median house value was just 31.9% the median house value for the nation overall ($102,500 vs. $320,900, respectively). As stark as those differences are, they are even worse when looking at values for Black households specifically. According to the 2022 American Community Survey, the median value of homes owned by Black householders in Cleveland was just $74,900 (or 30.8%), compared to a median value of $242,600 for Black householders nationwide. Median house value for Hispanic/Latino Clevelanders was 35.9% that of their peers nationwide, and median house value for White Clevelanders was 41.3% comparatively. The median value of homes owned by Black householders for the state overall was nearly twice that of their Cleveland peers. House values for Black and Hispanic/Latino homeowners in Cuyahoga County were less than half that of their peers nationwide (45.0% and 47.6%, respectively) while median house value for Cuyahoga County’s White homeowners was two-thirds that of the median value for White homeowners for the nation overall. The area’s age of housing stock, style, and condition, as well as location desirability, job prospects and population change, all contribute to differences seen in median house values and affect the ability to increase values. Yet, racial and ethnic factors also clearly play a role.
The 2022 American Community Survey data indicate racial and ethnic disparities in house values to be wider locally than for the state and nation overall. Median house value for Black homeowners in Cuyahoga County was just 51.1% that of White homeowners; the median house value for Hispanic/Latino homeowners was 70.6% that of White homeowners in the county. That compares to 64.4% and 80.0%, respectively, for the state overall. Black homeowners at the national level were even closer to being on par with their White neighbors, capturing more than three-quarters of the median house value of White homeowners.
HOUSE VALUES 2030 BENCHMARKS
As noted earlier, homes represent the single-biggest asset for most families. Thus, racial and ethnic disparities in house values that are substantially larger locally than for the state and nation overall are key contributors to large disparities in net worth seen here. Therefore, closing the gaps in house values will be important to narrowing wealth gaps. If Black homeowners in Cleveland fared as well as Black homeowners nationwide do in comparison to their White neighbors, they would see a 33.1% increase in median house values, based on 2022 ACS data. Median values would be $100,176, or $25,276 more. This higher value would have huge impact on personal wealth as well as community well-being. Benchmarks for 2030 would be to bring local disparities more in line with national levels so that Black house values in Cleveland and Cuyahoga County rise to 76.1% that of White house values, and Hispanic/Latino house values are nearly equal to White house values.
RENT BURDEN DISPARITIES
Although homeownership and house values are important contributors to wealth, many householders choose not to, or find themselves unable to, purchase homes. Economic mobility and wealth accumulation are not out of the reach of renters. However, in Cleveland, 38.6% of all renters are “burdened” by payments that are more than a third of their monthly incomes. More alarming is that 26.5% of all renters in Cleveland classify as “severely burdened,” meaning rents eat up half or more of monthly household incomes.
RENT BURDEN 2030 BENCHMARKS
Rent burden is a challenge across the nation, due, at least in part, to housing shortages in high-cost markets. Yet, in Cleveland and Cuyahoga County, those paying half or more of their household incomes on rent exceed the share of renters “severely burdened” nationwide. Bringing the level of severe burden in line with the national average of 24.8% would reduce the number of Cleveland households paying half or more of their household incomes for shelter by nearly 1,800. That would mean a near-term goal of no more than 25,072 Cleveland households (or 55,517 households in the county overall) paying 50% or more of monthly incomes on rent.
EMERGENCY SAVINGS DISPARITIES
Given the higher likelihood of households renting versus owning their living spaces and given the higher rates of severe rent burden in Cleveland, it’s not surprising that data from the Urban Institute show a disproportionate share of Clevelanders lack access to emergency savings. The 2022 Urban Institute analysis for its Financial Health and Wealth Dashboard found that roughly 1 of every 4 Black and Hispanic/Latino households in Cleveland had access to $2,000 in emergency savings. That compares to 41.9% of Black households nationwide and 48.7% of Hispanic/Latino households. Among White households, 57.6% in Cleveland had emergency savings of at least $2,000, considerably less than the 73.6% nationwide.
EMERGENCY SAVINGS 2030 BENCHMARKS
Providing financial guidance and helping make saving easier add to family stability and support wealth-building by eliminating costly hurdles, such as paying exorbitant payday loan interest to cover an unexpected bill or losing a job because of not being able to afford a car repair. Bringing Cleveland more in line with national rates for emergency savings would mean an additional 15,550 households of color would enjoy this relatively modest financial cushion.
HIGH-PAY EMPLOYMENT DISPARITIES
In a series of articles identifying the richest cities in certain states, including Ohio, Forbes.com highlighted employment concentrations in two occupation categories: management and business and financial operations. This would seem to be owing to the fact that jobs in management and business and financial operations tend to be both high-paying and relatively plentiful. For example, employment in management occupations made up 14% of overall U.S. employment and paid a median wage of $81,484, according to the 2022 American Community Survey. The share of White employment in management occupations in Cleveland and Cuyahoga County roughly mirrors that of the state and nation, and local employment rates among White workers exceed the share of Ohio and U.S. employment in business and financial occupations. The share of Black employment in such occupations locally lags that for the state and nation overall and is less than half the share of White employment in management and business and financial occupations.
HIGH-PAY EMPLOYMENT 2030 BENCHMARKS
A near-term goal of narrowing the Black/White employment gap to no wider than for the nation overall would set a target of having 6.9% of Black employment in Cleveland be in management occupations and 7.9% be in business and financial occupations. A goal of increasing Black employment in relatively high-pay occupations without displacing the share of White employment in such occupations means a focus on growing the share of management and business and financial jobs in Cleveland and Cuyahoga, while providing Black workers and students with the skills and pathways to access them.
MORTGAGE DENIAL DISPARITIES
The path to homeownership typically involves accessing a loan to cover most of the purchase price of a house. In Cuyahoga County and across the state and nation, those applying for home mortgages were overwhelmingly White, based on Home Mortgage Disclosure Act data for 2022. Yet, HMDA data show that in Cuyahoga County mortgage loans for Black and Hispanic/Latino applicants were far more likely to be denied than for their White peers. Among Black mortgage applicants in Cuyahoga County, the number of loans denied was roughly 70% of the number of loans originated. That level of denial was substantially higher than for Black applicants in the state and nation overall and was more than double the rate of loan denials seen for White applicants.
MORTGAGE DENIAL 2030 BENCHMARK
Increasing homeownership in Cleveland and Cuyahoga County among Black and Brown residents will mean tackling the legacy of redlining that is still apparent in lending patterns and bank investments. If Black mortgage applicants in Cuyahoga County were denied at the same rate as for the nation overall, 409 more mortgages would have been approved, based on 2022 HMDA data. A five-year goal would be to have no higher rate of denial locally than for the nation as a whole, while also increasing the number of Black and Hispanic mortgage applicants.
Chart Under Development
BUSINESS OWNERSHIP DISPARITIES
Increasing homeownership is often the focus of initiatives aimed at wealth-building and economic mobility. But disparities in business ownership also contribute to wide gaps in net worth. As an example, Crain’s Cleveland Business collects data on businesses in the region. The list does not capture all businesses, especially single-employee endeavors and side-hustle operations, but the list is informative regarding gaps in ownership, size and activities. Of the 2,070 businesses located in Cuyahoga County and included in the 2023 list, 186 (9.0%) appear to be Black- or Hispanic-owned, compared to 1,837 (88.7%) not classified as “minority owned.” Only 1,237 Cuyahoga County businesses on the Crain’s list included information about employment. Of the Black- or Hispanic-owned businesses that provided employment details, just 12 (6.6%) had 50 or more employees. The largest of the Black- and Hispanic-owned businesses provides janitorial services and lists nearly 700 employees. Five of these larger, minority-owned firms are in construction. One is in manufacturing, one in health care, one in financial services, one in security services, and one in technology. Of the seven Black- or Hispanic-owned businesses headquartered in Cuyahoga County with revenues of $10 million or more, five were in construction, one in manufacturing and one in business services related to construction.
BUSINESS OWNERSHIP 2030 BENCHMARKS
The share of Black- or Hispanic owned businesses making up Crain’s list of Cuyahoga County businesses is not that far off national rates of minority ownership in general. Roughly 3% of U.S. businesses were Black-owned according to Pew Research Center analysis of the 2022 Annual Business Survey and Census data; about 7.1% were Hispanic-owned. However, the 9.0% of Cuyahoga County businesses that are Black- or Hispanic-owned is far below the roughly 37% of county population accounted for by Black and Hispanic residents. According to the Pew Research Center analysis, the number of U.S. businesses that were Black-owned grew by roughly 30% from 2017 to 2021. A goal of similar growth in minority-owned businesses in Cuyahoga County would increase the number of Black- and Hispanic-owned businesses, according to the Crain’s list, by 55. Yet, adding small, sole proprietor establishments with meager revenues will not be enough to help close the wealth gap. Mentoring and access to capital will be needed to help minority-owned businesses grow employment and revenues and expand into higher-value sectors.